1 00:00:00,080 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple, Cocklay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:23,760 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,200 --> 00:00:27,159 Speaker 2: The House right now as we speak, is voting on 7 00:00:27,240 --> 00:00:30,720 Speaker 2: a motion to reconsider a rule that failed yesterday. This 8 00:00:30,840 --> 00:00:33,720 Speaker 2: is a procedural hurdle to try to get them to 9 00:00:33,760 --> 00:00:36,839 Speaker 2: be able to vote for final passage on various pieces 10 00:00:36,840 --> 00:00:39,680 Speaker 2: of crypto legislation, because yes, it is still crypto week 11 00:00:40,000 --> 00:00:41,839 Speaker 2: in the House, and what they want to consider is 12 00:00:41,840 --> 00:00:44,159 Speaker 2: a stable Coin Bill, a Genius Act that was passed 13 00:00:44,280 --> 00:00:47,440 Speaker 2: by the US Senate already, a market structure legislation, a 14 00:00:47,479 --> 00:00:50,600 Speaker 2: package called the Clarity Act, and then some anti CBDC 15 00:00:50,760 --> 00:00:54,840 Speaker 2: legislation as well. That rule that failed yesterday wasn't supposed 16 00:00:54,880 --> 00:00:57,960 Speaker 2: to see another failure again today after President Trump met 17 00:00:57,960 --> 00:00:59,920 Speaker 2: with the holdouts at the White House yesterday and came 18 00:01:01,120 --> 00:01:04,640 Speaker 2: they had all agreed to let this rule pass. Yet 19 00:01:04,680 --> 00:01:07,440 Speaker 2: there's three no votes on the board right now. So 20 00:01:07,520 --> 00:01:09,760 Speaker 2: let's get the latest with Megan Scully, who leads our 21 00:01:09,800 --> 00:01:13,840 Speaker 2: capital influence team here in Washington covering Congress for US. So, Megan, 22 00:01:13,920 --> 00:01:15,920 Speaker 2: is there a chance that we see failure again here? 23 00:01:15,959 --> 00:01:17,399 Speaker 2: I thought the President said he had a deal. 24 00:01:17,600 --> 00:01:18,280 Speaker 3: Yes he did. 25 00:01:18,400 --> 00:01:20,440 Speaker 4: Sounds like it was all wrapped up tight, didn't it. 26 00:01:20,600 --> 00:01:23,480 Speaker 4: But it does appear that it is in trouble now. 27 00:01:23,600 --> 00:01:27,080 Speaker 4: Votes can change before they gable it. So I'm sure 28 00:01:27,080 --> 00:01:29,679 Speaker 4: that there is a lot of lobbying happening on the 29 00:01:29,720 --> 00:01:32,839 Speaker 4: floor right now. The President definitely doesn't want to see 30 00:01:32,880 --> 00:01:36,560 Speaker 4: this go down, particularly after calling all of these hardliners 31 00:01:36,600 --> 00:01:39,920 Speaker 4: into the Oval office last night. So, but we are 32 00:01:40,000 --> 00:01:44,640 Speaker 4: watching it closely and we'll see this. If this does 33 00:01:44,720 --> 00:01:47,880 Speaker 4: go down, it does not necessarily mean crypto Week is over. 34 00:01:48,280 --> 00:01:51,480 Speaker 4: It could certainly they could strike another deal. They could 35 00:01:51,520 --> 00:01:53,640 Speaker 4: bring this up again within a matter of a few 36 00:01:53,680 --> 00:01:56,000 Speaker 4: hours and get this all back on track, as we've 37 00:01:56,040 --> 00:01:58,080 Speaker 4: seen happen again and again this year. 38 00:01:58,240 --> 00:02:01,280 Speaker 5: What are the hardliners asking for and maybe not getting 39 00:02:01,800 --> 00:02:04,480 Speaker 5: if we're seeing them still hold out or drag their 40 00:02:04,520 --> 00:02:07,760 Speaker 5: feet despite Donald Trump trying to get them aboard. 41 00:02:08,040 --> 00:02:10,480 Speaker 4: So last night, what they were asking for was to 42 00:02:10,680 --> 00:02:12,800 Speaker 4: attach this Central Bank language to. 43 00:02:14,480 --> 00:02:15,959 Speaker 3: The stable coin bill. 44 00:02:16,880 --> 00:02:20,800 Speaker 4: Yes, which essentially would force the Senate's hand would require 45 00:02:20,840 --> 00:02:24,320 Speaker 4: the Senate to amend its own stable coin bill, which 46 00:02:24,320 --> 00:02:26,320 Speaker 4: it doesn't want to do. It just wants the House 47 00:02:26,320 --> 00:02:28,760 Speaker 4: to pass the Senate bill so they could all move on. 48 00:02:29,760 --> 00:02:31,760 Speaker 4: But this would force the Senate then to address the 49 00:02:31,800 --> 00:02:35,680 Speaker 4: issue later this week presumably. As for what is the 50 00:02:35,880 --> 00:02:39,480 Speaker 4: issue right now, we are trying to find that out. 51 00:02:40,840 --> 00:02:41,040 Speaker 6: Well. 52 00:02:41,080 --> 00:02:41,640 Speaker 3: It's interesting. 53 00:02:41,680 --> 00:02:43,920 Speaker 2: We spoke with Senator Tom Tillis of North Carolina on 54 00:02:44,000 --> 00:02:46,200 Speaker 2: Balance of Power last night. Magan about the idea that 55 00:02:46,240 --> 00:02:48,440 Speaker 2: the Fed or the House rather could try to change 56 00:02:48,480 --> 00:02:50,360 Speaker 2: the Genius Act and send it back to the Senate, 57 00:02:50,400 --> 00:02:52,640 Speaker 2: and he suggested that could be a deal breaker, that 58 00:02:52,680 --> 00:02:54,400 Speaker 2: the House shouldn't do that. The problem is that the 59 00:02:54,400 --> 00:02:56,280 Speaker 2: House doesn't do that. The House once again, he's gotten 60 00:02:56,360 --> 00:02:59,920 Speaker 2: jammed by the Senate. This is just lawmakers in Congress, 61 00:03:00,080 --> 00:03:02,280 Speaker 2: least some of them, feeling like there's a repeated pattern 62 00:03:02,320 --> 00:03:05,000 Speaker 2: here where they don't have the power of the authority. 63 00:03:05,120 --> 00:03:07,600 Speaker 4: Yes, I think part of what we are seeing here, 64 00:03:07,639 --> 00:03:11,239 Speaker 4: the undercurrent here are these hardliners feeling like, as you said, 65 00:03:11,320 --> 00:03:13,400 Speaker 4: that they are being jammed by the Senate, that they 66 00:03:13,440 --> 00:03:17,440 Speaker 4: need to sort of take whatever the Senate ultimately passes 67 00:03:17,880 --> 00:03:22,799 Speaker 4: and you're talking about people who don't typically work well 68 00:03:23,080 --> 00:03:27,400 Speaker 4: in that area, Marjorie Taylor Green, Victoria's Sparks, several others. 69 00:03:28,240 --> 00:03:31,480 Speaker 4: So they are trying to essentially lay down a marker 70 00:03:31,520 --> 00:03:34,120 Speaker 4: here and make a point and say, you know, we 71 00:03:34,240 --> 00:03:38,080 Speaker 4: are our own chamber, equal powers, all of that. And 72 00:03:38,600 --> 00:03:41,520 Speaker 4: I think that's a lot of what is playing out here, Megan. 73 00:03:41,520 --> 00:03:44,680 Speaker 5: We've seen bitcoin climb to new records this week in 74 00:03:44,760 --> 00:03:48,720 Speaker 5: anticipation that there would be a breakthrough on at least 75 00:03:48,720 --> 00:03:52,400 Speaker 5: the Genius Act. How significant is this for the industry, 76 00:03:52,480 --> 00:03:54,920 Speaker 5: for the crypto industry, which is trying to shed some 77 00:03:55,040 --> 00:03:57,760 Speaker 5: of its I guess outsider. 78 00:03:57,640 --> 00:04:03,480 Speaker 4: Image, right, Yes, this package of bills all very heavily 79 00:04:03,520 --> 00:04:07,680 Speaker 4: supported by industry. This is something that for the last 80 00:04:07,800 --> 00:04:10,760 Speaker 4: year plus they've been trying to shepherd through Congress. So 81 00:04:11,800 --> 00:04:14,840 Speaker 4: this is an incredibly big deal for the industry as 82 00:04:14,880 --> 00:04:19,239 Speaker 4: a whole and its top priority, particularly the stable coin bill. 83 00:04:19,480 --> 00:04:23,320 Speaker 4: You know this this year failure to get this through 84 00:04:23,400 --> 00:04:28,880 Speaker 4: we saw yesterday, you know stockstrop after the procedural rule fail. 85 00:04:29,080 --> 00:04:32,640 Speaker 4: So I presume you know, everyone in the industry and 86 00:04:32,720 --> 00:04:35,320 Speaker 4: elsewhere is looking at this at this vote going on 87 00:04:35,440 --> 00:04:36,359 Speaker 4: right now, very. 88 00:04:36,160 --> 00:04:39,120 Speaker 2: Closely well, and one quickly on a vote that could 89 00:04:39,160 --> 00:04:43,240 Speaker 2: happen shortly megan in the Senate, specifically the Recisions package, 90 00:04:43,240 --> 00:04:45,880 Speaker 2: where we saw two procedural votes yesterday having to be 91 00:04:45,960 --> 00:04:49,479 Speaker 2: a tiebreaker with Vice President jd Vance casting the tie 92 00:04:49,480 --> 00:04:51,599 Speaker 2: breaking vote. Is there a guarantee that this is going 93 00:04:51,640 --> 00:04:53,480 Speaker 2: to actually be able to pass these nine billion dollars 94 00:04:53,520 --> 00:04:54,080 Speaker 2: in recisions? 95 00:04:54,480 --> 00:04:57,159 Speaker 4: Well, I don't think anything is a guarantee right now 96 00:04:57,200 --> 00:05:00,320 Speaker 4: as we're seeing play out on the House floor. But 97 00:05:00,440 --> 00:05:02,719 Speaker 4: what we are kind of continuing to see in the 98 00:05:02,760 --> 00:05:06,719 Speaker 4: Senate is Fune seems to be the majority leader, seems 99 00:05:06,760 --> 00:05:10,279 Speaker 4: to be very a tune with his caucus, and he's 100 00:05:10,320 --> 00:05:14,200 Speaker 4: able to lose three with jd Vance you know, casting 101 00:05:14,240 --> 00:05:16,400 Speaker 4: the tie breaking vote. We saw that as long ago, 102 00:05:16,600 --> 00:05:20,640 Speaker 4: as as Trump's nominees like Pete Hegseth getting over the 103 00:05:20,640 --> 00:05:24,240 Speaker 4: line with tie breaking votes. And you know, I would 104 00:05:24,279 --> 00:05:27,760 Speaker 4: suspect we're going to see more hemming and hying. We're 105 00:05:27,800 --> 00:05:32,240 Speaker 4: going to see some consternation, but ultimately, you know, perhaps 106 00:05:32,360 --> 00:05:34,800 Speaker 4: jade Van's coming in with a tiebreaker. I do think 107 00:05:34,880 --> 00:05:39,920 Speaker 4: the decision to protect the AIDS funding, the PEP FAR 108 00:05:40,000 --> 00:05:43,839 Speaker 4: funding yesterday, that is a very popular program and the 109 00:05:43,880 --> 00:05:46,680 Speaker 4: decision to protect that instead of stripping it from the 110 00:05:47,680 --> 00:05:51,800 Speaker 4: already appropriated funds, that that surely sweetened the pot for 111 00:05:51,880 --> 00:05:53,320 Speaker 4: some on the fence. 112 00:05:53,440 --> 00:05:56,960 Speaker 2: Republicans, all right, Megan Scully leading our capital influence team 113 00:05:57,040 --> 00:05:59,640 Speaker 2: here in Washington, Thank you so much. And it's too 114 00:05:59,680 --> 00:06:02,120 Speaker 2: the cap eth Capitol buildings that we go now live 115 00:06:02,160 --> 00:06:04,479 Speaker 2: on Capitol Hill. We're joined by the chair of the 116 00:06:04,480 --> 00:06:07,320 Speaker 2: House Ways and Means Committee, Congressman Jason Smith of Missouri, 117 00:06:07,360 --> 00:06:10,120 Speaker 2: is here with us live on Bloomberg TV and radio. 118 00:06:10,200 --> 00:06:12,920 Speaker 2: Mister Chairman, welcome back to Balance of Power. There's a 119 00:06:12,960 --> 00:06:14,440 Speaker 2: lot we want to discuss with you, But if we 120 00:06:14,480 --> 00:06:17,640 Speaker 2: could begin with Crypto Week, which perhaps is not going 121 00:06:17,680 --> 00:06:22,000 Speaker 2: as smoothly as you or many of your colleagues may 122 00:06:22,080 --> 00:06:25,840 Speaker 2: have intended it to. Is this ultimately going to move 123 00:06:25,880 --> 00:06:27,760 Speaker 2: forward or do you get the sense that the holdouts 124 00:06:27,760 --> 00:06:31,359 Speaker 2: are still willing to hold out on this trio of legislation. 125 00:06:32,640 --> 00:06:36,520 Speaker 7: Let's just look at thee hundred nineteenth Congress. It has 126 00:06:36,560 --> 00:06:40,279 Speaker 7: some ups and downs along the way. We just passed 127 00:06:40,480 --> 00:06:46,159 Speaker 7: the biggest piece of legislation in years in the one 128 00:06:46,200 --> 00:06:49,680 Speaker 7: big beautiful Bill, just the last week that we were 129 00:06:49,680 --> 00:06:52,440 Speaker 7: in session, and people said that there was no way 130 00:06:52,480 --> 00:06:54,520 Speaker 7: that we could ever do it, and I continue to 131 00:06:54,560 --> 00:06:59,480 Speaker 7: say failures not an option. I of course, the crypto 132 00:06:59,560 --> 00:07:03,240 Speaker 7: legislation that is on the floor is within other committees 133 00:07:03,279 --> 00:07:05,520 Speaker 7: of jurisdiction from the House Ways and Means Committee. We're 134 00:07:05,520 --> 00:07:08,320 Speaker 7: working on our own crypto items that's not on the floor. 135 00:07:08,880 --> 00:07:12,120 Speaker 7: But I truly believe that we'll be able to iron 136 00:07:12,160 --> 00:07:16,200 Speaker 7: and out, get it together and pass it. We have always, 137 00:07:16,360 --> 00:07:20,360 Speaker 7: whether it's funding government, whether it's the debt extension. People 138 00:07:20,400 --> 00:07:22,960 Speaker 7: didn't think we could do it. It got a little rocky, 139 00:07:23,160 --> 00:07:24,840 Speaker 7: but we still got it done and it's going to 140 00:07:24,880 --> 00:07:27,000 Speaker 7: happen the same here today. 141 00:07:27,840 --> 00:07:31,760 Speaker 5: Chairman Smith, if we see passage today or even later 142 00:07:31,840 --> 00:07:35,080 Speaker 5: this week of the Genius Act, do you anticipate that 143 00:07:35,200 --> 00:07:38,680 Speaker 5: this will clear a path eventually for something on market structure. 144 00:07:39,400 --> 00:07:41,800 Speaker 5: We know that this is another bill that has been 145 00:07:42,160 --> 00:07:44,520 Speaker 5: in the works, but it seems a little bit further 146 00:07:44,640 --> 00:07:48,480 Speaker 5: behind in terms of development and perhaps support to among lawmakers. 147 00:07:49,640 --> 00:07:52,520 Speaker 7: I think, without a doubt there's a comprehensive effort to 148 00:07:52,640 --> 00:07:55,600 Speaker 7: make sure that we are the crypto capital of the world. 149 00:07:55,720 --> 00:07:59,080 Speaker 7: That's what President Trump has said over and over again. 150 00:08:00,120 --> 00:08:03,280 Speaker 7: We had a hearing this morning in the Ways and 151 00:08:03,320 --> 00:08:08,840 Speaker 7: Means Committee on cryptocurrency and taxing digital assets. This is 152 00:08:08,880 --> 00:08:12,400 Speaker 7: another point that has to be addressed and looked at, 153 00:08:12,680 --> 00:08:15,040 Speaker 7: and that's what the Ways and Means Committee is focused on. 154 00:08:15,120 --> 00:08:19,960 Speaker 7: From this gambut within the digital assets space super important 155 00:08:20,240 --> 00:08:23,840 Speaker 7: as you know, to the markets to investments. There's fifty million, 156 00:08:24,280 --> 00:08:29,120 Speaker 7: fifty million Americans that are involved with a digital assets 157 00:08:29,160 --> 00:08:31,800 Speaker 7: so that's pretty substantial and we need to make sure 158 00:08:31,840 --> 00:08:34,720 Speaker 7: we continue to be the world leader. Well. 159 00:08:34,720 --> 00:08:37,920 Speaker 2: Of course, markets and investments also care very much about 160 00:08:37,960 --> 00:08:40,199 Speaker 2: tax policy, which is why we all played such close 161 00:08:40,200 --> 00:08:43,840 Speaker 2: attention to the tax changes and extensions that were included 162 00:08:43,840 --> 00:08:46,560 Speaker 2: in the One Big Beautiful Bill Act, one piece of 163 00:08:46,920 --> 00:08:50,319 Speaker 2: budget reconciliation. But mister Chairman, the chair of the Budget Committee, 164 00:08:50,360 --> 00:08:52,680 Speaker 2: Jody Errington, told our colleagues this week that he wants 165 00:08:52,720 --> 00:08:55,839 Speaker 2: to work on a second budget passage package to pass 166 00:08:56,280 --> 00:08:58,120 Speaker 2: by the end of the year. I wonder if you 167 00:08:58,520 --> 00:09:00,640 Speaker 2: see that as likely, given how hard it was to 168 00:09:00,640 --> 00:09:03,480 Speaker 2: get the first line across the finish line, and what 169 00:09:03,600 --> 00:09:06,160 Speaker 2: if any tax changes you would want included in a 170 00:09:06,200 --> 00:09:07,920 Speaker 2: second reconciliation package. 171 00:09:08,240 --> 00:09:11,000 Speaker 7: Well, let me just say there has never there has 172 00:09:11,120 --> 00:09:16,480 Speaker 7: never been two partisan reconciliation bills that have become law 173 00:09:16,760 --> 00:09:20,559 Speaker 7: in the same year. It's never happened before, So trying 174 00:09:20,559 --> 00:09:23,600 Speaker 7: to do a second one is doing something that when 175 00:09:23,640 --> 00:09:25,640 Speaker 7: the Democrats controlled the White House, the House and the 176 00:09:25,679 --> 00:09:29,400 Speaker 7: Senate they attempted to do too, and then ultimately couldn't 177 00:09:29,440 --> 00:09:32,880 Speaker 7: pass build back better and then the next year they 178 00:09:32,920 --> 00:09:35,360 Speaker 7: did a second reconciliation bill, but it wasn't in the 179 00:09:35,360 --> 00:09:39,760 Speaker 7: same year. So it is extremely difficult to do because 180 00:09:40,000 --> 00:09:44,520 Speaker 7: passing a budget reconciliation is not easy. As you saw 181 00:09:44,840 --> 00:09:47,560 Speaker 7: what we passed just recently, which is the largest tax 182 00:09:47,559 --> 00:09:50,079 Speaker 7: cut in US history, the largest spending cuts in US history, 183 00:09:50,120 --> 00:09:53,319 Speaker 7: the largest welfare reforms in US history, the largest one 184 00:09:53,320 --> 00:09:56,880 Speaker 7: time investment in border security in US history. That wasn't easy, 185 00:09:57,200 --> 00:10:00,720 Speaker 7: and we had to pass it just in the House. 186 00:10:00,800 --> 00:10:03,400 Speaker 7: The first initial vote was two hundred and fifteen to 187 00:10:03,440 --> 00:10:07,320 Speaker 7: two hundred and fourteen, so it was by one vote 188 00:10:07,400 --> 00:10:11,000 Speaker 7: the Senate, Jade Vance had to do the tie breaking vote. 189 00:10:11,080 --> 00:10:14,600 Speaker 7: So it's very, very difficult. But if we come up 190 00:10:14,600 --> 00:10:18,520 Speaker 7: with a reconciliation package that addresses needs for working families, 191 00:10:18,520 --> 00:10:21,480 Speaker 7: small businesses, and farmers, we'll get it done. But it 192 00:10:21,600 --> 00:10:23,559 Speaker 7: needs to make sure to addresses those points. 193 00:10:25,320 --> 00:10:27,640 Speaker 5: Chairman Smith, I wanted to shift gears a little bit 194 00:10:27,679 --> 00:10:30,240 Speaker 5: and talk about tariffs and tariff revenue. To set up 195 00:10:30,240 --> 00:10:33,120 Speaker 5: the conversation. I wanted to bring in something we heard 196 00:10:33,120 --> 00:10:37,120 Speaker 5: from Peter Navara on Friday on this program talking about 197 00:10:37,160 --> 00:10:37,959 Speaker 5: tariff revenue. 198 00:10:39,160 --> 00:10:43,360 Speaker 8: I would say that for the American people, these tariffs 199 00:10:43,679 --> 00:10:47,600 Speaker 8: are a great boon that brought a chart here shows 200 00:10:47,640 --> 00:10:52,000 Speaker 8: that we've already collected like one hundred billion dollars of tariffs. 201 00:10:51,720 --> 00:10:53,560 Speaker 3: A record for a long single fiscal. 202 00:10:53,720 --> 00:10:57,760 Speaker 8: Yeah, the terrors are working, and they were these kind 203 00:10:57,800 --> 00:11:00,600 Speaker 8: of revenues that were getting. It's a very important part 204 00:11:00,920 --> 00:11:04,520 Speaker 8: of the big beautiful bill in terms of financing that 205 00:11:05,120 --> 00:11:07,240 Speaker 8: as well. 206 00:11:07,600 --> 00:11:10,800 Speaker 5: Chairman Smith, how much are you expecting on the committee 207 00:11:10,840 --> 00:11:13,880 Speaker 5: in terms of revenue from tariffs that the President has 208 00:11:13,880 --> 00:11:17,960 Speaker 5: imposed this year already and the other tariffs we are 209 00:11:18,000 --> 00:11:22,000 Speaker 5: expecting not only on US trading partners, but on sectors 210 00:11:22,080 --> 00:11:25,200 Speaker 5: on goods and various sectors including drugs and semiconductors and 211 00:11:25,200 --> 00:11:26,160 Speaker 5: autos and so forth. 212 00:11:27,480 --> 00:11:30,160 Speaker 7: So let's just look at the last month in June. 213 00:11:30,200 --> 00:11:32,400 Speaker 7: This is something that a lot of people's not paying 214 00:11:32,400 --> 00:11:35,840 Speaker 7: attention to or discussing. If you look at the revenues 215 00:11:35,880 --> 00:11:38,760 Speaker 7: that came within the federal government and the expenses we 216 00:11:38,840 --> 00:11:43,600 Speaker 7: had last month was the first time since June of 217 00:11:43,679 --> 00:11:47,480 Speaker 7: two thy sixteen, then we had a month that created 218 00:11:47,640 --> 00:11:51,079 Speaker 7: a surplus, not a deficit. Of course, we need a 219 00:11:51,120 --> 00:11:54,319 Speaker 7: surplus for twelve different months. But if you look into 220 00:11:54,920 --> 00:11:58,079 Speaker 7: why did the month of June actually have a surplus 221 00:11:58,120 --> 00:12:02,120 Speaker 7: and not a deficit, spin because of the increase tax revenues, 222 00:12:02,440 --> 00:12:06,200 Speaker 7: but also the increase tariff revenues. Those are the two 223 00:12:06,240 --> 00:12:10,200 Speaker 7: biggest issues that led to making sure that government was 224 00:12:10,240 --> 00:12:13,240 Speaker 7: balanced for the month of June. So tariffs do play 225 00:12:13,400 --> 00:12:15,520 Speaker 7: a part of the role. I've said all along. When 226 00:12:15,559 --> 00:12:21,000 Speaker 7: you're looking at the fiscal sanity, the fiscal responsibility of government, 227 00:12:21,120 --> 00:12:23,280 Speaker 7: you have to look at three different legs. You have 228 00:12:23,400 --> 00:12:26,199 Speaker 7: the tax issue. You need certainty in the tax code. 229 00:12:26,240 --> 00:12:28,800 Speaker 7: We just finished that with the one big beautiful bill. 230 00:12:29,720 --> 00:12:32,360 Speaker 7: Then you have the trade mechanisms, and then you have 231 00:12:32,480 --> 00:12:36,400 Speaker 7: the deregulation. Once you do those three legs, that will 232 00:12:36,679 --> 00:12:40,840 Speaker 7: create an economy that will go gamebusters and it will 233 00:12:40,880 --> 00:12:44,319 Speaker 7: help us balance our budgets. And these trade agreements that 234 00:12:44,360 --> 00:12:48,040 Speaker 7: the president's working on. You're even having CEOs now of 235 00:12:48,160 --> 00:12:51,400 Speaker 7: some major US companies that's going out there saying I 236 00:12:51,440 --> 00:12:55,520 Speaker 7: was opposed to the President's tariff policies, but they're really 237 00:12:55,559 --> 00:12:59,959 Speaker 7: not making an impact. They're not inflationary, they're not raising price, 238 00:13:00,440 --> 00:13:01,599 Speaker 7: and I think they're working. 239 00:13:03,200 --> 00:13:03,400 Speaker 6: Well. 240 00:13:03,480 --> 00:13:04,160 Speaker 3: Mister chairman. 241 00:13:04,200 --> 00:13:06,600 Speaker 2: We know that President Trump is paying close attention to 242 00:13:06,679 --> 00:13:08,800 Speaker 2: that lack of an inflationary read through, at least at 243 00:13:08,800 --> 00:13:11,000 Speaker 2: this time from his tariff policy, and he sees that 244 00:13:11,040 --> 00:13:13,760 Speaker 2: as further justification for his view that the Federal Reserve 245 00:13:14,120 --> 00:13:16,079 Speaker 2: should be cutting interest rates right now. 246 00:13:16,080 --> 00:13:18,480 Speaker 3: I'm sure you're aware of the reporting which. 247 00:13:18,280 --> 00:13:20,560 Speaker 2: The President has pushed back on, that he was considering 248 00:13:20,600 --> 00:13:23,440 Speaker 2: firing the chair of the Federal Reserve. Do you believe 249 00:13:23,480 --> 00:13:26,040 Speaker 2: he would have the legal authority to do that, as 250 00:13:26,160 --> 00:13:28,280 Speaker 2: questions over the cost of the renovations to the FED 251 00:13:28,320 --> 00:13:32,120 Speaker 2: buildings here in Washington justification for firing for cause. 252 00:13:33,520 --> 00:13:36,320 Speaker 7: First off, I will tell you I agree with the 253 00:13:36,360 --> 00:13:40,439 Speaker 7: President that interest rates should be cut. Interest rates were 254 00:13:40,559 --> 00:13:44,240 Speaker 7: raised because we went through an inflationary crisis during the 255 00:13:44,240 --> 00:13:47,960 Speaker 7: Biden administration or inflation went up twenty two percent. We 256 00:13:48,040 --> 00:13:52,040 Speaker 7: now have the lowest inflation that we've had in four years, 257 00:13:52,320 --> 00:13:56,000 Speaker 7: but yet they've not reduced one time the interest rates. 258 00:13:56,040 --> 00:13:58,480 Speaker 7: So he has a valid point when you're talking about 259 00:13:58,480 --> 00:14:02,480 Speaker 7: the interest perspective when you look at other heads of 260 00:14:02,520 --> 00:14:07,920 Speaker 7: different agencies, whether it's the IRS. The IRS Commissioner chose 261 00:14:08,000 --> 00:14:12,440 Speaker 7: to step down whenever President President Trump was elected so 262 00:14:12,520 --> 00:14:16,280 Speaker 7: that President Trump could put in place his person. This 263 00:14:16,320 --> 00:14:19,400 Speaker 7: is something that I would consider mister Powell to do. 264 00:14:19,720 --> 00:14:24,680 Speaker 7: He should consider resigning because clearly he's not aligned with 265 00:14:24,880 --> 00:14:27,080 Speaker 7: the President of the United States. Other people's done that 266 00:14:27,120 --> 00:14:30,920 Speaker 7: with the agencies. I think Chairman Powell should consider his 267 00:14:31,080 --> 00:14:32,840 Speaker 7: place in government right now. 268 00:14:34,480 --> 00:14:38,080 Speaker 2: All right, mister chairman, we appreciate you joining US Congressman 269 00:14:38,160 --> 00:14:41,360 Speaker 2: Jason Smith, the Republican representing Missouri, of course and chair 270 00:14:41,400 --> 00:14:43,360 Speaker 2: of the House Ways and Means Committee here with us 271 00:14:43,360 --> 00:14:45,360 Speaker 2: on balance of power. Thank you so much. And that 272 00:14:45,480 --> 00:14:47,680 Speaker 2: is another question, Mike, of course, is not just whether 273 00:14:47,760 --> 00:14:49,600 Speaker 2: or not the chair of the Federal Reserve could end 274 00:14:49,640 --> 00:14:51,840 Speaker 2: up being fired, but whether he could resign under what 275 00:14:51,960 --> 00:14:54,160 Speaker 2: is still immense pressure from not just President Trump but 276 00:14:54,200 --> 00:14:55,440 Speaker 2: others in the administry. 277 00:14:55,040 --> 00:14:56,800 Speaker 5: Even though he has indicated that he would do no 278 00:14:56,920 --> 00:14:59,920 Speaker 5: such thing, and he has tried in every way possible 279 00:15:00,160 --> 00:15:01,840 Speaker 5: to resist that pressure. 280 00:15:01,480 --> 00:15:03,880 Speaker 2: Yep, and has also tried to say repeatedly that there 281 00:15:03,960 --> 00:15:07,440 Speaker 2: is it is not applicable with the law to fire 282 00:15:07,480 --> 00:15:09,400 Speaker 2: the Chair of the Federal Reserve. We'll see whether or 283 00:15:09,400 --> 00:15:11,520 Speaker 2: not we have to actually test that legal theory. We'll 284 00:15:11,520 --> 00:15:13,480 Speaker 2: continue to follow this story here on Balance of Power 285 00:15:13,560 --> 00:15:15,240 Speaker 2: on Bloomberg TV and Radio. 286 00:15:17,440 --> 00:15:20,920 Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch 287 00:15:21,000 --> 00:15:24,040 Speaker 1: us live weekdays at noon and five pm Eastern on 288 00:15:24,160 --> 00:15:27,400 Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business app. 289 00:15:27,440 --> 00:15:30,440 Speaker 1: You can also listen live on Amazon Alexa from our 290 00:15:30,480 --> 00:15:36,560 Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty. 291 00:15:36,480 --> 00:15:40,360 Speaker 2: Kayleie Lines alongside Mike Shephard here in Washingtonday. Welcome Washington Today. 292 00:15:40,400 --> 00:15:43,440 Speaker 2: Welcome back to Balance of Power on Bloomberg TV and Radio, 293 00:15:43,480 --> 00:15:45,760 Speaker 2: where we just spoke with, as Charlie mentioned, the Chair 294 00:15:45,800 --> 00:15:48,640 Speaker 2: of the House Ways and Means Committee, Congressman Jason Smith, 295 00:15:48,640 --> 00:15:51,800 Speaker 2: who yes, said the Chair of the Federal Reserve should 296 00:15:51,840 --> 00:15:54,320 Speaker 2: resign when we asked him about whether or not President 297 00:15:54,400 --> 00:15:58,480 Speaker 2: Trump could legally fire Chairman Powell, whose term is said 298 00:15:58,520 --> 00:16:01,760 Speaker 2: to expire as chairman in May of twenty twenty six. 299 00:16:01,800 --> 00:16:03,720 Speaker 2: But President Trump, of course, in the Oval office, would 300 00:16:03,760 --> 00:16:06,520 Speaker 2: be questioned by reporters about this earlier Today, suggested he's 301 00:16:06,520 --> 00:16:09,160 Speaker 2: not planning to fire him, in part because May twenty 302 00:16:09,160 --> 00:16:11,960 Speaker 2: twenty six isn't all that far away and he soon 303 00:16:12,040 --> 00:16:13,440 Speaker 2: gets to pick POW's replacement. 304 00:16:14,520 --> 00:16:17,160 Speaker 9: We get to make a change in the next what 305 00:16:17,360 --> 00:16:21,520 Speaker 9: eight months or so, and we'll pick somebody that's good, 306 00:16:21,560 --> 00:16:23,600 Speaker 9: and we'll pick somebody. I just want a fair job. 307 00:16:24,200 --> 00:16:26,920 Speaker 9: We want to see lower interest rates. Our country deserves it. 308 00:16:27,840 --> 00:16:29,920 Speaker 9: We're making a lot of money. We're doing great as 309 00:16:29,960 --> 00:16:34,720 Speaker 9: a country who had no inflation record, stock market record, business, 310 00:16:35,480 --> 00:16:38,520 Speaker 9: everything's a record. Now. We had the worst inflation in 311 00:16:38,680 --> 00:16:44,160 Speaker 9: history under Biden, and now we have almost no inflation. 312 00:16:44,760 --> 00:16:47,040 Speaker 9: We've done a great job, and we should have the 313 00:16:47,080 --> 00:16:48,000 Speaker 9: interest rates cut. 314 00:16:50,120 --> 00:16:53,160 Speaker 2: President Trump, perhaps Mike feeling empowered to talk about the 315 00:16:53,240 --> 00:16:55,760 Speaker 2: lack of inflation by the inflation data we got today 316 00:16:55,760 --> 00:16:58,640 Speaker 2: PPI literally zero percent gain. 317 00:16:58,720 --> 00:17:00,520 Speaker 3: Month on month too. 318 00:17:00,600 --> 00:17:02,600 Speaker 5: The CPI, at least at the top level. If you 319 00:17:02,680 --> 00:17:06,240 Speaker 5: drill a little bit lower into actual categories like appliances, 320 00:17:06,280 --> 00:17:09,000 Speaker 5: we are seeing some upward price pressure. But for the 321 00:17:09,000 --> 00:17:12,679 Speaker 5: White House, that top level number and CPI also surely 322 00:17:12,720 --> 00:17:15,159 Speaker 5: gave the President some free reign to talk about cutting 323 00:17:15,200 --> 00:17:18,280 Speaker 5: interest rates, and that's something that's critical to his agenda. 324 00:17:18,480 --> 00:17:20,800 Speaker 5: He wants see mortgage rates go down, and he also 325 00:17:20,840 --> 00:17:23,320 Speaker 5: wants to see the cost of investing for business go 326 00:17:23,480 --> 00:17:26,560 Speaker 5: down too, given all of his interest in having plants 327 00:17:26,600 --> 00:17:27,600 Speaker 5: built across the US. 328 00:17:27,680 --> 00:17:29,840 Speaker 2: Yeah, and that's why President Trump says when he's choosing 329 00:17:29,880 --> 00:17:34,199 Speaker 2: pow'ser placement, he's only interested in low interest people. So 330 00:17:34,440 --> 00:17:37,480 Speaker 2: on that note, let's bring our political panel into the conversation. 331 00:17:37,520 --> 00:17:41,040 Speaker 2: Bloomberg Politics contributors Rick Davis and Jeanie Shanzano are with us. Rick, 332 00:17:41,080 --> 00:17:43,920 Speaker 2: of course, Stone Court Capital partner and Republican strategist. Genie 333 00:17:43,960 --> 00:17:46,840 Speaker 2: Democratic analyst and senior Democracy fellow at the Center for 334 00:17:46,880 --> 00:17:49,359 Speaker 2: the Study of the Presidency and Congress. 335 00:17:49,440 --> 00:17:50,440 Speaker 3: Genie, I wonder. 336 00:17:50,320 --> 00:17:54,800 Speaker 2: How you read into the reasoning President Trump has around 337 00:17:54,840 --> 00:17:57,000 Speaker 2: interest rates that Mike was just referring to. That Actually, 338 00:17:57,080 --> 00:17:58,399 Speaker 2: at the end of the day, what this really is 339 00:17:58,400 --> 00:18:00,879 Speaker 2: about for him, in large part, he says, is about 340 00:18:00,880 --> 00:18:03,360 Speaker 2: the interest burden of the United States making sure those 341 00:18:03,400 --> 00:18:05,840 Speaker 2: payments are lower. Is this the president that maybe is 342 00:18:06,359 --> 00:18:08,440 Speaker 2: a bit more worried about our debt and deficit, knowing 343 00:18:08,480 --> 00:18:11,040 Speaker 2: that his one big, beautiful bill just passed that will 344 00:18:11,040 --> 00:18:11,480 Speaker 2: add to. 345 00:18:11,440 --> 00:18:16,800 Speaker 10: It, Yeah, I don't know of a president, Republican, Democrat, 346 00:18:16,840 --> 00:18:20,639 Speaker 10: anywhere in between who has not wanted lower interest rates. 347 00:18:20,680 --> 00:18:24,040 Speaker 10: So in this way, Donald Trump is perfectly in keeping 348 00:18:24,119 --> 00:18:27,800 Speaker 10: with every not just President probably, but every politician or 349 00:18:27,840 --> 00:18:31,080 Speaker 10: most of them. And sure he is going to be 350 00:18:31,160 --> 00:18:33,960 Speaker 10: concerned about the interest rates. He's going to be concerned 351 00:18:33,960 --> 00:18:37,840 Speaker 10: about debt and deficit because this reflects on him. The 352 00:18:37,960 --> 00:18:41,560 Speaker 10: number one reason he was elected, according to those exit 353 00:18:41,640 --> 00:18:45,199 Speaker 10: bulls in twenty twenty four, was that he promised to 354 00:18:45,280 --> 00:18:49,880 Speaker 10: be able to manage the economy in a way that 355 00:18:50,240 --> 00:18:53,720 Speaker 10: people felt Joe Biden simply wasn't doing that. He was 356 00:18:53,760 --> 00:18:57,960 Speaker 10: a sound manager as a former businessman of the economy. 357 00:18:58,080 --> 00:19:01,600 Speaker 10: And so as he sits here today, six seven months in, 358 00:19:02,000 --> 00:19:05,360 Speaker 10: he knows he owns this economy and interest rates are 359 00:19:05,400 --> 00:19:08,679 Speaker 10: something that we all feel as consumers and voters. So 360 00:19:09,040 --> 00:19:11,240 Speaker 10: it does matter. And we all of course see the 361 00:19:11,280 --> 00:19:14,800 Speaker 10: ticking up of the deficit and that matters as well. 362 00:19:14,920 --> 00:19:17,720 Speaker 10: So he's looking at the same numbers we are voters 363 00:19:17,760 --> 00:19:19,640 Speaker 10: feel it, and so it matters to him. 364 00:19:21,720 --> 00:19:25,000 Speaker 5: Rick when it comes to numbers and what the President 365 00:19:25,119 --> 00:19:27,960 Speaker 5: and his allies in Congress as well are looking at 366 00:19:28,080 --> 00:19:31,199 Speaker 5: how much are they factoring in the market reaction. It 367 00:19:31,280 --> 00:19:34,600 Speaker 5: was quite negative when those reports began to emerge that 368 00:19:34,720 --> 00:19:37,800 Speaker 5: the President had not only floated the idea of firing J. 369 00:19:38,040 --> 00:19:41,440 Speaker 5: Powell in private, but even waved around a letter. We've 370 00:19:41,440 --> 00:19:43,960 Speaker 5: seen those numbers recover a little bit. But how much 371 00:19:43,960 --> 00:19:46,040 Speaker 5: of this is a factor in their thinking. 372 00:19:47,280 --> 00:19:49,720 Speaker 11: Yeah, I think quite different from his first term, where 373 00:19:49,720 --> 00:19:53,919 Speaker 11: he seemed hyper sensitive to market changes, he seems a 374 00:19:53,920 --> 00:19:57,000 Speaker 11: little bit more immune to them in this term. Obviously, 375 00:19:57,080 --> 00:20:00,399 Speaker 11: the biggest crisis he'd had in the market it was 376 00:20:00,400 --> 00:20:02,880 Speaker 11: when he got into a bit of a trade war 377 00:20:02,960 --> 00:20:06,040 Speaker 11: earlier in his administration, and back right off of that, 378 00:20:06,840 --> 00:20:11,359 Speaker 11: yielding US a new acronym taco tariffs and the taco 379 00:20:11,480 --> 00:20:14,760 Speaker 11: trade and and and and so I think he's thinking 380 00:20:14,800 --> 00:20:17,600 Speaker 11: more long term on this. I think you guys are 381 00:20:17,680 --> 00:20:22,359 Speaker 11: absolutely correct that he's got the deficits in his rearview mirror, 382 00:20:22,400 --> 00:20:26,120 Speaker 11: looking at those every day, realizing that these interest rates 383 00:20:26,160 --> 00:20:30,199 Speaker 11: that that that that keep ticking away are not very dynamic. 384 00:20:30,320 --> 00:20:33,960 Speaker 11: They're they're they're very much of a penalty to any administration. 385 00:20:34,160 --> 00:20:36,840 Speaker 11: It runs up the deficit. And that's exactly what he's 386 00:20:36,880 --> 00:20:39,400 Speaker 11: just done with his big Beautiful bill. But the other 387 00:20:39,520 --> 00:20:43,720 Speaker 11: key component to his entire budget strategy is economic growth, 388 00:20:44,160 --> 00:20:47,040 Speaker 11: and he needs these low interest rates for economic growth. 389 00:20:47,119 --> 00:20:51,720 Speaker 11: So maybe less focused on the markets today and much 390 00:20:51,760 --> 00:20:57,000 Speaker 11: more focused on new building development, manufacturing starts, things like 391 00:20:57,080 --> 00:21:00,720 Speaker 11: that that really require lower economic lower interest rates in 392 00:21:00,800 --> 00:21:04,080 Speaker 11: order to create that kind of economic growth, which, of course, 393 00:21:04,160 --> 00:21:08,040 Speaker 11: all his models that he argued for in selling the 394 00:21:08,040 --> 00:21:12,280 Speaker 11: big Beautiful Bill were three and a half four percent GDP. 395 00:21:12,560 --> 00:21:14,679 Speaker 11: He's a long way off of that, and so I 396 00:21:14,680 --> 00:21:17,080 Speaker 11: think that's what's really fuel in his interests here. 397 00:21:18,880 --> 00:21:20,679 Speaker 2: Well, but it doesn't that just speak to the kind 398 00:21:20,720 --> 00:21:22,919 Speaker 2: of catch twenty two for the President Rick where he 399 00:21:23,040 --> 00:21:25,960 Speaker 2: wants juice to grow, or he wants growth to be juced, 400 00:21:25,960 --> 00:21:28,080 Speaker 2: so he wants interest rates lower, knowing growth might take 401 00:21:28,080 --> 00:21:30,560 Speaker 2: a hit ultimately from his tariff policy, depending on the 402 00:21:30,560 --> 00:21:33,240 Speaker 2: extent to which tariffs are actually implemented and for how 403 00:21:33,280 --> 00:21:36,000 Speaker 2: long they stay in place. But it's those very tariffs 404 00:21:36,040 --> 00:21:38,400 Speaker 2: that is keeping the federal reserve on the sidelines for now, 405 00:21:38,480 --> 00:21:41,480 Speaker 2: not wanting to cut interest rates because of infletion. Can't 406 00:21:41,480 --> 00:21:44,639 Speaker 2: we chalk up all of the difficulty he has around 407 00:21:44,680 --> 00:21:47,760 Speaker 2: interest rates to his own policy, not necessarily the FEDS. 408 00:21:48,920 --> 00:21:52,119 Speaker 11: Yeah, I think that this is a massive change. This 409 00:21:52,200 --> 00:21:54,520 Speaker 11: is not a small change. And if you follow sort 410 00:21:54,520 --> 00:21:59,600 Speaker 11: of the Marlago Accord, in the significant alterations of the 411 00:21:59,600 --> 00:22:05,040 Speaker 11: global economic infrastructure that exists today that this administration is pursuing, 412 00:22:05,920 --> 00:22:08,240 Speaker 11: there's a lot of friction, and I think this is 413 00:22:08,240 --> 00:22:10,880 Speaker 11: the kind of friction you're seeing happen right now on 414 00:22:10,920 --> 00:22:13,240 Speaker 11: these issues. You know, could he get the Fed to 415 00:22:13,280 --> 00:22:16,959 Speaker 11: move more quickly if there weren't pressures on prices because 416 00:22:17,000 --> 00:22:21,600 Speaker 11: of tariffs. Absolutely, But he needs those tariffs to generate 417 00:22:21,680 --> 00:22:25,159 Speaker 11: revenue in order to reset the financial relationships. And of 418 00:22:25,160 --> 00:22:29,240 Speaker 11: course one of the fundamental aspects of his realignment economically 419 00:22:29,680 --> 00:22:32,679 Speaker 11: is getting down the trade deficits, and so you know, 420 00:22:32,800 --> 00:22:35,240 Speaker 11: he's not going to give that up. What he wants 421 00:22:35,280 --> 00:22:37,359 Speaker 11: to do is get rid of Jerome Powell. 422 00:22:39,160 --> 00:22:40,800 Speaker 5: Genie, it's been very hard to keep up with a 423 00:22:40,840 --> 00:22:44,159 Speaker 5: fast moving pace of everything that is happening here with Trump, 424 00:22:44,200 --> 00:22:47,840 Speaker 5: from j Powell to tariffs. How do Democrats keep up 425 00:22:47,880 --> 00:22:51,000 Speaker 5: with this? And can they form a coherent argument around 426 00:22:51,040 --> 00:22:53,600 Speaker 5: the economy that packages all of this together. 427 00:22:55,480 --> 00:22:58,200 Speaker 10: Yeah, they're going to try now, Mike, I always say 428 00:22:58,280 --> 00:23:01,919 Speaker 10: Democrats and forming a co cohesive sort of narrative to 429 00:23:02,000 --> 00:23:04,919 Speaker 10: sell it an election. It's something like an oxymoron. It 430 00:23:04,960 --> 00:23:07,840 Speaker 10: doesn't work so well all the time. But given the 431 00:23:07,880 --> 00:23:10,879 Speaker 10: big beautiful bill, they should be able to do that. 432 00:23:11,560 --> 00:23:15,439 Speaker 10: And you know what's working against them are things like 433 00:23:15,760 --> 00:23:20,600 Speaker 10: Mumdani's potential election in New York City. But putting that aside, 434 00:23:21,040 --> 00:23:24,280 Speaker 10: they are going to be arguing, number one, about healthcare 435 00:23:24,440 --> 00:23:26,960 Speaker 10: and the impact of this big beautiful bill on healthcare, 436 00:23:27,320 --> 00:23:31,159 Speaker 10: the impact of inflation we've seen that tick up, the 437 00:23:31,400 --> 00:23:35,600 Speaker 10: impact of debt and deficits on their children, their grandchildren. 438 00:23:35,880 --> 00:23:38,600 Speaker 10: But I think most important to make the case that 439 00:23:38,680 --> 00:23:42,159 Speaker 10: Donald Trump is doing the bidding of the billionaires and 440 00:23:42,600 --> 00:23:45,960 Speaker 10: he the very wealthy, and he is leaving aside the 441 00:23:46,040 --> 00:23:48,639 Speaker 10: people he claims to care most about, the working in 442 00:23:48,680 --> 00:23:52,040 Speaker 10: the middle class, who bear the brunt of all of this, including, 443 00:23:52,119 --> 00:23:54,600 Speaker 10: by the way, on his tariffs. I know his talk 444 00:23:54,640 --> 00:23:58,440 Speaker 10: about tariffs as always they meaning the other country will 445 00:23:58,480 --> 00:24:02,240 Speaker 10: pay nineteen percent in the case of Indonesia. The fact 446 00:24:02,359 --> 00:24:05,520 Speaker 10: is Americans at home will bear the brunt of that, 447 00:24:05,680 --> 00:24:08,480 Speaker 10: and it is a regressive tax. So Democrats have to 448 00:24:08,520 --> 00:24:09,640 Speaker 10: make that case. 449 00:24:11,080 --> 00:24:11,399 Speaker 7: All right. 450 00:24:11,520 --> 00:24:14,280 Speaker 2: Jeanie Schanzeno and Rick Davis our political panel here on 451 00:24:14,400 --> 00:24:17,600 Speaker 2: balance of power, both of them, Bloomberg Politics contributors, thanks 452 00:24:17,600 --> 00:24:18,960 Speaker 2: for being with us as always. 453 00:24:18,720 --> 00:24:20,480 Speaker 3: Here on Bloomberg TV and Radio. 454 00:24:20,520 --> 00:24:22,240 Speaker 2: And we want to go live now here on Bloomberg 455 00:24:22,280 --> 00:24:24,240 Speaker 2: to the North lawn of the White House, where we 456 00:24:24,240 --> 00:24:28,000 Speaker 2: find Bloomberg's chief political correspondent, Anne Marie hor Dern, having 457 00:24:28,119 --> 00:24:30,080 Speaker 2: just been in the Oval Office with President Trump and 458 00:24:30,119 --> 00:24:32,879 Speaker 2: having the chance to question him about his intentions with 459 00:24:32,960 --> 00:24:35,760 Speaker 2: the Chair of the Federal Reserve. So, Anne Marie, obviously 460 00:24:35,800 --> 00:24:37,520 Speaker 2: some pushback to today's earlier reporting. 461 00:24:38,280 --> 00:24:40,040 Speaker 12: Yeah, a lot of pushback from the President in the 462 00:24:40,040 --> 00:24:42,639 Speaker 12: Oval Office. He talked about the fact that he is 463 00:24:42,680 --> 00:24:44,840 Speaker 12: not looking or planning to fire J. 464 00:24:45,040 --> 00:24:45,440 Speaker 3: Powell. 465 00:24:45,440 --> 00:24:48,320 Speaker 12: When I asked him about this draft letter, did he 466 00:24:48,359 --> 00:24:50,680 Speaker 12: write it? Did he wave it in front of congressional 467 00:24:50,800 --> 00:24:53,480 Speaker 12: Republicans at this dinner last night? He said, no, there 468 00:24:53,520 --> 00:24:56,800 Speaker 12: is no letter. He discussed the quote concept of the 469 00:24:56,920 --> 00:25:01,080 Speaker 12: idea of firing the FED chair. He actually said that lawmakers, 470 00:25:01,160 --> 00:25:03,199 Speaker 12: most of them are really in favor of it, but 471 00:25:03,320 --> 00:25:06,720 Speaker 12: he said he is more conservative than they are, so 472 00:25:06,760 --> 00:25:09,479 Speaker 12: he pushed back on this notion. But he continued, of 473 00:25:09,480 --> 00:25:12,680 Speaker 12: course to bring up his gripes with Fedchair J. Powell, 474 00:25:13,400 --> 00:25:16,080 Speaker 12: one of course being the fact that he thinks the 475 00:25:16,119 --> 00:25:18,719 Speaker 12: FED should be lowering interest rates and we have not 476 00:25:18,760 --> 00:25:21,040 Speaker 12: seen the Fed do that, of course since last year 477 00:25:21,080 --> 00:25:24,080 Speaker 12: before the election, and now this new one that you've 478 00:25:24,080 --> 00:25:26,959 Speaker 12: seen a lot of administrative officials really start to push 479 00:25:27,040 --> 00:25:30,080 Speaker 12: going after the FED Chair for the renovations that are 480 00:25:30,480 --> 00:25:33,760 Speaker 12: taking place at the Federal Reserve building. So he kept 481 00:25:33,760 --> 00:25:35,879 Speaker 12: those talking points, but he made it pretty clear that 482 00:25:35,960 --> 00:25:38,439 Speaker 12: at this moment he has no plans to fire the 483 00:25:38,440 --> 00:25:41,280 Speaker 12: FED Chair, which of course would open up a huge 484 00:25:41,400 --> 00:25:45,560 Speaker 12: legal battle because this would be a president in American history. 485 00:25:47,040 --> 00:25:49,879 Speaker 5: Emory, are you getting a sense that that whole question 486 00:25:49,920 --> 00:25:52,400 Speaker 5: of the renovation of the FED headquarters is emerging as 487 00:25:52,440 --> 00:25:56,880 Speaker 5: a coherent means of arguing for and justifying the FED 488 00:25:57,000 --> 00:25:57,720 Speaker 5: Chair's exit. 489 00:25:58,880 --> 00:26:01,400 Speaker 12: Well, they definitely are looking into it, and even within 490 00:26:01,440 --> 00:26:03,560 Speaker 12: the FED, we do know that the FED Chair J. 491 00:26:03,800 --> 00:26:09,760 Speaker 12: Powell is asking questions about it. How did the renovations 492 00:26:10,280 --> 00:26:13,119 Speaker 12: become over budget, etc. So he clearly wants to make 493 00:26:13,160 --> 00:26:16,000 Speaker 12: sure that he has the answers if there are those questions. 494 00:26:16,000 --> 00:26:18,720 Speaker 12: But this seems to be a new line of attack 495 00:26:18,960 --> 00:26:22,639 Speaker 12: on the FED. But the President continues to go after 496 00:26:22,960 --> 00:26:26,120 Speaker 12: what for him is the biggest problem, which is where 497 00:26:26,119 --> 00:26:28,600 Speaker 12: interest rates are right now, and he wants to see 498 00:26:28,600 --> 00:26:32,479 Speaker 12: them lower. Of course, a lot of economists on Wall Street, 499 00:26:32,760 --> 00:26:35,600 Speaker 12: even ones that are sympathetic to the President's view, like 500 00:26:35,680 --> 00:26:38,480 Speaker 12: Neil Dutta of Renmack, who says the Fed should be 501 00:26:38,520 --> 00:26:41,560 Speaker 12: lowering interest rates, said, if you were to file fire him, 502 00:26:41,880 --> 00:26:43,879 Speaker 12: it'll have the exact effect in the market that the 503 00:26:43,880 --> 00:26:45,320 Speaker 12: president's looking for. 504 00:26:46,680 --> 00:26:49,040 Speaker 2: Yeah, well, it all comes down to the behavior of 505 00:26:49,080 --> 00:26:51,080 Speaker 2: the bond market. I guess at the end of the day, 506 00:26:51,320 --> 00:26:53,280 Speaker 2: Annrie Horder and live at the White House for us, 507 00:26:53,520 --> 00:26:55,720 Speaker 2: thank you so much for being here on Balance of Power, 508 00:26:55,760 --> 00:26:56,960 Speaker 2: and we'll have more straight ahead. 509 00:26:56,960 --> 00:26:58,560 Speaker 3: I'm Kaylee Lions alongside Mike. 510 00:26:58,440 --> 00:27:03,680 Speaker 2: Shephard right here on Bloomberg TV and Radio. 511 00:27:04,480 --> 00:27:07,960 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 512 00:27:08,040 --> 00:27:11,480 Speaker 1: us live weekdays at noon and five pm Eastern on Apple, 513 00:27:11,520 --> 00:27:14,879 Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. Listen 514 00:27:14,960 --> 00:27:18,080 Speaker 1: on demand wherever you get your podcasts, or watch us 515 00:27:18,119 --> 00:27:19,840 Speaker 1: live on YouTube. 516 00:27:20,680 --> 00:27:24,280 Speaker 2: Both Wall Street and Washington paying attention to the narrative 517 00:27:24,320 --> 00:27:26,760 Speaker 2: around the Fed chair Jerom Howell with Equal Interest today 518 00:27:26,760 --> 00:27:29,640 Speaker 2: as President Trump again, as we've told you repeatedly this hour, 519 00:27:29,720 --> 00:27:32,560 Speaker 2: has said he is not planning on firing the FED chairman, 520 00:27:33,000 --> 00:27:36,320 Speaker 2: but he still is unsatisfied with the chair's performance and 521 00:27:36,400 --> 00:27:38,000 Speaker 2: with the current state of interest rates. 522 00:27:37,800 --> 00:27:39,639 Speaker 3: Which he wants to see lower. 523 00:27:39,680 --> 00:27:41,200 Speaker 2: In the face of what he said in the Oval 524 00:27:41,200 --> 00:27:45,040 Speaker 2: Office today, Mike is quote no inflation, and at least 525 00:27:45,080 --> 00:27:45,600 Speaker 2: looking at the. 526 00:27:45,520 --> 00:27:48,320 Speaker 3: PPI data that we got today, you could see. 527 00:27:48,160 --> 00:27:50,320 Speaker 2: How that technically might be true, at least in this 528 00:27:50,359 --> 00:27:54,960 Speaker 2: particular instance, is both PPI on the headline and Core 529 00:27:54,960 --> 00:27:58,119 Speaker 2: exiting out food and energy month on month rose zero percent. 530 00:27:58,240 --> 00:28:00,680 Speaker 5: It would be a very favorable reading for the President 531 00:28:00,760 --> 00:28:02,600 Speaker 5: and his point of view, but it's only one month, 532 00:28:02,920 --> 00:28:05,439 Speaker 5: and the trend is something that Scott Bessett yesterday had 533 00:28:05,480 --> 00:28:09,399 Speaker 5: pointed to before the CPI numbers came out. And what 534 00:28:09,480 --> 00:28:12,560 Speaker 5: was interesting in our conversation with Stuart Paul earlier today 535 00:28:13,000 --> 00:28:15,399 Speaker 5: is that he dug through the numbers a little bit 536 00:28:15,400 --> 00:28:18,680 Speaker 5: more deeply infants and increases in appliances and other goods 537 00:28:19,040 --> 00:28:21,840 Speaker 5: that suggest that yes, tarris are actually starting to have 538 00:28:21,880 --> 00:28:25,200 Speaker 5: an effect at that level where consumers and yes, voters 539 00:28:25,200 --> 00:28:26,800 Speaker 5: too could start seeing. 540 00:28:26,760 --> 00:28:28,760 Speaker 3: You know who else digs through the inflation numbers. 541 00:28:28,920 --> 00:28:32,320 Speaker 2: Michael McKee, Bloomberg's International economics and Policy correspondent, and he's 542 00:28:32,400 --> 00:28:35,720 Speaker 2: joining us now here on balance of power. So Mike, 543 00:28:36,320 --> 00:28:39,080 Speaker 2: to the point that Mike Shepherd was just making about 544 00:28:39,080 --> 00:28:41,800 Speaker 2: it being was actually underneath the surface of the data 545 00:28:42,000 --> 00:28:45,640 Speaker 2: that ultimately matters when you look underneath. It's not necessarily 546 00:28:45,680 --> 00:28:49,040 Speaker 2: true that we see no inflation, as President Trump suggests. 547 00:28:50,640 --> 00:28:53,400 Speaker 6: That's right, Kayleie. What we saw was a drop in 548 00:28:53,560 --> 00:28:58,000 Speaker 6: service industry inflation in the PPI that was strong enough 549 00:28:58,000 --> 00:29:00,760 Speaker 6: because it's a service industry economy to push down the 550 00:29:00,840 --> 00:29:03,400 Speaker 6: overall number or to keep it flat rather which on 551 00:29:03,440 --> 00:29:06,880 Speaker 6: a year over year basis brought down the PPI inflation numbers, 552 00:29:07,240 --> 00:29:11,800 Speaker 6: but the goods inflation went up, and we saw goods 553 00:29:11,840 --> 00:29:15,000 Speaker 6: prices rise on a number of areas that are tariffed. 554 00:29:15,600 --> 00:29:17,959 Speaker 6: So for the FED, they're going to be looking at 555 00:29:17,960 --> 00:29:21,160 Speaker 6: this and saying there's evidence that tariffs are going to 556 00:29:21,160 --> 00:29:23,640 Speaker 6: bleed through into the economy and they are going to 557 00:29:23,680 --> 00:29:27,239 Speaker 6: cause prices to go up. I go back to what 558 00:29:27,320 --> 00:29:30,240 Speaker 6: Mike just said about it's only one month, so the 559 00:29:30,280 --> 00:29:31,960 Speaker 6: Fed's going to want to make sure that this is 560 00:29:32,000 --> 00:29:35,880 Speaker 6: a continuing pattern and it could get worse before they 561 00:29:35,960 --> 00:29:40,280 Speaker 6: do anything. So even though this would make the case 562 00:29:40,320 --> 00:29:43,640 Speaker 6: to somebody who didn't understand economics, like perhaps the person 563 00:29:43,680 --> 00:29:46,040 Speaker 6: in the Oval office, it's not going to make the 564 00:29:46,080 --> 00:29:49,520 Speaker 6: case for the FED. And so I suspect that the 565 00:29:49,520 --> 00:29:52,640 Speaker 6: President is going to be disappointed at the July meeting, 566 00:29:52,680 --> 00:29:55,720 Speaker 6: even if the numbers suggest that inflation is somewhat tame. 567 00:29:57,600 --> 00:30:00,840 Speaker 5: Now, the FED chair has insisted that the law backs 568 00:30:00,920 --> 00:30:04,920 Speaker 5: him up and staying in his role, but he is 569 00:30:05,040 --> 00:30:09,720 Speaker 5: under significant pressure from the administration to maybe move on, 570 00:30:09,920 --> 00:30:12,560 Speaker 5: and perhaps move on once his term ends and leave 571 00:30:12,600 --> 00:30:14,880 Speaker 5: the board. Do you see or get a sense that 572 00:30:14,960 --> 00:30:18,160 Speaker 5: he may decide to stay on after all once he 573 00:30:18,240 --> 00:30:19,400 Speaker 5: leaves his role as chair. 574 00:30:20,960 --> 00:30:24,000 Speaker 6: There's sort of a unanimous feeling, Mike among the people 575 00:30:24,000 --> 00:30:26,560 Speaker 6: I've talked to, both at the FED and the economics profession, 576 00:30:26,560 --> 00:30:29,560 Speaker 6: that the only reason Powell would stay on after the 577 00:30:29,680 --> 00:30:32,719 Speaker 6: end of his chairman's term is if he worried about 578 00:30:32,760 --> 00:30:35,440 Speaker 6: the FED as an institution. If the President put in 579 00:30:35,480 --> 00:30:38,560 Speaker 6: somebody who was going to be a bullet and china 580 00:30:38,560 --> 00:30:42,440 Speaker 6: shop and take away credibility from the FED, he might 581 00:30:42,520 --> 00:30:45,080 Speaker 6: try to stay on. But even he knows that that 582 00:30:45,120 --> 00:30:48,840 Speaker 6: would cause problems for the overall FED, because in essence, 583 00:30:48,880 --> 00:30:51,520 Speaker 6: you'd have two FED chairs. You'd have somebody the President 584 00:30:51,560 --> 00:30:54,040 Speaker 6: appointed whom the markets may not want to listen to, 585 00:30:54,760 --> 00:30:57,120 Speaker 6: and then you'd have Jay Powell, whom the markets are 586 00:30:57,200 --> 00:31:00,360 Speaker 6: used to listening to. And if the new chair said something, 587 00:31:00,400 --> 00:31:03,880 Speaker 6: Powell could contradict it, and that would really throw markets 588 00:31:03,880 --> 00:31:07,280 Speaker 6: for a loop. So it would be difficult for the 589 00:31:07,280 --> 00:31:10,000 Speaker 6: Fed if that happened. But if he thought it was 590 00:31:10,040 --> 00:31:12,600 Speaker 6: a bad enough situation, he might do that. And I 591 00:31:12,640 --> 00:31:15,720 Speaker 6: think that's why he's not saying he's going to leave. 592 00:31:16,000 --> 00:31:18,520 Speaker 6: He's trying to use that as a bit of leverage 593 00:31:18,560 --> 00:31:22,280 Speaker 6: on the White House to keep them from going too far. 594 00:31:24,120 --> 00:31:27,400 Speaker 2: Well, as we consider how the markets view all of this, Mike, 595 00:31:27,440 --> 00:31:29,840 Speaker 2: it ultimately is the bond market that will dictate the 596 00:31:29,880 --> 00:31:32,800 Speaker 2: interest rates that are actually paid on things like our 597 00:31:32,960 --> 00:31:35,480 Speaker 2: national debt, which President Trump said in the Oval Office 598 00:31:35,520 --> 00:31:38,160 Speaker 2: once again, is really his issue with where the FED 599 00:31:38,160 --> 00:31:38,840 Speaker 2: funds rate is. 600 00:31:38,920 --> 00:31:41,280 Speaker 3: Right now, let's remind ourselves what Trump said earlier. 601 00:31:42,080 --> 00:31:44,640 Speaker 9: He's not doing the right job. We should be saving 602 00:31:44,640 --> 00:31:46,520 Speaker 9: a trillion dollars a year an interest you know, when 603 00:31:46,520 --> 00:31:49,320 Speaker 9: he talks about costs. We should be saving think of it, 604 00:31:49,360 --> 00:31:51,800 Speaker 9: a trillion dollars a year, add that with the tariffs 605 00:31:51,800 --> 00:31:56,280 Speaker 9: and everything else. But he just doesn't want he's a knucklehead. 606 00:31:58,120 --> 00:32:01,080 Speaker 2: I'll leave the knucklehead comment aside for now, Mike. But 607 00:32:01,120 --> 00:32:03,239 Speaker 2: if ultimately the objective here is to make sure that 608 00:32:03,800 --> 00:32:06,560 Speaker 2: rates come down to the credibility point that you were 609 00:32:06,600 --> 00:32:08,800 Speaker 2: just making, isn't there a chance that even if the 610 00:32:08,800 --> 00:32:10,680 Speaker 2: President were to get what he wants, either through a 611 00:32:10,720 --> 00:32:14,240 Speaker 2: new chairman or the FED actually cutting rates under pressure, 612 00:32:14,520 --> 00:32:16,880 Speaker 2: then its credibility is a problem. The bond market doesn't 613 00:32:16,880 --> 00:32:19,480 Speaker 2: buy it, and it doesn't actually change the amount we 614 00:32:19,520 --> 00:32:21,840 Speaker 2: have to pay an interest or makes it higher. 615 00:32:22,680 --> 00:32:26,160 Speaker 6: Yeah. Absolutely, that's the base case for the opponents of 616 00:32:26,200 --> 00:32:28,840 Speaker 6: all of this is that the president isn't going to 617 00:32:28,840 --> 00:32:30,920 Speaker 6: get what he wants because while the Fed can lower 618 00:32:31,240 --> 00:32:35,960 Speaker 6: short end rates, they can't affect long end rates. That's 619 00:32:36,080 --> 00:32:38,200 Speaker 6: the province of the markets, and the markets are going 620 00:32:38,240 --> 00:32:41,600 Speaker 6: to decide whether they think there's a possible inflation problem 621 00:32:41,680 --> 00:32:45,040 Speaker 6: or whether they think that there's a debt problem, and 622 00:32:45,080 --> 00:32:47,480 Speaker 6: they're going to react to it. So odds are that 623 00:32:47,640 --> 00:32:51,440 Speaker 6: if the president put in a toady who basically tried 624 00:32:51,440 --> 00:32:54,480 Speaker 6: to force through a rate cut, markets would send rates 625 00:32:54,600 --> 00:32:58,360 Speaker 6: much higher. And that's another reason people just don't understand 626 00:32:58,360 --> 00:33:03,320 Speaker 6: what the president's problem is here, because his strategy for 627 00:33:03,360 --> 00:33:06,520 Speaker 6: getting lower interest rates is kind of the opposite of 628 00:33:06,600 --> 00:33:07,400 Speaker 6: what you need to do. 629 00:33:10,440 --> 00:33:14,320 Speaker 2: Indeed, it is Michael McKee, Bloomberg International Economics and Policy Correspondent, 630 00:33:14,680 --> 00:33:17,400 Speaker 2: Thank you so much. And as we watch this here 631 00:33:17,440 --> 00:33:19,840 Speaker 2: at Bloomberg, as Wall Street watches this, we know Capitol 632 00:33:19,920 --> 00:33:21,760 Speaker 2: Hill is watching this as well, and people who used 633 00:33:21,800 --> 00:33:22,840 Speaker 2: to spend. 634 00:33:22,640 --> 00:33:24,560 Speaker 5: A lot of time on the Hill, well, that's right, Kayley. 635 00:33:24,640 --> 00:33:27,920 Speaker 5: And we're joined now by Patrick McHenry. He is the 636 00:33:27,920 --> 00:33:31,360 Speaker 5: former chair of the House Financial Services Committee and former 637 00:33:31,440 --> 00:33:36,520 Speaker 5: Speaker pro tempore and a Bloomberg contributor. Char McHenry, it's 638 00:33:36,560 --> 00:33:39,160 Speaker 5: so glad to have We're so glad to have you 639 00:33:39,240 --> 00:33:43,360 Speaker 5: with us today. You have to be watching this fed 640 00:33:43,440 --> 00:33:47,440 Speaker 5: drama unfold today with a certain amount of, I don't know, 641 00:33:47,640 --> 00:33:52,280 Speaker 5: nostalgia or maybe an insider's appreciation of what is going 642 00:33:52,320 --> 00:33:55,800 Speaker 5: on now. Is it your sense that the president actually 643 00:33:55,840 --> 00:33:59,600 Speaker 5: is serious about what he said to lawmakers behind closed 644 00:33:59,600 --> 00:34:02,600 Speaker 5: doors last night, or is he more serious about what 645 00:34:02,720 --> 00:34:05,280 Speaker 5: he said in public today at the White House. 646 00:34:06,240 --> 00:34:09,279 Speaker 13: Well, both things can be true. What this president has 647 00:34:09,320 --> 00:34:11,120 Speaker 13: been very clear about is that he doesn't like the 648 00:34:11,120 --> 00:34:14,440 Speaker 13: interest rate policy of the Federal Reserve. He puts that 649 00:34:14,640 --> 00:34:19,879 Speaker 13: fully on the chair of the Federal Reserve. So there 650 00:34:19,880 --> 00:34:22,719 Speaker 13: are two things that can be true at once. One 651 00:34:22,840 --> 00:34:28,400 Speaker 13: is that he doesn't like Howell's approach to rates being 652 00:34:28,840 --> 00:34:33,160 Speaker 13: too late at the beginning of COVID and thinks that 653 00:34:33,719 --> 00:34:38,640 Speaker 13: our rates should come down now, and then the second 654 00:34:38,719 --> 00:34:41,880 Speaker 13: part is to see that The second part is that 655 00:34:41,920 --> 00:34:46,600 Speaker 13: the Open Markets Committee is dominated by Biden appointees. So 656 00:34:46,680 --> 00:34:49,120 Speaker 13: even if you remove the FED Chair, you still have 657 00:34:49,200 --> 00:34:52,400 Speaker 13: an Open Markets Committee that has a different view than 658 00:34:52,440 --> 00:34:56,240 Speaker 13: the President does. And you're talking about the FED chair's 659 00:34:56,719 --> 00:34:59,239 Speaker 13: term of office ending at the beginning of next year. 660 00:35:00,160 --> 00:35:03,160 Speaker 13: I think what we're seeing today as the President highlighting 661 00:35:03,160 --> 00:35:06,440 Speaker 13: the fact that inflation has come way down, that the 662 00:35:06,480 --> 00:35:11,160 Speaker 13: tariffs haven't had a dramatic negative impact on inflation counter 663 00:35:11,200 --> 00:35:14,920 Speaker 13: to expectations, and is trying to drive his economic message 664 00:35:14,960 --> 00:35:17,960 Speaker 13: in light of what we know is in the inflation 665 00:35:18,160 --> 00:35:21,759 Speaker 13: print this morning. So all these things are complicated and 666 00:35:22,160 --> 00:35:24,880 Speaker 13: there's a lot going on here, but the key message 667 00:35:24,880 --> 00:35:27,560 Speaker 13: that the president's trying to drive is an economic one, 668 00:35:28,440 --> 00:35:31,080 Speaker 13: not a personnel conversation. 669 00:35:33,480 --> 00:35:35,600 Speaker 2: Well, I'd like to ask you about a separate live 670 00:35:35,680 --> 00:35:38,799 Speaker 2: conversation happening as we speak, mister Chairman on Capitol Hill 671 00:35:38,880 --> 00:35:41,160 Speaker 2: right now is the House is moving toward reconsidering the 672 00:35:41,239 --> 00:35:44,319 Speaker 2: rule that failed yesterday, a procedural hurdle to advance three 673 00:35:44,320 --> 00:35:47,959 Speaker 2: different pieces of crypto legislation as part of Crypto Week. 674 00:35:48,000 --> 00:35:50,120 Speaker 2: The rule that failed yesterday was because of a handful 675 00:35:50,160 --> 00:35:52,600 Speaker 2: of lawmakers who actually convened with the President at the 676 00:35:52,600 --> 00:35:56,280 Speaker 2: White House last night, meeting which the President emerged from 677 00:35:56,600 --> 00:35:58,839 Speaker 2: saying we have a deal. They're now going to vote 678 00:35:58,880 --> 00:36:01,280 Speaker 2: to pass the rule, and the chair of the Freedom Caucus, 679 00:36:01,600 --> 00:36:04,600 Speaker 2: Andy Harris, confirmed that on XTS a few minutes ago 680 00:36:04,680 --> 00:36:07,600 Speaker 2: that they will be voting in favor of the rule today. 681 00:36:07,840 --> 00:36:10,680 Speaker 2: When do we break out of this pattern of people 682 00:36:10,760 --> 00:36:14,520 Speaker 2: voting no initially President Trump stepping in and they ultimately 683 00:36:14,560 --> 00:36:15,960 Speaker 2: decide to change their minds. 684 00:36:16,000 --> 00:36:17,399 Speaker 3: What's the point of the exercise? 685 00:36:19,840 --> 00:36:22,719 Speaker 13: That is the point of the exercise, which is I'm 686 00:36:22,760 --> 00:36:26,120 Speaker 13: going to stop your again to President Trump, You're going 687 00:36:26,200 --> 00:36:29,239 Speaker 13: to bring me to the Oval Office. I will say 688 00:36:29,239 --> 00:36:31,680 Speaker 13: to you, I love you and I didn't want to 689 00:36:31,760 --> 00:36:35,719 Speaker 13: hurt you. Give me assurances about some extraneous random thing 690 00:36:36,360 --> 00:36:38,880 Speaker 13: and then they vote yes. So what they want is 691 00:36:38,880 --> 00:36:41,480 Speaker 13: the attention and love of the sun, the moon, and 692 00:36:41,560 --> 00:36:44,640 Speaker 13: the stars. And right now in the Republican ecosystem, that 693 00:36:44,760 --> 00:36:47,759 Speaker 13: is in the person of Donald J. Trump, who controls 694 00:36:47,840 --> 00:36:52,560 Speaker 13: this party. Unlike any other politician and modern American history, 695 00:36:53,040 --> 00:36:57,560 Speaker 13: he has control over his party and thereby the policy 696 00:36:57,560 --> 00:37:00,560 Speaker 13: making on Capitol Hill. So it is a messy way 697 00:37:00,560 --> 00:37:04,640 Speaker 13: to do it. It is very embarrassing for congressional leadership 698 00:37:04,680 --> 00:37:06,799 Speaker 13: to have to send members over to the White House 699 00:37:06,840 --> 00:37:10,080 Speaker 13: for the President to close them again. But that's the 700 00:37:10,120 --> 00:37:13,760 Speaker 13: process that we're going through. And inevitably, what they've shown 701 00:37:14,160 --> 00:37:17,640 Speaker 13: with policymakers on Capitol Hill have shown, especially the Freedom Caucus, 702 00:37:18,000 --> 00:37:20,759 Speaker 13: is that they will cave, they will fold, and they 703 00:37:21,000 --> 00:37:23,840 Speaker 13: must do that in the person in the room with 704 00:37:23,960 --> 00:37:26,640 Speaker 13: the person of Donald Trump. But they will inevitably fold 705 00:37:27,000 --> 00:37:30,160 Speaker 13: for no change in policy. And that's what's happening once 706 00:37:30,200 --> 00:37:34,480 Speaker 13: again with Crypto that happened on reconciliation. It's happened probably 707 00:37:34,520 --> 00:37:37,440 Speaker 13: a half dozen times so far this legislate year and 708 00:37:37,520 --> 00:37:38,279 Speaker 13: will continue. 709 00:37:39,960 --> 00:37:40,120 Speaker 8: Cherr. 710 00:37:40,200 --> 00:37:43,280 Speaker 5: McHenry, Is your sense then that this actually gets through 711 00:37:43,480 --> 00:37:46,440 Speaker 5: this week? Do we actually see crypto week ending in 712 00:37:46,520 --> 00:37:49,040 Speaker 5: this victory lab for crypto advocates. 713 00:37:50,120 --> 00:37:53,279 Speaker 13: Yes we do. We see a bipartisan vote for the 714 00:37:53,280 --> 00:37:56,839 Speaker 13: stable Coin bill, a genius act, and we see less 715 00:37:56,880 --> 00:37:59,840 Speaker 13: of a bipartison vote because of the maneuvers of the 716 00:38:00,040 --> 00:38:04,400 Speaker 13: Ridom Caucus for the Market Structure Bill, which brings clarity 717 00:38:04,480 --> 00:38:08,600 Speaker 13: to ninety three percent of the crypto marketplace. And that's 718 00:38:08,640 --> 00:38:12,480 Speaker 13: the bigger bill that we'll have to come later. But 719 00:38:12,520 --> 00:38:16,200 Speaker 13: the stable coin regime will have a nice bipartisan vote 720 00:38:16,200 --> 00:38:20,040 Speaker 13: this week, which will show that crypto does have massive 721 00:38:20,040 --> 00:38:22,719 Speaker 13: power within both of the parties, much more so in 722 00:38:22,760 --> 00:38:25,759 Speaker 13: the Republican Party than the Democratic Party, but a significant 723 00:38:25,760 --> 00:38:28,200 Speaker 13: group within the Democratic Party or pro crypto. 724 00:38:29,480 --> 00:38:32,000 Speaker 5: Well's follow up chair McHenry, how much more work does 725 00:38:32,080 --> 00:38:34,640 Speaker 5: need to be done on that Market Structure bill to 726 00:38:34,800 --> 00:38:36,840 Speaker 5: get it through, to win the support it needs. 727 00:38:37,680 --> 00:38:40,640 Speaker 13: Well, my colleagues and I worked very hard for the 728 00:38:40,760 --> 00:38:44,359 Speaker 13: last five years on crypto in the House of Representatives, 729 00:38:44,719 --> 00:38:47,600 Speaker 13: and so we've got a pretty well baked approach of 730 00:38:47,680 --> 00:38:50,440 Speaker 13: policymakers on both sides of the isle who are engaged 731 00:38:50,480 --> 00:38:54,400 Speaker 13: in policy making. That's a smaller group, but they are 732 00:38:55,040 --> 00:38:57,360 Speaker 13: well versed in the set of policies that are in 733 00:38:57,400 --> 00:39:01,120 Speaker 13: the Clarity Act or last Congress called Fit twenty one, 734 00:39:01,680 --> 00:39:04,120 Speaker 13: that is the Market Structure Bill that brings clarity to 735 00:39:04,320 --> 00:39:07,400 Speaker 13: commodities and securities and defines a digital asset and a 736 00:39:07,440 --> 00:39:11,040 Speaker 13: means of exchange. So House members are much further along 737 00:39:11,080 --> 00:39:13,680 Speaker 13: on this than Senate members, and so the Senate is 738 00:39:13,680 --> 00:39:16,120 Speaker 13: going to have to take a lot of time to 739 00:39:16,160 --> 00:39:19,759 Speaker 13: actually understand this policy, the trade offs, to go through 740 00:39:19,760 --> 00:39:22,600 Speaker 13: this and then go through the stages of grief before 741 00:39:22,640 --> 00:39:26,000 Speaker 13: they can get to actually voting on a market structure bill. 742 00:39:26,160 --> 00:39:28,719 Speaker 13: Hopefully that happens this fall, but it should, it's going 743 00:39:28,760 --> 00:39:31,239 Speaker 13: to take longer than expectations. Unfortunately. 744 00:39:32,360 --> 00:39:34,319 Speaker 2: Well, mister Chairman, we just have a minute left. Is 745 00:39:34,320 --> 00:39:36,799 Speaker 2: that effort in the Senate, knowing it would require democratic 746 00:39:36,840 --> 00:39:39,759 Speaker 2: buy in potentially disrupted by a recisions vote we could 747 00:39:39,800 --> 00:39:44,000 Speaker 2: see later today or tomorrow that Democrats obviously don't want 748 00:39:44,040 --> 00:39:47,280 Speaker 2: to see. Do you see that disrupting potentially the appropriations 749 00:39:47,280 --> 00:39:50,040 Speaker 2: process and any further bypart is an effort on crypto 750 00:39:50,160 --> 00:39:50,760 Speaker 2: or other things? 751 00:39:52,400 --> 00:39:56,400 Speaker 13: Yes, I think when Chuck Schummer got played by the 752 00:39:56,400 --> 00:40:00,120 Speaker 13: President Trump and Elon Musk and the Doge process, that 753 00:40:00,120 --> 00:40:02,439 Speaker 13: that kept the government open at the beginning of the year. 754 00:40:02,840 --> 00:40:06,480 Speaker 13: I don't think Schumer and the Democratic Senate will play 755 00:40:06,480 --> 00:40:09,600 Speaker 13: the same rules by the same rules going into the fall. 756 00:40:09,920 --> 00:40:12,440 Speaker 13: I think the likelihod of government shutdown is rather high 757 00:40:12,920 --> 00:40:17,160 Speaker 13: given the environment we're currently in. Highly partisan environment we're 758 00:40:17,160 --> 00:40:19,800 Speaker 13: currently in, and that will curtail a lot of serious 759 00:40:19,840 --> 00:40:22,320 Speaker 13: policy making that could otherwise be done. 760 00:40:23,600 --> 00:40:25,560 Speaker 2: All right, not an optimistic note to end on, but 761 00:40:25,600 --> 00:40:27,600 Speaker 2: we'll leave it there, mister Chairman, Thank you as always 762 00:40:27,600 --> 00:40:29,960 Speaker 2: for joining us. Of course, former Congressman from North Carolina, 763 00:40:30,000 --> 00:40:32,840 Speaker 2: former Chair of the House Financial Services Committee, Patrick McHenry, 764 00:40:32,920 --> 00:40:35,279 Speaker 2: now a Bloomberg contributor here with us. 765 00:40:38,600 --> 00:40:41,040 Speaker 10: Thanks for listening to the Balance of Power podcast. 766 00:40:41,640 --> 00:40:44,080 Speaker 6: Make sure to subscribe if you haven't already, at Apple, 767 00:40:44,200 --> 00:40:44,759 Speaker 6: Spotify 768 00:40:44,880 --> 00:40:47,440 Speaker 11: Or wherever you get your podcasts, and you can find 769 00:40:47,520 --> 00:40:50,760 Speaker 11: us live every weekday from Washington, DC at noontime Eastern 770 00:40:51,040 --> 00:40:52,440 Speaker 11: at Bloomberg dot com.