WEBVTT - FAA Weighs Pullback in Newark Flights; Trump Floats Tax on Rich 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business 0:00:10.560 --> 0:00:14.440 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.320 stay ahead with insight on the people, companies, and trends 0:00:18.400 --> 0:00:23.400 shaping today's complex economy. Plus global business finance and tech 0:00:23.480 --> 0:00:27.360 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.680 --> 0:00:31.760 with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.360 --> 0:00:35.200 George Ferguson our next guest has definitely been my guy. 0:00:35.240 --> 0:00:36.639 I love to read his research. 0:00:36.960 --> 0:00:40.360 He is, of course Bloomberg Intelligence senior Aerospace, Defense and 0:00:40.520 --> 0:00:43.320 Airlines analysts, and he's joining us here today just to 0:00:43.400 --> 0:00:45.400 chat about what's going on right now in the aerospace 0:00:45.440 --> 0:00:47.760 and defense industry. I mean, of course we've really been 0:00:47.800 --> 0:00:50.639 talking about the defense budget and how all those things 0:00:50.680 --> 0:00:53.560 are really impacting US defense primes. 0:00:53.600 --> 0:00:57.880 Here, George, we booked him to talk about the Boeing 0:00:58.000 --> 0:01:02.200 sales fair, Hi, ge, But now getting there, Yeah, now 0:01:02.200 --> 0:01:03.600 we got the headlines on Newark. 0:01:03.720 --> 0:01:05.759 No very true, So many things going on right now. 0:01:05.800 --> 0:01:07.280 But I mean, of course, as Matt just pointed out, 0:01:07.319 --> 0:01:10.120 we have the ITEG it's ordering seventy one large jets 0:01:10.120 --> 0:01:14.720 from Boeing and Airbus to grow its network. George, what 0:01:14.840 --> 0:01:16.560 is the initial reaction to this and how are you 0:01:16.640 --> 0:01:19.039 all thinking about this in terms of peers and what 0:01:19.080 --> 0:01:20.600 it really just generally means for Boeing. 0:01:23.000 --> 0:01:26.080 First, thanks for having me on. Yeah, so you know, 0:01:26.240 --> 0:01:29.200 we've we really thought that Boeing would probably be in 0:01:29.240 --> 0:01:37.160 the middle of the Trump administration's balance of payments equalization process, 0:01:37.240 --> 0:01:39.000 let's call it, right, And I think the defense primes 0:01:39.000 --> 0:01:42.399 will be there as well. And so it wasn't surprising 0:01:42.480 --> 0:01:45.120 to us when we saw the first deal made with 0:01:45.200 --> 0:01:48.600 the UK include Boeing jets, right, and so I think 0:01:48.640 --> 0:01:51.080 they talked about ten billion dollars orth the Boeing jets. 0:01:51.880 --> 0:01:54.400 We saw a bunch of seventy seven orders today. I 0:01:54.520 --> 0:01:57.400 might quibble about whether it's really ten billion dollars worth. 0:01:57.440 --> 0:02:00.520 I think they're using list prices, so maybe we could 0:02:00.520 --> 0:02:02.480 have we could have goosed that up a little bit 0:02:02.480 --> 0:02:06.520 if we used actual pay prices. But I'd expect this 0:02:06.560 --> 0:02:08.240 is going to be a trend you're going to see 0:02:08.760 --> 0:02:14.080 around the world as the Trump administration engages countries with 0:02:14.200 --> 0:02:18.200 again balance of payment with the US that's out of whack, 0:02:18.360 --> 0:02:21.600 and they're gonna they're going to probably offer them components 0:02:21.639 --> 0:02:25.040 for aircraft from Boeing and defense products in order to 0:02:25.080 --> 0:02:27.440 balance it. So I think you could see a pretty 0:02:27.440 --> 0:02:30.560 good year for the Boeing order book. And it's it's 0:02:30.560 --> 0:02:33.120 been a little bit like recently because they haven't been 0:02:33.120 --> 0:02:36.680 executing Airbus has been and Airbus has been taking the 0:02:36.720 --> 0:02:39.440 majority of orders last couple of years. So it would 0:02:39.480 --> 0:02:41.680 be a nice talent for Boeing to have a good 0:02:41.720 --> 0:02:43.480 year of orders underneath. 0:02:43.720 --> 0:02:44.960 Well, I'm glad of that. 0:02:45.880 --> 0:02:48.880 I love the wide body planes. I hate the seven 0:02:49.040 --> 0:02:50.400 thirty sevens and the A three to twenty. 0:02:50.480 --> 0:02:52.000 So why body more space? 0:02:52.080 --> 0:02:55.160 I need more space, you know, And I guess they'll 0:02:55.320 --> 0:02:57.120 i AG is going to use these for BA. 0:02:57.240 --> 0:02:59.880 I use Iberia a lot, which i G also owns. 0:03:00.440 --> 0:03:02.919 I'm looking forward just to having more, you know, look 0:03:02.919 --> 0:03:04.839 at me. I'm a big guy guy. 0:03:05.840 --> 0:03:06.280 I like it. 0:03:06.880 --> 0:03:11.480 But I am not going to be flying out of Newark. 0:03:11.520 --> 0:03:14.440 Typically when I go to Berlin, I'm on a United 0:03:14.440 --> 0:03:20.080 flight straight out of Newark. But over the last two weeks, George, 0:03:20.120 --> 0:03:24.880 we've had two events where the radar screens go blank, 0:03:25.440 --> 0:03:27.960 and to me, although I heard from I think the 0:03:28.000 --> 0:03:30.880 CEO of United said it's still safe, that does not 0:03:31.000 --> 0:03:33.680 sound safe to me. How safe is it when the 0:03:33.760 --> 0:03:35.360 radar screen turns off? 0:03:35.680 --> 0:03:36.120 George? 0:03:38.240 --> 0:03:41.320 I think you're right. I would argue that probably isn't 0:03:41.320 --> 0:03:45.240 that safe. But I would expect the FAA and the 0:03:45.280 --> 0:03:48.360 CEO of United to say it is safe, because that's 0:03:48.400 --> 0:03:51.200 what they always say. But I'd find it very concerning. 0:03:51.560 --> 0:03:55.600 So I mean, what happens then? I mean, first of all, 0:03:55.640 --> 0:03:58.440 what happens. Does the FAA have to stop people flying 0:03:58.440 --> 0:04:01.520 out of Newark? Because if we think that all airline 0:04:01.520 --> 0:04:06.000 travel is dangerous, that is horrendous for the US economy. 0:04:06.200 --> 0:04:08.880 So isn't it the right move for officials to say, no, 0:04:08.960 --> 0:04:11.640 it's just this one airport and stop people from flying 0:04:11.640 --> 0:04:12.440 in and out of that one. 0:04:13.480 --> 0:04:15.920 I mean, I think one, there's just no way we're 0:04:15.920 --> 0:04:17.600 gonna be able to stop people coming in and out 0:04:17.640 --> 0:04:21.960 of Newark. And just to make sure we understand what, 0:04:22.640 --> 0:04:24.800 you know, what the outage is. The outage is for 0:04:24.920 --> 0:04:29.000 aircraft sort of arriving into the Newark area, not so 0:04:29.080 --> 0:04:32.200 much the air traffic control going you know, directly landing 0:04:32.240 --> 0:04:34.760 at Newark. And so is that a little bit better? 0:04:34.800 --> 0:04:38.000 I think it is. I think give more time to react. Clearly, 0:04:38.080 --> 0:04:41.800 the FAA has to get better systems in place. You know, 0:04:42.279 --> 0:04:45.480 part of the backstory here is they moved the control 0:04:45.520 --> 0:04:49.680 of this approach and departure from Newark from a control 0:04:49.760 --> 0:04:52.360 center in New York, out of Long Island to Philadelphia, 0:04:52.360 --> 0:04:55.039 because New York is pretty overworked. They've got LaGuardia, They've 0:04:55.040 --> 0:04:58.680 got Kennedy. They tried to put in systems that would 0:04:58.760 --> 0:05:02.400 essentially remote into the New York center to get the 0:05:02.400 --> 0:05:05.520 controllers all the information they needed, and they thought they 0:05:05.520 --> 0:05:08.560 had redundant systems in place, and clearly they didn't, so 0:05:08.600 --> 0:05:11.679 they have to redouble their efforts and making sure they've 0:05:11.720 --> 0:05:15.039 absolutely got a fail safe line that gets in the 0:05:15.080 --> 0:05:19.240 data they need from that New York center. And then 0:05:19.240 --> 0:05:20.560 I think, you know, part of that is that some 0:05:20.600 --> 0:05:24.080 of the employees were, you know, very stressed out about 0:05:24.080 --> 0:05:26.960 the experience, and they've gone on leave and that's put 0:05:26.960 --> 0:05:30.120 them at a shortage. So I think it's temporary. At 0:05:30.600 --> 0:05:33.200 New York is a challenging airport. As you know, in 0:05:33.240 --> 0:05:36.040 the summer when we start to get thunderstorms, we can 0:05:36.080 --> 0:05:39.960 always have backups at Newark even under normal circumstances. But 0:05:40.000 --> 0:05:42.560 if the FA wants to push through and control this 0:05:42.600 --> 0:05:45.160 out of Philadelphia, which seems to be the right move 0:05:45.240 --> 0:05:47.880 given the amount of workload in New York. They've got 0:05:48.000 --> 0:05:52.040 have to redouble their efforts on this backup, this backup 0:05:53.040 --> 0:05:57.320 you know system to make sure there's always information and 0:05:57.360 --> 0:05:59.839 they're going to have to get you know, the controllers 0:05:59.839 --> 0:06:01.000 work there in Philadelphia. 0:06:01.000 --> 0:06:03.840 Again, Hey, George, there was a time where people were 0:06:03.839 --> 0:06:06.200 really concerned about hopping on a Boeing plane. I would 0:06:06.279 --> 0:06:08.479 argue that people are still a little bit uncomfortable with 0:06:08.520 --> 0:06:10.760 getting on some Boeing planes. But as we've kind of 0:06:10.839 --> 0:06:14.080 navigated through earning season, has the focus really been about 0:06:14.120 --> 0:06:19.240 tariffs and Boeing in other A and D companies exposure. 0:06:18.680 --> 0:06:20.680 To tariffs or are people at all still. 0:06:20.480 --> 0:06:23.720 Talking a little bit about the safety aspect for passengers 0:06:23.720 --> 0:06:25.560 on flights you. 0:06:25.520 --> 0:06:27.520 Know here and there. I do still hear people tell 0:06:27.560 --> 0:06:29.839 me they won't fly a Bowing airplane to they're concerned 0:06:29.839 --> 0:06:34.080 about it. I presume not. I'd fly in any time. So, 0:06:35.320 --> 0:06:39.599 but I do think that the narrative is starting to 0:06:39.640 --> 0:06:44.040 turn to effective tariffs as well. As you know Boeing's 0:06:44.080 --> 0:06:47.800 manufacturing process, is it stable? Is quality coming through it? 0:06:47.800 --> 0:06:50.040 Which I guess sort of bleeds into that question, would 0:06:50.080 --> 0:06:52.479 you fly a Boeing airplane? And you know what we've 0:06:52.480 --> 0:06:55.320 seen in one queue. We've saw good deliveries. We saw 0:06:55.400 --> 0:06:57.240 them get ready rid of some of the inventory of 0:06:57.279 --> 0:06:59.800 airplanes they've already been built. They've been sitting on TARA 0:07:00.560 --> 0:07:03.080 costs a lot of money to keep those maintained. They're 0:07:03.080 --> 0:07:06.839 getting rid of them. That'll help the the cost at Boeing, 0:07:06.920 --> 0:07:10.840 and it helps them focus on the manufacturing line, which 0:07:10.880 --> 0:07:13.200 is you know, which is where the cash generation's got 0:07:13.200 --> 0:07:15.800 to come from. That's going to lead the turnaround. And 0:07:16.000 --> 0:07:18.640 I would say one que looked pretty good, and so 0:07:18.680 --> 0:07:20.760 I think the narrative, you know, we've got to watch 0:07:20.840 --> 0:07:24.000 tariffs closely. I do. I don't think tariffs will hurt 0:07:24.440 --> 0:07:27.280 Boeing that much. Again, I think they'll be involved in 0:07:27.320 --> 0:07:30.920 negotiations over balance of payments. I think there's other parts 0:07:30.920 --> 0:07:34.400 of the backlog where they could deliver airplanes away from 0:07:34.440 --> 0:07:39.000 tariff issues. And so it looks to us like the 0:07:39.040 --> 0:07:42.600 setup could still be pretty good for a recovery for Boeing, 0:07:42.640 --> 0:07:44.440 for a lot of deliveries this year and some good 0:07:44.440 --> 0:07:45.320 cash generation. 0:07:45.880 --> 0:07:50.800 George in general, I think people though are worried about safety, 0:07:51.640 --> 0:07:55.000 not necessarily about the seven thirty seven. I know you'll 0:07:55.040 --> 0:07:59.760 still fly at Paul Sweeney loves that plane. But you know, 0:07:59.800 --> 0:08:03.000 we've had we've had more air crashes, we have these 0:08:03.120 --> 0:08:06.240 problems now at Newark. Is it just bad timing that 0:08:06.280 --> 0:08:08.400 this happens at the same time that you know, Elon 0:08:08.520 --> 0:08:13.680 Mosk is taking a chainsaw to government jobs? Or is 0:08:13.720 --> 0:08:17.400 this because of that kind of cost cutting? And I 0:08:17.440 --> 0:08:22.760 also wonder air traffic control are they paid enough to 0:08:22.880 --> 0:08:25.720 work in the New York metro area or do we 0:08:25.760 --> 0:08:27.080 need to pay them more? 0:08:29.120 --> 0:08:29.200 So? 0:08:29.280 --> 0:08:32.439 I think a bunch of questions in there, maybe. 0:08:32.280 --> 0:08:35.240 Two separate questions, right is it is it Doge or not? 0:08:35.840 --> 0:08:38.800 And so should we pay these should we pay these 0:08:38.800 --> 0:08:41.320 guys moving ten a little bit more? So? 0:08:41.440 --> 0:08:45.720 I think that first it's not Doge in my view? Right, So, 0:08:46.520 --> 0:08:50.520 air traffic control system is something that is built over decades, 0:08:50.960 --> 0:08:53.960 and that's part of the challenge, challenge of managing it 0:08:54.440 --> 0:08:56.920 and upgrading it, is that you've got old systems working 0:08:56.920 --> 0:08:59.880 with new The air traffic control system never seems to 0:08:59.880 --> 0:09:03.040 get enough money from Congress to make it as maybe 0:09:03.080 --> 0:09:04.880 as whiz bang as we should have here in the 0:09:04.960 --> 0:09:08.200 United States. It's important to us, it's important to our economy. 0:09:08.440 --> 0:09:11.000 We have a very disparare country. Right, We've got population 0:09:11.120 --> 0:09:14.520 centers pretty far apart, no trains that link them. So 0:09:14.600 --> 0:09:17.520 to me, it's super critical to the US infrastructure. It 0:09:17.600 --> 0:09:20.160 never seems to get the money it deserves. And so 0:09:20.240 --> 0:09:23.840 this is a build up over decades of you know, 0:09:24.120 --> 0:09:27.199 putting this together with bailing wire and tape. Right. So 0:09:27.760 --> 0:09:30.240 hopefully the Trump administration does come through with a nice 0:09:30.400 --> 0:09:33.000 upgrade program for the system, because I think it would 0:09:33.040 --> 0:09:35.800 also fix some of the controller issue. I think you 0:09:35.800 --> 0:09:39.960 could bring a lot better technology to the business and 0:09:40.000 --> 0:09:42.160 not have to worry about recruiting controllers. I think we're 0:09:42.200 --> 0:09:46.360 having a challenge recruiting controllers. Are they paid enough? Probably not, right, 0:09:46.600 --> 0:09:49.200 I hear ranges from seventy to two hundred and twenty 0:09:49.200 --> 0:09:51.959 thousand dollars. You probably know, even with two hundred and 0:09:51.960 --> 0:09:54.400 twenty thousand dollars a year, it's probably a little bit 0:09:54.760 --> 0:09:58.199 hard to live on Long Island if you're starting out 0:09:58.200 --> 0:10:00.000 at seventy I don't know how you live in Long Island. 0:10:00.720 --> 0:10:02.720 I will tell you some of them get you know, 0:10:02.760 --> 0:10:06.440 over time and other things that bolster their pay and 0:10:06.800 --> 0:10:09.520 you know, so maybe they don't want, they don't want 0:10:09.559 --> 0:10:12.480 one hundred percent backfill of all the employees. But probably 0:10:12.520 --> 0:10:14.280 just a bad situation for us to be in, and 0:10:14.320 --> 0:10:16.200 so we need to do better at recruiting and we 0:10:16.240 --> 0:10:18.400 probably need to raise some day in that area. 0:10:19.040 --> 0:10:21.200 All right, George, thanks very much, George Ferguson. 0:10:21.280 --> 0:10:27.160 There, you're listening to the Bloomberg Business Week Daily Podcast. 0:10:27.400 --> 0:10:30.120 Catch us live weekday afternoons from two to five eas 0:10:30.160 --> 0:10:33.800 during Listen on Applecarplay and Android Otto with the Bloomberg 0:10:33.880 --> 0:10:37.240 Business app, or watch us live on YouTube. 0:10:38.760 --> 0:10:41.000 Well, you know, a lot has been going on right now, Matt. 0:10:41.120 --> 0:10:42.280 I've been watching, I. 0:10:42.240 --> 0:10:44.520 Mean, what we're doing, the news, but there's so many 0:10:44.520 --> 0:10:45.960 headlines that have been coming through. And one of the 0:10:45.960 --> 0:10:48.800 things that I've been keeping an eye on is Trump 0:10:48.840 --> 0:10:52.840 saying that he is interested, he's open to right. He 0:10:52.840 --> 0:10:57.080 said he's okay if they do hiking on hiking taxes 0:10:57.120 --> 0:10:59.800 on the wealthy. Those are people who are earning two 0:10:59.800 --> 0:11:04.000 and a half million dollars or more. And it seems 0:11:04.000 --> 0:11:06.400 as though he's cautioning the GOP on it, but he 0:11:06.440 --> 0:11:07.640 says that he's okay with it. 0:11:07.640 --> 0:11:09.000 It's a lot to uncover here. 0:11:08.920 --> 0:11:11.760 A lot as He mastered the flip flop, the wishy 0:11:11.920 --> 0:11:14.800 washy statement in a way that nobody else could because 0:11:14.840 --> 0:11:18.840 he said in a truth social posting that this is 0:11:18.880 --> 0:11:22.560 what cost George Bush Senior the election, although this isn't 0:11:22.600 --> 0:11:25.840 what cost George Bush Sheenery the election. He thinks Congress 0:11:25.880 --> 0:11:28.319 could do it, although he doesn't think Congress maybe should 0:11:28.360 --> 0:11:31.560 do it. He's contradicted himself in so many ways. But 0:11:31.600 --> 0:11:34.400 it's interesting. Nonetheless, Yes, and so we're going to talk 0:11:34.440 --> 0:11:38.360 about it right now with Eric Wasson, congressional reporter out 0:11:38.440 --> 0:11:39.959 of Washington, d C. 0:11:40.120 --> 0:11:43.960 For US at Bloomberg News. Eric, it seems as. 0:11:43.880 --> 0:11:48.720 If President Trump wants to do this to pay for 0:11:49.320 --> 0:11:51.520 a lot of the other tax cuts that he's promised 0:11:51.840 --> 0:11:53.160 while he was on the campaign trail. 0:11:53.240 --> 0:11:54.960 Is that fair to say? 0:11:55.600 --> 0:11:55.840 Yeah? 0:11:55.880 --> 0:11:58.240 You know, his truth social post differs very much from 0:11:58.280 --> 0:12:00.360 what he's saying in private. He called up Speaker of 0:12:00.360 --> 0:12:03.880 Mike Johnson on Wednesday and ask for this tax rate 0:12:04.240 --> 0:12:06.640 increase on the wealthy. He also asked in that same 0:12:06.679 --> 0:12:09.760 conversation to close what's known as the carried interest loophole, 0:12:09.880 --> 0:12:13.720 to to call tax carried interest as ordinary income, something 0:12:13.720 --> 0:12:16.640 that's opposed by private equity venture capital in the real 0:12:16.720 --> 0:12:21.240 estate industry. But you know he's waffling in public. One 0:12:21.679 --> 0:12:24.400 GPA high level texted me, you know, this guy's a 0:12:24.480 --> 0:12:26.920 fortress force of nature. They're really trying to put together 0:12:26.920 --> 0:12:30.360 this very complicated bill, and his public statements and private 0:12:30.360 --> 0:12:33.760 interventions are making it even harder to get you get 0:12:33.760 --> 0:12:36.559 together on this. The big question is, you know, how 0:12:36.720 --> 0:12:39.680 how many years can they you know, suspend taxation on 0:12:39.760 --> 0:12:43.160 tips overtime and raise a standard deduction for seniors to 0:12:43.240 --> 0:12:47.400 compensate for paying tax and Social Security benefits. You know, 0:12:47.480 --> 0:12:50.080 the if they do these other pay fors as they're called, 0:12:50.080 --> 0:12:51.640 like raising decks on the ritch, you could maybe do 0:12:51.679 --> 0:12:54.040 that for ten years. If not, maybe it's just two 0:12:54.160 --> 0:12:57.560 or three or four years of that tax new tax 0:12:57.600 --> 0:13:00.320 benefit and then basically they can go to the voters say, 0:13:00.440 --> 0:13:02.640 you know, re elect Republicans in twenty twenty eight, will 0:13:02.640 --> 0:13:03.120 extend it. 0:13:04.200 --> 0:13:05.640 Eric I mean, of course, when we think about the 0:13:05.679 --> 0:13:10.560 idea of hiking taxes, especially on the wealthy, this could 0:13:10.559 --> 0:13:13.400 be said to be counter to what the Republican agenda 0:13:13.600 --> 0:13:17.720 is in Washington. If there is merit to these tweets 0:13:17.720 --> 0:13:20.880 and there is a push for this, what exactly does 0:13:20.920 --> 0:13:22.680 that look like in terms of the hurdles that it 0:13:22.720 --> 0:13:25.360 takes to make that happen, and does Trump actually have 0:13:25.440 --> 0:13:27.760 the jurisdiction to make that call. 0:13:27.920 --> 0:13:30.280 Well, well, just put it simply, I don't see this 0:13:30.520 --> 0:13:34.520 tax rate increase happening. It's opposed by congressional leadership in 0:13:34.559 --> 0:13:37.800 both the House and Senate. You know, this is opposed 0:13:37.800 --> 0:13:41.679 by the core, you know, the traditional Republicans. Now there 0:13:41.720 --> 0:13:44.520 are these New America First populists like JD. Vance or 0:13:44.559 --> 0:13:47.760 in cast others who are in favor of it, and 0:13:47.800 --> 0:13:51.200 you know what, the politics, they're probably right. Democrats are 0:13:51.200 --> 0:13:53.520 going to attack this bill as a tax cut for 0:13:53.559 --> 0:13:57.000 billionaires paid for by cuts to medicaid in food stamps, 0:13:57.320 --> 0:13:59.280 and it is a very good chance that Democrats take 0:13:59.280 --> 0:14:02.760 the House in twenty twenty six elections running against this bill. 0:14:03.320 --> 0:14:06.040 So I think Trump's political instincts are correct. But the 0:14:06.080 --> 0:14:09.559 party really doesn't want to be the party of raising taxes. 0:14:09.600 --> 0:14:12.240 It's one thing that really unites Republicans in the past, 0:14:12.559 --> 0:14:14.679 and it's going to be almost impossible. They can only 0:14:14.720 --> 0:14:17.199 lose like three votes in the House, you know, the 0:14:17.240 --> 0:14:19.560 same number in the Senate, and then you're just not 0:14:19.600 --> 0:14:21.600 going to get those votes for this, So I don't 0:14:21.600 --> 0:14:24.480 think it's really going to happen. That carried interests is 0:14:24.480 --> 0:14:27.080 a different story. Maybe that gets snuck in. Certainly lobbyists 0:14:27.160 --> 0:14:30.520 or fighting tooth and nail on that issue as we speak, 0:14:31.080 --> 0:14:33.000 but I just don't think it's going to happen. And 0:14:33.040 --> 0:14:35.360 Trump has remade the party. If his truth social posts 0:14:35.400 --> 0:14:39.000 today came out strongly in favor of this, perhaps he 0:14:39.040 --> 0:14:42.760 could move mountains. But he's so tepid in his support 0:14:42.840 --> 0:14:45.800 that I just I don't see him really being able 0:14:45.840 --> 0:14:47.360 to get this through now. 0:14:47.360 --> 0:14:49.680 The interesting thing is that he raised taxes on so 0:14:49.760 --> 0:14:55.040 many millions of middle class families in twenty seventeen with 0:14:55.080 --> 0:14:59.080 the TCJA when he capped the State and Local tax deduction, 0:14:59.200 --> 0:15:02.280 a deduction that has been in place for over a century. 0:15:02.720 --> 0:15:09.040 That really, that really, I think reflects the heart of 0:15:09.040 --> 0:15:12.200 American tax policy, that you shouldn't be taxing people twice 0:15:12.200 --> 0:15:16.560 on the same income. And that cap he promised to 0:15:16.640 --> 0:15:19.760 lift when he was campaigning here in New York on 0:15:19.800 --> 0:15:23.000 Long Island before the before the election. 0:15:23.880 --> 0:15:25.920 Do you think we're gonna see the salt cap lifted? 0:15:27.160 --> 0:15:29.640 It's going to be lifted, but the amount that's on 0:15:29.680 --> 0:15:32.120 the table now is a thirty thousand dollars cap as 0:15:32.120 --> 0:15:35.720 if the ten thousand that's there now not doubled for 0:15:35.720 --> 0:15:39.320 for for married couples. You know, that was rejected immediately 0:15:39.360 --> 0:15:42.840 by a group of Republicans from high tax states like 0:15:42.840 --> 0:15:45.600 New York and California, including Elise Stefonik, who may be 0:15:45.720 --> 0:15:48.560 running for governor, who jumped into this fray kind of 0:15:48.600 --> 0:15:52.080 at the eleventh dour. You know, I think they maybe 0:15:52.080 --> 0:15:54.360 they're gonna get the marriage penalty eliminated, maybe goes up 0:15:54.360 --> 0:15:57.800 to forties. Can't be much more. It's extremely expensive. Uh, 0:15:57.840 --> 0:16:00.120 you know, we're talking trillions if you get high I 0:16:00.880 --> 0:16:03.200 hire into the size of the cap that some people 0:16:03.240 --> 0:16:06.480 are talking aboute hundred thousand dollars, and they just don't 0:16:06.480 --> 0:16:08.720 have the running room. And then the House, the real 0:16:08.760 --> 0:16:11.920 issue is that the Conservatives want spending cuts, and if 0:16:11.960 --> 0:16:14.360 you go above four trillion dollars, they want more spending 0:16:14.400 --> 0:16:17.320 cuts that the moderates will not do to medicate. The 0:16:17.320 --> 0:16:19.560 Senate's a different story. You know, in the end of 0:16:19.600 --> 0:16:21.640 the day, the Senate has given itself a mandate of 0:16:21.680 --> 0:16:25.320 only cutting four billion dollars in spending. They're pretty much 0:16:25.680 --> 0:16:27.760 primed to put a lot of this on the nation's 0:16:27.760 --> 0:16:31.840 credit card and then increase the deficit through a budget 0:16:31.880 --> 0:16:34.360 gimmick that I won't go into now, but basically it 0:16:34.560 --> 0:16:37.080 assumes that the cost of extending the existing tax cuts 0:16:37.120 --> 0:16:39.520 is zero. You know, the Senate will probably win the 0:16:39.600 --> 0:16:41.120 end of the day, but for now, they're just trying 0:16:41.120 --> 0:16:42.480 to get this out of the House. The House has 0:16:42.560 --> 0:16:46.120 to start all tax legislation under the Constitution, and you know, 0:16:46.200 --> 0:16:48.840 they got to satisfy the conservative fiscal hawks a little 0:16:48.840 --> 0:16:52.080 bit by not just going hogwild on things like an 0:16:52.200 --> 0:16:53.440 unlimited salt cap. 0:16:55.520 --> 0:16:59.360 All right, I just you know, it feels like they 0:16:59.360 --> 0:17:02.400 didn't get tax revenue before. So if you double tax 0:17:02.440 --> 0:17:04.600 people to get more tax revenue temporarily, and then all 0:17:04.640 --> 0:17:06.960 of a sudden it turns into I guess all temporary 0:17:07.000 --> 0:17:09.720 taxes eric turn into permanent taxes, don't they. 0:17:11.359 --> 0:17:12.240 Well, I was a pay. 0:17:12.200 --> 0:17:14.159 Four in twenty seventeen. I mean, it was one of 0:17:14.160 --> 0:17:16.960 the pay fours, So they're trying to use it again 0:17:17.000 --> 0:17:20.800 to some degree. But yeah, I mean there's certainly an argument. Interestingly, 0:17:20.840 --> 0:17:23.120 business really cares about something you know, to sea salt, 0:17:23.160 --> 0:17:25.840 which is the corporate salt deduction. There's been a real 0:17:25.920 --> 0:17:29.200 effort here to limit that. That's the ability of companies 0:17:29.520 --> 0:17:33.320 to deduct state income, property and other fees from their 0:17:33.359 --> 0:17:35.680 federal taxes. And I was thought of as a pay 0:17:35.720 --> 0:17:38.840 for for this salt cap increase. We are hearing that 0:17:38.840 --> 0:17:40.920 business is probably going to be successful in beating that back. 0:17:40.960 --> 0:17:42.920 It's a top priority of places like the US Chamber 0:17:42.920 --> 0:17:45.040 of Commerce to not have this in the bill, and 0:17:45.080 --> 0:17:46.560 we can get into it. There's a host of other 0:17:46.920 --> 0:17:51.800 similar tax provisions on executive compensation, stock buybacks that lobbyists 0:17:51.800 --> 0:17:53.240 are fighting over even as we speak. 0:17:54.200 --> 0:17:57.399 It's so funny because they don't pay taxes anyway, these corporations, right, 0:17:57.440 --> 0:17:59.720 if you look at Eric, correct me if I'm wrong, 0:17:59.760 --> 0:18:03.840 But individual taxpayers contribute I think two point two trillion 0:18:03.920 --> 0:18:08.040 dollars to annual revenue, and corporations contribute less than half 0:18:08.119 --> 0:18:10.959 a trillion, something like four hundred and fifty billion. 0:18:11.000 --> 0:18:11.440 Is that right. 0:18:12.600 --> 0:18:14.119 I don't have those stats right in front of me, 0:18:14.160 --> 0:18:16.760 so I can't confirm or deny them, but I will. 0:18:16.800 --> 0:18:19.240 I will say that you know, corporations will argue that 0:18:19.280 --> 0:18:22.280 this will impinge on economic growth and their ability to 0:18:22.400 --> 0:18:25.960 hire and grow their businesses. So you know, there's probably 0:18:25.960 --> 0:18:28.720 some merit to that, especially if new corporate taxes go 0:18:28.920 --> 0:18:32.440 much higher. You know, the corporate solid tax proposal is 0:18:32.480 --> 0:18:34.800 talking about that's on the table is a one percent 0:18:34.840 --> 0:18:38.119 effective corporate tax increase from the current twenty one to 0:18:38.119 --> 0:18:38.879 twenty two percent. 0:18:39.480 --> 0:18:41.200 I mean, of course, when we think about the idea 0:18:41.240 --> 0:18:44.560 of taxing the rich, this is something that Democrats do 0:18:44.720 --> 0:18:46.880 want to hear. But I mean when we think about 0:18:46.880 --> 0:18:50.200 their Republican party, is there anybody that would be in 0:18:50.320 --> 0:18:51.159 support of this? 0:18:51.240 --> 0:18:53.479 Who else would be potentially on board with Trump? 0:18:54.280 --> 0:18:56.600 Oh? Well, you know, it's very interesting. Andy Harris is 0:18:56.640 --> 0:18:58.680 the head of the House Freedom Caucus. He's very much 0:18:58.720 --> 0:19:00.359 on board. I think I first broke that story when 0:19:00.400 --> 0:19:02.080 I talked to him in the hallway. He's out on 0:19:02.160 --> 0:19:04.960 media again today saying yes, let's do it. He would 0:19:05.000 --> 0:19:09.320 even go for millionaires, not just two point five millionaires, 0:19:10.520 --> 0:19:12.760 and to pay for some of these other agenda items. 0:19:12.920 --> 0:19:16.159 So it's interesting. There are interesting allies even among the 0:19:16.160 --> 0:19:19.800 most conservative. Josh Hawley, who's a populist of the new 0:19:19.840 --> 0:19:23.000 style close to JD. Vans in the Senate, is also 0:19:23.080 --> 0:19:26.080 in favor. So there are allies, and these are part 0:19:26.119 --> 0:19:28.000 of the people who think the Republican Party needs to 0:19:28.040 --> 0:19:31.520 cement itself as a working class party. Culturally, it's very 0:19:31.520 --> 0:19:35.640 working class, it braces very similar values, anti woke, etc. 0:19:36.440 --> 0:19:37.919 These guys say it needs to be followed up with 0:19:38.000 --> 0:19:41.680 economic benefits. But on the other hand, you know, certainly 0:19:41.720 --> 0:19:44.840 economists woul say these tariffs, some of which would go 0:19:44.920 --> 0:19:47.600 into place permanently, that Trump is talking about, are a 0:19:47.640 --> 0:19:50.840 direct you know, basically a sales tax that really hits 0:19:51.480 --> 0:19:53.080 lower and blue collar workers. 0:19:53.880 --> 0:19:55.120 Eric, great talking to you. 0:19:55.920 --> 0:19:58.919 I'll continue to send you the occasional email here and 0:19:58.920 --> 0:20:01.399 there when if you're right assault story. He's sick of me, 0:20:02.000 --> 0:20:04.720 probably shooting him a Bloomberg message. By the way, where 0:20:04.760 --> 0:20:06.399 are you It looks like you're set up in a 0:20:06.440 --> 0:20:07.680 debate hall or something. 0:20:07.720 --> 0:20:08.399 I'm so curious. 0:20:08.480 --> 0:20:13.000 I'm in the press conference studio of the House Representatives, 0:20:13.200 --> 0:20:15.000 right next next to the place where I work. 0:20:15.080 --> 0:20:18.359