Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,
Speaker 1: on the Bloomberg Born On a Monday, the twenty one
Speaker 1: of August. This is Bloomberg Surveillance on Bloomberg Radio. I'm
Speaker 1: David Gura in New York. Francine Lackway is in London.
Speaker 1: Tom Keene is off this week, and I love this
Speaker 1: story that fran and Scarlett food Wolf last week that
Speaker 1: I heard about second hand. Tom and I were taking
Speaker 1: time off to climb Mount Everest, I gather well with
Speaker 1: the summit insight. One of us had to turn back
Speaker 1: to host the show, and here I am. Our first
Speaker 1: guest is Nathan Sheets. He joins us in our Bloomberg
Speaker 1: eleven three studios. He's the chief economist at pe JIM
Speaker 1: Fixed Income. Of course, former Under Secretary of the Trade
Speaker 1: for International Affairs. Join me and Francy on TV now
Speaker 1: here on radio as well. Great to have you with us, Nathan,
Speaker 1: and let me start by looking forward to the meetings
Speaker 1: in Jackson Hole. A little bit later this week, we
Speaker 1: talked about this someone on television, What are you listening for? What? What?
Speaker 1: What normally transpires at Jackson Hole? As much as you
Speaker 1: can say what normally transpires it at this annual event,
Speaker 1: what are you gonna be listening for? So, I think
Speaker 1: the UH the key in these meetings is what we
Speaker 1: hear about the inflation process. UH. Central banks are very
Speaker 1: focused on why, on the one hand, the global economy
Speaker 1: is performing well, but on the other hand, why inflation
Speaker 1: is as low as it is. And I think that
Speaker 1: there will be a lot of a lot of reflections
Speaker 1: and thinking about whether the inflation process has changed in
Speaker 1: some significant way, for example, as a result of shifting
Speaker 1: demographics or deep change UH in the economy. We heard
Speaker 1: her make the case UH now a few months back
Speaker 1: that the inflationary headwines we're seeing her transitory UH. She
Speaker 1: has since walked that back a little bit. But how
Speaker 1: much of the conversation do you think it's going to
Speaker 1: center on that the temporariness of what we're seeing. So,
Speaker 1: I would say, particularly in the United States, that is
Speaker 1: a key question. There are some temporary factors that have
Speaker 1: influenced UH, consumer prices of late UH medical costs of
Speaker 1: influenced the CPI, UH cell phone plans, and so forth.
Speaker 1: But it does feel more and more like that's only
Speaker 1: part of the story. And the fact that this soft
Speaker 1: inflation performance is is echoed and many other of the
Speaker 1: advanced economies UH in recent months suggests that maybe there's
Speaker 1: something deeper, deeper at play, what Nathan, And if it
Speaker 1: is something deeper, do we need to try and fix
Speaker 1: that at the root of the cause, or do we
Speaker 1: just need to look at a different set of numbers.
Speaker 1: So I think for UH, for central banks, the question
Speaker 1: of what is driving this is a very deep one UH.
Speaker 1: I think part of it may have to do with
Speaker 1: UH the fact that inflation has been very low for
Speaker 1: a long time. At Once inflation expectations are anchored, it
Speaker 1: becomes very difficult to to raise them. I think that
Speaker 1: the experience in Japan UH in in in recent years
Speaker 1: very much highlights highlights that challenge UH. So this is
Speaker 1: this is a very tough set of issues. Is it
Speaker 1: just temporary UH? Is there something deeper at play? And
Speaker 1: ultimately the issue of what what drives inflation expectations for consumer?
Speaker 1: Nathan were you surprised? So the both the European Central
Speaker 1: Bank and the Fed kept on saying that actually, inflation
Speaker 1: will be fine in a couple of quarters once you
Speaker 1: know the market, the labor market start stabilizing and that
Speaker 1: will feed into wage growth. And they've kind of had
Speaker 1: to reassess that and go with what the market was expecting.
Speaker 1: Does that mean they lose credibility? So? Uh, The baseline
Speaker 1: macroeconomic models UH focus on the relationship between slack in
Speaker 1: the labor market, the unemployment rate UH, and inflation. And
Speaker 1: I really think that even in this very tough situation
Speaker 1: and circumstances that central banks are in, that that relationship
Speaker 1: is the best that the central banks have to go on.
Speaker 1: But as you suggest, their confidence in that model is
Speaker 1: is uh not as great as as it has been
Speaker 1: in the past. And so I think they're having to, uh,
Speaker 1: in some sense drive by looking through the rear view
Speaker 1: mirror and look at where the economy has been and
Speaker 1: where it is and where it has been and is
Speaker 1: is a place where inflation remains very very low. Maybe
Speaker 1: we had this ECB form a few weeks back in
Speaker 1: Portugal and and there was news there about a new
Speaker 1: effort of coordination among central banks. Do you expect that
Speaker 1: conversation to to continue that that form ended up making
Speaker 1: a lot more news, I think than a lot of
Speaker 1: people expected, in part because there was some marketing misinterpretation
Speaker 1: of what Mario Dragging and others had to had to say.
Speaker 1: Did you expect there to be continuity between that conference
Speaker 1: in this one? So I would say the issue of
Speaker 1: central bank cooperation is one that is sometimes I think misunderstood.
Speaker 1: The FED, UH, the CB, the Bank of England primarily
Speaker 1: have domestic man dates for price stability and for the
Speaker 1: FED in addition UH full employment, So when they're talking
Speaker 1: about cooperation, it is primarily an exercise in information sharing,
Speaker 1: in relationship building, and only in very rare instances is
Speaker 1: that the formal coordination of policy. Now, of course we're
Speaker 1: in a global economy and central banks have to pay
Speaker 1: attention to what other central banks are doing because there
Speaker 1: are meaningful there are meaningful spillover effects. But I wouldn't
Speaker 1: expect there to be much talk in Jackson Hole of
Speaker 1: a formal coordination, but a lot of of of times
Speaker 1: bank comparing notes and better understanding what other central banks
Speaker 1: are thinking and how they're assessing the developments in their economy.
Speaker 1: We're at this point in the conversation about central banking
Speaker 1: where you pull up a speech and you do control
Speaker 1: left and you try to find all the instances of
Speaker 1: the word taper or or derivations thereof. Is Marito drag
Speaker 1: under pressure to to say more about the tapering process
Speaker 1: at this point. I think that that Mario Draggy will
Speaker 1: be moving in a very uh, deliberate way on his
Speaker 1: communications strategy. And I think these reports we've heard of
Speaker 1: the last week or so that he's likely to focus
Speaker 1: on international economic issues and less on tapering and the
Speaker 1: trajectory of monetary policy in the year area are are credible.
Speaker 1: So I think it will be a very interesting presentation,
Speaker 1: but may be somewhat more of an academic intellectual exercise
Speaker 1: than a blueprint for where the ECB will be headed.
Speaker 1: Where's what should the ECB worry about their Italian elections?
Speaker 1: Unclear which way they would go if they were to
Speaker 1: be held now, and they have to be held before
Speaker 1: March of next year. Yeah, there are significant political risks
Speaker 1: uh for the CB to be factoring in, and I
Speaker 1: think that very much forms a backdrop for them. I
Speaker 1: would say an imminent concern for them is as they
Speaker 1: start thinking about reducing the size of their purchases, what
Speaker 1: does that mean for bond markets in Europe? And particularly
Speaker 1: does tapering pose any risks for bond markets in Italy
Speaker 1: and Portugal where UH the ECB has been a significant
Speaker 1: a significant borrower. I think there is an underlying story
Speaker 1: in these countries of recovery and stronger economic performance. But
Speaker 1: even so, having the e c B reduced the purchases
Speaker 1: and ultimately exit could have implications for demanding yields in
Speaker 1: those economies. Nathan in twenty seconds, should they worry about
Speaker 1: the level of the euros and getting too high? The
Speaker 1: e c B UH watches the euro close a UH,
Speaker 1: and levels UH such as what we have today in
Speaker 1: the past have drawn comment from the e c B.
Speaker 1: On the other hand, the euroeconomy is performing very well
Speaker 1: and a stronger European economy is able to absorb a
Speaker 1: stronger currency and UH and continue to grow at an
Speaker 1: acceptable pace. So there's a balance there, but the e
Speaker 1: c B will be paying attention to it closely, all right, Nathan,
Speaker 1: Thank you so much. Nathan Sheets there PGIM Chief Economists
Speaker 1: stays with us at your region bunds today gaining with
Speaker 1: treasuries while the dollar is steady after the drop we
Speaker 1: saw on Friday. Of course, it's all about to the
Speaker 1: central bankers meeting at Jackson Hole. As Nathan was saying,
Speaker 1: it's about growing and knees about persistent low inflation that
Speaker 1: we'll be watching out for and what they can do
Speaker 1: about it. This is Bloomberg here with Nathan Sheets of
Speaker 1: p Jim formerly the Treasury Department or Bloomberg eleven three
Speaker 1: oh studios, having a conversation about monetary policy. Maybe we'll
Speaker 1: talk a little about fiscal policy as well. Help us
Speaker 1: understand the degree to which personnel matters that at this point, Nathan,
Speaker 1: there's a new survey of economists sound indicating that a
Speaker 1: lot of them, the majority of them, think that Gary
Speaker 1: Cone is going to be the next uh FED share
Speaker 1: you look at what this president, this administration is going
Speaker 1: to be able to do with regard to appointments, and
Speaker 1: uh he the president could radically change the configuration of
Speaker 1: the FED. What's your sense of how that's going to
Speaker 1: change policy going forward? So on the one hand, by
Speaker 1: sense is that, uh, personnelity is crucially important and who
Speaker 1: is who is leading the Federal Reserve is is very significant,
Speaker 1: and issues about their background and how they view the
Speaker 1: world and how how flexible they may be in implementing
Speaker 1: monetary policy versus how rules based they may be could
Speaker 1: have a very different implications for where US um monetary
Speaker 1: policy is headed. But it's also the case that there
Speaker 1: is a fair amount of of inertia inside of the
Speaker 1: Federal Reserve, and part of that reflects the fact that
Speaker 1: you have reserve bank presidents who have long tenures and
Speaker 1: they have significant impact on the trajectory of policy, and
Speaker 1: the Federal Reserve staff is is very influential in framing
Speaker 1: the policy decisions. So I do expect that the changes
Speaker 1: in personnel that are likely over the next year or
Speaker 1: two at the FED are likely to change the tone
Speaker 1: of of FED communication and to some extent, the trajectory
Speaker 1: of policy, but it won't be an abrupt shift or
Speaker 1: an abrupt discontinuity in in FED policy. With some regularity,
Speaker 1: we hear the clarion call from the Treasury Department about
Speaker 1: the dead ceiling, raising the dead ceiling. We're hearing it
Speaker 1: again from from this new Treasury Secretary. Steve Lution would
Speaker 1: like to see that done cleanly, he'd like to see
Speaker 1: it done on time. He's already begun to use so
Speaker 1: called extraordinary measures to make sure the government can continue
Speaker 1: to pay the bills that that come. How much has
Speaker 1: this conversation changed. How worried are you about the government
Speaker 1: raising the debt ceiling here on the heels of an
Speaker 1: August congressional recess. As a as a macro economist, they
Speaker 1: would say, one of the very important third rails UH
Speaker 1: for US policy is taking steps to continue to foster
Speaker 1: confidence in the US government and our ability to make
Speaker 1: good on our obligations. As a as an economist, I
Speaker 1: see UH significant downside and essentially no upside to pushing
Speaker 1: the issue of of of of funding the government and
Speaker 1: the debt ceiling to the very to the very brink.
Speaker 1: It's uh, it's UH. It's important that we get this
Speaker 1: issue resolved, and we get it resolved constructively. Now that's said,
Speaker 1: I do worry that the political dynamics afoot are likely
Speaker 1: to make this UH more challenging rather than less challenging. UH.
Speaker 1: With in the past, the Democrats owned the government, the
Speaker 1: Republicans were the challengers in the opposition, but it's not
Speaker 1: clear who owns UH. Continuing the government's operations in the
Speaker 1: current in the current configuration, and I think that creates
Speaker 1: uh some potential UH stresses and challenges and getting this
Speaker 1: issue resolved over the next several weeks. Nathan, whose job
Speaker 1: is it to to make it workable? I don't know.
Speaker 1: Is it the president's? Is it the chiefest off? I
Speaker 1: think ultimately, UH, it is responsibility of the President of
Speaker 1: the United States, along with the Speaker of the House
Speaker 1: and the majority leader in the Senate, to engineer an
Speaker 1: approach that UH manages a solution to this problem. UH.
Speaker 1: That they are the leadership, they are the political leadership,
Speaker 1: and this is a political problem, and it's one that
Speaker 1: there's no really there's no option other than to find
Speaker 1: a solution. Right, But how does he do that? How
Speaker 1: much political capital has he lost so far with Republicans?
Speaker 1: And how does he regain the trust? I think that
Speaker 1: that the congressional Republicans. Uh, there is within the Republican
Speaker 1: caucuses in the Senate, in the House, there are a
Speaker 1: lot of centrifugal forces, UH, a lot of differing views
Speaker 1: and UH, it's it's it's going to be a challenge, UH.
Speaker 1: And it's not clear how we get from where we
Speaker 1: are today, uh to a place where uh the leadership
Speaker 1: that I described, the President, the Speaker, and the Majority
Speaker 1: leader are able to leverage the Republican caucus and uh
Speaker 1: for for for Dad's ceiling, they also need some Democratic votes.
Speaker 1: That's going to require sixty votes in the Senate. Nathan
Speaker 1: Sheets for generous with your time this morning doing TV
Speaker 1: and radio with us. This is Bloomberg Surveillance on bloom Burgrinder.
Speaker 1: Nathan Sheets of p Jim joining us on our Bloomberg
Speaker 1: eleven three oh studios in New York. More to come.
Speaker 1: This is Bloomberg David Gurreat and Francine Lappa Francine in London.
Speaker 1: Tom Keane off this week. This is Bloombick Surveillance. Continuing
Speaker 1: our conversation about Washington now with Brad Blakman. He was
Speaker 1: member of President George W. Bush's senior staff. He joins
Speaker 1: us now from our bureau Oor Bloomberg ninty nine one
Speaker 1: Studios in Washington, d C. Great to have you with this,
Speaker 1: Mr Blackman, and let me begin just by asking you
Speaker 1: about the role of the chief of staff in the
Speaker 1: White House. So much of of our attention has been
Speaker 1: on John Kelly and the degree to which he's changed
Speaker 1: the way things are run at the White House over
Speaker 1: these last couple of weeks in a vacuum. What what's
Speaker 1: the role of of a chief of staff? Well, the
Speaker 1: chief of staff is the gatekeeper to the president. He
Speaker 1: controls the president schedule and access and direction. Um. That
Speaker 1: is really the coin of the realm of a president
Speaker 1: is his time is a finite amount of time the
Speaker 1: president has. It has to be spent well, and there
Speaker 1: has to be a direction in in where the administration
Speaker 1: is going in legislation and policy and regulation. So that
Speaker 1: is the role of the of the manager, if you will,
Speaker 1: is a chief of staff who's able to manage the
Speaker 1: staff but also manage the care and feeding of the
Speaker 1: president as well as his official duties as president. And
Speaker 1: how much of his or her responsibilities include dealing with
Speaker 1: with the Congress. I know a lot has been made here.
Speaker 1: The fact that you look at John Kelly and and
Speaker 1: in his tremendous amount of military service, I gotta some
Speaker 1: of that we spent as a liaison tip to capital.
Speaker 1: How important is that relationship between the chief of staff
Speaker 1: and the legislative branch. It's important, but it's it's not
Speaker 1: a day to day UH concern. That's why an effective
Speaker 1: team has to be built around an effective manager or
Speaker 1: chief of staff. He needs now a good political person,
Speaker 1: a good legislative person to work the day to day
Speaker 1: UH issues of the hill, a communications person, and policy.
Speaker 1: That team of management, policy, communications, legislation, and political is
Speaker 1: really the benchmark of where this president is going to
Speaker 1: go because he needs a good team to rely on
Speaker 1: in order to carry out his instructions. Mr Blakeman, how
Speaker 1: would you advise the president today after the week he's had. Well,
Speaker 1: he has a great opportunity tomorrow in Phoenix, He's going
Speaker 1: to be giving a rally, and I think he needs
Speaker 1: to set the tone now as president to unite the country, um,
Speaker 1: from every part of the country, every person in the country,
Speaker 1: whether you're a publican Democrat, whoever you are, wherever you are,
Speaker 1: we're all Americans, and the problems that face us are
Speaker 1: not um are not just problems of one person or
Speaker 1: one group. UH. Here. We have to get the economy moving.
Speaker 1: We need trade, we need infrastructure, we need healthcare. The
Speaker 1: big ticket items that the President promised must be kept now.
Speaker 1: And it wasn't only promises the President made. These were
Speaker 1: promises the Republicans. Everyone who stood for office in two
Speaker 1: thousands sixteen made the promises to make America great again. Well,
Speaker 1: that comes with policy, and right now, Uh, there's a
Speaker 1: legislative agenda coming up in the fall that must be
Speaker 1: dealt with. They must be dealt with affirmatively. And uh,
Speaker 1: failure is not an option. Right, But how would you
Speaker 1: advise Republicans that maybe took offense or absolutely did not
Speaker 1: agree on how the President handled Charlottesville. Well, you know,
Speaker 1: the president again has an opportunity in Phoenix to set
Speaker 1: set a tone. The president's written statements on Charlottesville. We're line.
Speaker 1: It's when he went off script and Tuesday and uh,
Speaker 1: and and damage those written statements that were that we're fine. Um.
Speaker 1: And but Republicans have to understand we have global issues,
Speaker 1: we have national issues, heavy issues that need to be solved,
Speaker 1: and we only have one president. He's our president for
Speaker 1: at least four eight years, and and we have to
Speaker 1: make sure that he's successful. Brown, I'm looking at a
Speaker 1: copy of The New York Times, a piece in thereby
Speaker 1: Jeremy Peters and Maggie Haberman looking at the role of
Speaker 1: Steve Bannon in this administration before he left, and the
Speaker 1: way things will change now, And a line sticks out
Speaker 1: to me the right. Bannon's exit will clarify that only
Speaker 1: one person, Mr Trump, for better or worse, has always
Speaker 1: been his own chief strategist. What's your sense of the
Speaker 1: intractability of this president? We were talking about John Kelly
Speaker 1: at the degree which he's begun to change the way
Speaker 1: the White House is running now that you've observed this
Speaker 1: president in this role for more than than seven months, Now,
Speaker 1: is he somebody who's who's a way of doing the
Speaker 1: job can be changed? Do you think sure? Because I
Speaker 1: think he's success driven. And uh, right now, if I
Speaker 1: were the chief of staff, I'd laid before the president
Speaker 1: the promises that he made in the campaign and and
Speaker 1: and then set forth the legislative agenda to provide for
Speaker 1: deals to be closed. The president now has to work Congress.
Speaker 1: And the success of this president will be his ability
Speaker 1: to keep his promises on the big ticket items like
Speaker 1: infrastructure and taxes and and and budget and military. The
Speaker 1: things that he promised the American people they're going to
Speaker 1: remember when they go to the polls. And by the way,
Speaker 1: two thousand eighteen, we have every member of the House
Speaker 1: up for reelection as well as one third of the Senate,
Speaker 1: and if Republicans want to hold that majority, then they
Speaker 1: have to have a record to run on. You've you've
Speaker 1: done work as a communications consultant. I wonder what you
Speaker 1: you make of what we've seen with your card to
Speaker 1: the President tweeting the president not sticking to script. I
Speaker 1: think a lot of his Republican supporters in particular, would
Speaker 1: like nothing more, uh for him to be talking about
Speaker 1: taxi for him now, if not exclusively than that, than
Speaker 1: almost So how do you get somebody to to to
Speaker 1: stay on topic? How do you get the president to
Speaker 1: focus on on these issues that would make him you say,
Speaker 1: he's success driven, maybe lead to some some legislative successes. Well,
Speaker 1: I would tell the president, sir, you can be spontaneous,
Speaker 1: and you can be reactionary to to news it as
Speaker 1: it happens, but there's got to be a method to
Speaker 1: the madness. And uh, there has to be a communications
Speaker 1: strategy that's honored by the staff but also honored by
Speaker 1: the president and um and I think there's gotta be
Speaker 1: more deliberative tweeting. There's gotta be more targeted tweeting the
Speaker 1: president certainly understands the targeting of messaging. He's done it
Speaker 1: his entire life. Now it needs to be a little
Speaker 1: bit more honed and and uh and thought out. And
Speaker 1: I think General Kelly needs to hire somebody sooner rather
Speaker 1: than later a good communications strong communications Personally. I think
Speaker 1: the president respects and and willum and and we'll uh
Speaker 1: adhere to And you see a president that is willing
Speaker 1: to listen. What we we've heard many times and over
Speaker 1: and over is that you have people that advise him,
Speaker 1: but then he goes at it his own way. Well,
Speaker 1: I think a lot of the problems this White House
Speaker 1: has is simple to me, and that is the people
Speaker 1: who get you to the White House and the campaign
Speaker 1: are not necessarily the people you need when you get there.
Speaker 1: And I think once you peel away the campaign staff
Speaker 1: and start hiring professional people who know Washington, know how
Speaker 1: it works, insiders are not necessarily swamp creatures. Um. They
Speaker 1: can they can help you navigate this town and get
Speaker 1: you the success that you need in order to rack
Speaker 1: up uh. The achievements at that are the basis of
Speaker 1: the promises you made in the campaign. So I think
Speaker 1: discipline is key to an effective White House. But more
Speaker 1: importantly than that is teamwork. Mr Blakeman, who will define
Speaker 1: conservatism in the US. Is it bandoned or is it
Speaker 1: the Murdock's No. I think conservatism is going to be
Speaker 1: uh displayed by the parties and the leaders within the parties.
Speaker 1: It's not the outside people who were the influencers who
Speaker 1: determined conservatism. It's the people who are actually on the
Speaker 1: front lines who are putting their votes down. It's the
Speaker 1: president who's signing bills. Those are the things that directly
Speaker 1: affect the American people and that will determine the conservative
Speaker 1: movement in America. Uh. Do you recognize that the Republican Party,
Speaker 1: the views the Republican Party espoused by this president. You're
Speaker 1: somebody who has said worked for President George W. Bush.
Speaker 1: How much has the party changed since then? Well, we're
Speaker 1: not keeping to the platform and uh every four years,
Speaker 1: parties Uh deliberate, they fight, they can jole, Uh, they trade,
Speaker 1: they bargain, they compromise on the platform. My suggestion is
Speaker 1: get back to basics, get back to the platform that
Speaker 1: was hashed out at the convention. This is what we
Speaker 1: stand for. Honor the promises that were made, and you'll
Speaker 1: be wildly successful. The American people expect healthcare, they expect
Speaker 1: tax reform, they expect infrastructure, debt reduction, a strong military.
Speaker 1: These are the These are the things that you should
Speaker 1: be focused like a laser beam this fall on. UH.
Speaker 1: Tax reform must come. We have to have major accomplishments
Speaker 1: so that we can run in two thousand eighteen and
Speaker 1: retain our majorities in the House and the Senate. All right,
Speaker 1: Prab Blakeman, thank you very much for the time this morning.
Speaker 1: Brad Blakeman joining us for our ninty on one studios
Speaker 1: in Washington, d C. He was an adviser to President
Speaker 1: George W. Bush. Johnny is now on our phone lines days.
Speaker 1: Grover Nork which the President Americans for tax from always
Speaker 1: great to speak with him to hear his thoughts on
Speaker 1: the debate over tax reform in Washington and DC. Grow
Speaker 1: were great to speak with you. Let me start by
Speaker 1: asking you how much the the the agenda has changed
Speaker 1: from a policy perspective now that Steve Bannon is out
Speaker 1: of the White House. I think last we spoke, I
Speaker 1: asked you about a plan that Mr Bannon had floated
Speaker 1: here to apply a new tax on Americans making more
Speaker 1: than five million dollars a year. So he was wrestling
Speaker 1: his way into the conversation over a tax from what
Speaker 1: changes for you now that he's out of the White House. Nothing.
Speaker 1: He was not a participant in the debate on tax reform.
Speaker 1: The one idea that it's reported that he put forward,
Speaker 1: although it seemed to sort of be a dead cat
Speaker 1: bounce that he didn't even seem to repeat it. He
Speaker 1: wanted to have a higher marginal tax rate on the
Speaker 1: highest income Americans and by the way, most small businesses,
Speaker 1: because he thought that was populist. It was one of
Speaker 1: the stupid or dumbest, most destructive ideas ever put forward.
Speaker 1: And I'm pleased to see it got zero support. I
Speaker 1: don't think that's why he got fired. UH. But his
Speaker 1: stepping aside to do other things has may have an
Speaker 1: effect on immigration policy, it has zero effect on tax policy.
Speaker 1: There is complete unanimity. This is this is what gets
Speaker 1: lost in all the jangle. And because of the conflict
Speaker 1: on healthcare, the House, the Senate, and the White House,
Speaker 1: the big sick the top two ties from each Minuchan
Speaker 1: from Treasury, Cone from UH, the economic advisors, as well
Speaker 1: as a speaker, and the majority leader and their tax guys.
Speaker 1: All six are meeting talking daily, Their staffs are talking
Speaker 1: repeatedly every day. They've been doing so for more than
Speaker 1: a month. But now CBO and Joint Tax are free
Speaker 1: to score bills dealing with tax reform instead of being
Speaker 1: caught up with efforts to score what's going on on healthcare?
Speaker 1: Chairman Brady telling me telling me as much about a
Speaker 1: week ago when I interviewed ahead of the speech that
Speaker 1: he gave it the Reagan Ranch, I believe last week
Speaker 1: give me a sense that grovery if you could have
Speaker 1: what you're going to be looking for when you're going
Speaker 1: to be looking for a plan from the White House. Here,
Speaker 1: we're waiting that we're waiting a comprehensive plan here from
Speaker 1: the Big Six as you call them. Yeah, the White
Speaker 1: House will announce a plan that has House and Senate
Speaker 1: UH support. So that I was not gonna have a plan,
Speaker 1: or we're gonna have three plans or two plans or
Speaker 1: one and a half plans. You have one plan by
Speaker 1: September twenty eight that will go to the House Ways
Speaker 1: and Means Committee, who will be thoroughly aware of it.
Speaker 1: They may have some ideas or amendments they want, but
Speaker 1: they will be fully understanding exactly what it is and
Speaker 1: largely in support. Look, everybody agrees the corporate rate is
Speaker 1: going towards fifteen, the small business rate, the sub Chapter
Speaker 1: S rate is going towards fifteen. Everybody agrees. But actually,
Speaker 1: don't we need someone to lay it out? Yeah? No, no, no,
Speaker 1: that's what's gonna take till September twenty eight. And I
Speaker 1: under saying, if everyone agrees on where you're going, the
Speaker 1: only question is how quickly you can get there. Whether
Speaker 1: some of these tax cuts are temporary and others are permanent.
Speaker 1: But the idea of the border justability of the corporate
Speaker 1: income tax was divisive. The senators from Walmart didn't like it, uh,
Speaker 1: and so it probably wasn't going anywhere. They took that
Speaker 1: off the table and Paul Ryan's World Agreement not eight.
Speaker 1: Now answer me this, do you think last week was
Speaker 1: a setback for the president? And if it was in
Speaker 1: the wake of Charlottesville, does it mean that he will
Speaker 1: be in a hurry to push tax reform through? Um?
Speaker 1: That's that hadn't thought of it that way. I thought
Speaker 1: there were two big things this administration the House and
Speaker 1: said it one's due before election. One was healthcare. It
Speaker 1: was tax reform. Healthcare has been put off. Even if
Speaker 1: they come back and visit it, it will be a
Speaker 1: skinny bolle, not a uh significant reform. Uh So to
Speaker 1: get the economy strength, and you have two tools now.
Speaker 1: One is all the de regulation that's happening, and that's big,
Speaker 1: and the FCC changes in the TC changes and the
Speaker 1: FDA changes and FIRK and all of a sudden, that's
Speaker 1: all big, big, big, and fifty years from now we'll
Speaker 1: go wow, that was that was a big part of this.
Speaker 1: But none of those make headlines. The press and and
Speaker 1: voters will focus on the tax reform and whether job
Speaker 1: creation and of creation followed. We need strong economic growth
Speaker 1: in the first two quarters of next year. This is
Speaker 1: what the White House understands, the House and the Senate
Speaker 1: leadership understands. And if you're running for reelection and all
Speaker 1: the Congress and our heart of the Senators are, you
Speaker 1: want robust growth starting in the third quarter of this
Speaker 1: year if you can by making sure everyone understands that
Speaker 1: the pro growth parts of tax reform will take effect
Speaker 1: from September from the date that they dropped the bill,
Speaker 1: not from the date that it passes. Nobody should hold
Speaker 1: up an investment or to lay a decision based on
Speaker 1: tax policy. They should know that the new rules would
Speaker 1: be the old rules. Uh. But you need to have
Speaker 1: strong growth in the first two quarters of next year
Speaker 1: so that everybody gets that the economy is stronger. Understand
Speaker 1: it's because of tax reform and to a certain extent,
Speaker 1: other challenges. The president has fade into the background if
Speaker 1: he has delivered the growth that he said was his
Speaker 1: top priority. So to that extent, it is increasingly important.
Speaker 1: I would argue was made more important by delaying healthcare
Speaker 1: reformas it strikes me that there is a fire underneath
Speaker 1: a lot of Republican congressman to get something done, and
Speaker 1: I want to using that, I ask you about the
Speaker 1: state of the pledge something you're you're famous for getting
Speaker 1: congressman to sign a pledge to that they won't raise taxes.
Speaker 1: Are you at all worried that the pressure to do something,
Speaker 1: particularly after what happened with healthcare, might lead some of them,
Speaker 1: might leave perhaps a majority of them to to opt
Speaker 1: to raise taxes. Absolutely not. The tax reform that we're
Speaker 1: talking about is a multi trillion dollar tax reduction. It
Speaker 1: does that one by taking a dynamic view of the economy,
Speaker 1: joint taxes, dynamic scoring dynamically, So this would be a
Speaker 1: net tax cut period that in no way comes close
Speaker 1: to violating the pledge. The pledge would be if you
Speaker 1: shot down with the Democrats and past the net tax increase.
Speaker 1: That isn't going to happen, largely because ninety plus percent
Speaker 1: of Republicans have signed the pledge, kept it and are
Speaker 1: never ever, ever, ever ever going to raise taxes. Carvin,
Speaker 1: let me ask you lastly, hear what your group is
Speaker 1: doing here to to push for tax reform. Are we
Speaker 1: speaking with Tim Phillips about a week ago about the
Speaker 1: work that Americans for Prosperities doing, The money that he's
Speaker 1: invested in this cause, the events that he's holding around
Speaker 1: the country give us a sense of of what you're doing.
Speaker 1: Can you put a number to it and sort of
Speaker 1: how is your your advocacy for this change to your
Speaker 1: As we move ahead past this August recess, sure, the
Speaker 1: focus has moved from healthcare to tax reform. Health Care
Speaker 1: was supposed to be a joy and our tax cuts,
Speaker 1: so it's very much a tax bill that got shun
Speaker 1: to decide uh Americans for tax Form runs the Center
Speaker 1: Right Coalition meeting of a hundred and fifty Center right
Speaker 1: leaders in DC every week, but there are forty state
Speaker 1: capitals where similar meetings are structured at the state level.
Speaker 1: So we're working in each of those states, true, and
Speaker 1: with everything from the state think tank, to state taxpayer groups,
Speaker 1: to all the various state activist group, business groups, n
Speaker 1: f I, B Chamber, and so on to make sure
Speaker 1: that in every state we have voices that are focused
Speaker 1: on what exactly is in tax care at tax reform
Speaker 1: and why we need it. We'll be doing ads too,
Speaker 1: and we just try to figure out where we need
Speaker 1: to do and raising resources to do that. But over
Speaker 1: the last several months and now you'll see strong support
Speaker 1: out in the grassroots, targeting individual congressman, senators and the
Speaker 1: newspapers and radio talk shows that they listen to. Great
Speaker 1: to speak with you. Let's talk again once we get
Speaker 1: that White House plan grabbing Norquays. There joined us now
Speaker 1: is Dan Akerson, former chairman and CEO of GM. He
Speaker 1: joins us for our Bloomberg studios in Washington, d C.
Speaker 1: It's great to have you with us here this morning,
Speaker 1: and I wonder if we could use what I just
Speaker 1: mentioned as a peg to talk about what business is
Speaker 1: interested in hearing from the the White House at this point,
Speaker 1: how dialogical relationship it is between business and the White House.
Speaker 1: What would you like to see happen with regard to
Speaker 1: that relationship going forward. Well, I think there needs to
Speaker 1: be UH an interactive discussion based on respect and UM.
Speaker 1: And I think there's clearly that every CEO given the
Speaker 1: opportunity to sit on a policy of formulating body than
Speaker 1: the president chairs would welcome the opportunity because here she's
Speaker 1: got to represent their shareholders. They want to make sure
Speaker 1: their point of view is reflected in any UH developing
Speaker 1: strategy or policy. And but then to the president has
Speaker 1: a constituency that he or she must make sure that
Speaker 1: they're talking to. And the CEO also has a constituency.
Speaker 1: It's the customer base obviously, and also he has this
Speaker 1: employees and his suppliers that are looking at him or
Speaker 1: her to make sure that UH their shared value, shared perspectives,
Speaker 1: and to put it into cliche, everybody's on the same page.
Speaker 1: And and I think there was a rift in that
Speaker 1: fabric of dialogue over the last week or so. So
Speaker 1: the actress and you have that that rift, as you
Speaker 1: describe it. Early on in this administration, we saw a
Speaker 1: lot of business leaders going to the White House meeting
Speaker 1: with the president. He appeared to be listening to them.
Speaker 1: We had the video footage of the beginning of a
Speaker 1: lot of those meetings. You had Steve Schwartzman convening this
Speaker 1: group of experts that comprised the Strategic and Economic Policy Forum.
Speaker 1: I wonder where we go from here? How do you
Speaker 1: pick up the pieces from this? How do you how
Speaker 1: do you make that relationship a robust one again? Well,
Speaker 1: you know, I think leadership is always comprised of such topics.
Speaker 1: Are elements as character, competency, integrity, empathy, temperament. And I think,
Speaker 1: although we have rarely seen this, I think the president
Speaker 1: essentially has to, in some form or fashion, has to
Speaker 1: apologize for what happened. You know, I had my dad,
Speaker 1: my father who was born in the early twenties and
Speaker 1: five uncles fought against a perspective that was really morally
Speaker 1: corrupt and it was represented by a swasticker. And so
Speaker 1: when the President of the United States, the leader of
Speaker 1: the United States and the free world, says that there
Speaker 1: were two sides, and there were good people on both sides.
Speaker 1: That's just a nethema to everything I've ever been exposed
Speaker 1: to and what my family and I served as well
Speaker 1: fought for. And you say that that is just so
Speaker 1: wrong that it has to be amended. And at the
Speaker 1: end of the day, you know, I don't know exactly
Speaker 1: when it went on in Charlottesville, but there were nineteen
Speaker 1: people injured and one killed. None of them were carrying
Speaker 1: tiki torches the night before, screaming Jews won't replace us
Speaker 1: and things of that nature. It was just wrong. And
Speaker 1: I think humility and and asking for forgiveness of a
Speaker 1: portion of our society would be in order. I don't
Speaker 1: think it's forthcoming, So it will be depending on the
Speaker 1: company and the person. It'll be difficult to uh to
Speaker 1: ascertain exactly how that relationship will evolve. If I were
Speaker 1: still an active CEO, I would try to reach across
Speaker 1: and see if there couldn't be some uh explanation or accommodation.
Speaker 1: But I think it's going to be difficult for a while.
Speaker 1: And I think certain industries consumer for example, it will
Speaker 1: be more difficult for a CEO to UH look or
Speaker 1: appear to be uh, you know, UH to have a
Speaker 1: more constructive relationship with the president, which I think is
Speaker 1: a sad state of affairs. There should be a good
Speaker 1: working relationship between American business and the chief executive of
Speaker 1: our country. But Danna Kristen, do you believe that unless
Speaker 1: the president apologize? So, if he does not apologize, and
Speaker 1: I don't know if there's a time frame, if it
Speaker 1: needs to be in the next two weeks, do you
Speaker 1: believe that he will actually lose the respect in the
Speaker 1: faith of C E O. S. And where does that
Speaker 1: put corporate America? Well, I can only speak for how
Speaker 1: I would see that we've all made mistakes in our
Speaker 1: lives and an apology sincere apologies. As you know, I
Speaker 1: just was out of line, and I want to take
Speaker 1: this moment, this point in time, this opportunity to apologize.
Speaker 1: There there is no excuse for the KKK. It's a
Speaker 1: domestic terrorism group. They've done terrible things in the history
Speaker 1: of this country. And there's no excuse for supporting any
Speaker 1: organization that wants to fly a swasticker in our in
Speaker 1: our population. I just, uh, this is not a there's
Speaker 1: no gray area around those. In my mind, it's a
Speaker 1: black and white issue, and I think fundamentally, I hope
Speaker 1: and believe that the president feels that and he just
Speaker 1: And it goes to one of the elements of what
Speaker 1: I described as leadership. It's temperament. Yeah, you can't allow
Speaker 1: yourself to become so emotional and say things that you
Speaker 1: will regret later. It's it's like a marriage. It's based
Speaker 1: on trust. You have to believe that the guy in
Speaker 1: the corner office or in the oval office is UH
Speaker 1: that shares values that I think are basic to the
Speaker 1: American experience. Do you believe that the White House will recover,
Speaker 1: that this Trump administration will recover from it if the
Speaker 1: President doesn't apologize. Hard to say. I think as time
Speaker 1: goes on, this whole fade a bit, but there have
Speaker 1: been There's a segment or population that I think are
Speaker 1: really I've been damaged, hurt uh And it will be
Speaker 1: suspicious for a while. But it's not impossible to win
Speaker 1: back the goodwill of the people with good deeds. But
Speaker 1: I mean things for example, I also mentioned empathy. It's
Speaker 1: just you have to be steady, you have to be predictable.
Speaker 1: You can't. I remember the Rose Garden celebration when the
Speaker 1: House passed their version of repeal and repace of Obamacare,
Speaker 1: and Obamacare is flawed, and I don't think anybody in
Speaker 1: the right mind would say it's it's a perfect piece
Speaker 1: of legislation. Uh, it needs to be fixed. But then
Speaker 1: several weeks later he calls it mean. Well, he had
Speaker 1: a celebration of it, and then he couldn't get the
Speaker 1: Senate to pass it. And then you can see in
Speaker 1: our legislators, our senators and our congressmen, they kind of go,
Speaker 1: what what's this all about? One hand, it's a rose
Speaker 1: garden celebration, subsequently called mean and then he's angry and
Speaker 1: calls out senators that have constituencies that they represent. And
Speaker 1: I can tell you as an American and God, I've
Speaker 1: been blessed in so many ways, but you see to yourself, uh, empathy.
Speaker 1: I don't want to live in a country that doesn't
Speaker 1: take care of the most vulnerable among us. And Uh,
Speaker 1: in our family, we've had some medical problems the last
Speaker 1: couple of years, and we were blessed to have insurance.
Speaker 1: What if I weren't. What happens to people on the
Speaker 1: margin unemployed, Uh, where they have a major medical problem,
Speaker 1: do we just say, well, too bad for you? And
Speaker 1: best of luck. And you can't say that twenty five
Speaker 1: or whatever the number is. But I heard five million
Speaker 1: Americans in the next five or six years would be
Speaker 1: without insurance. And and somehow there's got to be a compromise.
Speaker 1: And I think a good leader that would gain the good,
Speaker 1: the trust and respect to the American public, regardless of
Speaker 1: political affiliation. And just said, look, we all know the
Speaker 1: Obamacare is flawed. I need six people on either side
Speaker 1: of the aisle. I don't need to pick the right
Speaker 1: wing or the left wing too, two groups of six
Speaker 1: a dozen people, uh, and come back to me with
Speaker 1: the five or six things that we need to replace
Speaker 1: to make it better. I mean at the time they
Speaker 1: passed Obamacare, I remember and they said they can't pete
Speaker 1: across state lines. Crazy competition is good, and you can
Speaker 1: uh expand the pool, the ricks pool at the insurance
Speaker 1: companies taken on, and you can you can essentially cross
Speaker 1: subsidize from high risk areas to the lower risk areas.
Speaker 1: They're they're just basic fundamental business decisions that were overlooked
Speaker 1: because Obamacare was not passed with one Republican vote, and
Speaker 1: I guess repeal and replacement vote with not one Democratic vote.
Speaker 1: You can't reform one sixth of the U. S economy
Speaker 1: UH without having a bipartisan bill that both parties can
Speaker 1: live with. And so there's work to be done. And
Speaker 1: I think that'd be a good place to start, UH,
Speaker 1: to go back and make a valiant effort and and
Speaker 1: get a select number to come back with us with
Speaker 1: a bipart come back to the entire Congress with a
Speaker 1: bipartisan view, and you'd have the right wing on one
Speaker 1: side and the left wing on the other side saying
Speaker 1: that's not good enough. Well, Medicare, believe it or not,
Speaker 1: you probably too young to rem Medicare was very controversial
Speaker 1: at the time. Yeah, very controversial, but look at them
Speaker 1: on Alzheimer's patients there. What if we didn't have Medicaid,
Speaker 1: how would families take care of their loved ones as
Speaker 1: they got older? And it's a very popular program today.
Speaker 1: Damn we gotta leave it there. Thank you very much
Speaker 1: for those valuable comment. Stan Atkinson, former chairman and CEO
Speaker 1: of General Motors, joining us. We're not Animal Studios in Washington,
Speaker 1: d C. Here on Bloomberg Surveillance David Gura with Francine Laco,
Speaker 1: who is in for Tom Keene. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: on Twitter at Tom Keene David Gura. Is that David Gura?
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Speaker 1: Bloomberg Radio