Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us
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Speaker 2: We've spent the better part of the week talking about
Speaker 2: a potential deal on the border funding for Israel Ukraine,
Speaker 2: maybe a breakthrough in the Senate, the Senate, the House.
Speaker 2: We're out today. We only have a couple legislative days
Speaker 2: left here. They've got through the end of next week
Speaker 2: essentially to get something done, and we're going to talk
Speaker 2: to Congressman Don Bayer about that in just a moment.
Speaker 2: The headline, though on jobs is stronger than expected, pretty
Speaker 2: much across the board. As we connect with our friend
Speaker 2: Michael McKee in New York, Bloomberg Economics Editor, one hundred
Speaker 2: and ninety nine thousand jobs. Michael, it's great to see you.
Speaker 2: I heard you live at eight thirty, and I know
Speaker 2: you've been talking about this ever since. I can tick
Speaker 2: through the data. If you're listening to Bloomberg, if you
Speaker 2: have a terminal, you don't need me to tell you.
Speaker 2: Monthly wage growth rising more than expected, workforce participation up.
Speaker 2: It's hard to find bad news in here, I guess,
Speaker 2: depending on how you look at things. Michael McKee, what
Speaker 2: does it mean for the Fed next week?
Speaker 3: Well, it's good news for the FED basically tells them
Speaker 3: that we are still seeing strength in the economy. It
Speaker 3: has slowed, hiring is lower than it was, but we're
Speaker 3: seeing wage gains and the rate of wage gains is slowing,
Speaker 3: so less inflation pressure. But overall it fits Goldilocks soft
Speaker 3: landing scenario quite well. I joked earlier today that I
Speaker 3: wish I had been at the Council of Economic Advisors
Speaker 3: this morning when they opened the champagne bottles, because this
Speaker 3: is certainly a good news for the Biden administration.
Speaker 2: Sure is. I mean, look, I guess it's good to
Speaker 2: see wage growth in an era of inflation. But doesn't
Speaker 2: this become the definition of inflation area at some point, Michael,
Speaker 2: or am I reading it wrong?
Speaker 3: Well, it would if it were continuing to go up.
Speaker 3: But what we're seeing is wage growth coming down. The
Speaker 3: FED thinks that average hourly earnings of between three and
Speaker 3: three and a half percent are what's sustainable with two
Speaker 3: percent inflation. It still leaves you a little ahead of inflation,
Speaker 3: and so we're down to four percent now, so we're
Speaker 3: getting into that range, and as long as it continues
Speaker 3: in that direction, the Fed will feel justified. Then the
Speaker 3: question becomes if we get down to the three and
Speaker 3: a half percent range and inflation continues to fall, when
Speaker 3: do they start cutting interest rates? That'll be a key
Speaker 3: question that'll be asked if Jay poll next week.
Speaker 2: So this is sweet music for the White House, obviously, Michael,
Speaker 2: it would be an orchestra though if we actually did
Speaker 2: see a soft landing at some point in what's going
Speaker 2: to be a reelection year, potentially for Joe Biden, certainly
Speaker 2: a campaign year. But Bloomberg Economics is telling us that
Speaker 2: a recession probably already started in October. How do we
Speaker 2: rationalize that call.
Speaker 3: Well, nobody's been able to predict recessions with any accuracy.
Speaker 3: We find out later that we were in a recession
Speaker 3: because the numbers get revised, and they get revised lower
Speaker 3: to show that things were actually contracting. Right now, it
Speaker 3: doesn't seem like that's the case. That we're seeing still
Speaker 3: still growth in just about every category, and certainly the
Speaker 3: hiring levels and the unemployment rate of three point seven
Speaker 3: percent suggests that we're not in recession. It could always
Speaker 3: be changed, and we could find out in the new
Speaker 3: year that we are.
Speaker 1: But at this.
Speaker 3: Point it looks like a soft landing. The issue is
Speaker 3: how do you define it in terms of time. You
Speaker 3: could come out if you were Jay Powell or Joe
Speaker 3: Biden right now and say, well, we had a soft landing.
Speaker 3: Do you wait until you get to two percent inflation
Speaker 3: sometime next year? Because the economy is always evolving, so
Speaker 3: you're always at risk of while we had it. And
Speaker 3: then it left.
Speaker 2: Good to see you, Michael, have a great weekend. Thanks
Speaker 2: for the good news. Michael McKee, Bloomberg Economics Editor, with
Speaker 2: us from world headquarters in New York. As we turned
Speaker 2: to the Congressman from Virginia, Don Byer, the Democrat from
Speaker 2: the Commonwealth, is with us. At least you're still here, Congressman.
Speaker 2: By the nature of your district, of course, I know
Speaker 2: a lot of lawmakers have headed home for the weekend,
Speaker 2: and I love to start with you. Welcome back on
Speaker 2: the news on jobs here. Aren't you itching to see
Speaker 2: that Michigan accomplished banner? Go up here see Joe Biden
Speaker 2: take victory for beating inflation. For accomplishing the soft landing.
Speaker 2: Is this it right now?
Speaker 4: Well, Jay, I wish it were that simple. But there's
Speaker 4: a lot of really good news. I loved your interview.
Speaker 4: You just had the fact that it's the fourteen million
Speaker 4: new jobs in the Biden administration. This is the twenty
Speaker 4: second straight month we've been below four percent unemployment rate.
Speaker 4: That's never happened in our lives. And now we see
Speaker 4: inflations down to about a third of what it was
Speaker 4: a year ago. I was fascinating to see the Michigan
Speaker 4: Consumer Sentiment at Index this morning that Americans are beginning
Speaker 4: to see feel and project much lower interest expectations, including
Speaker 4: an eight year range of two point eight percent. So
Speaker 4: we're moving in the right direction. The problem we have,
Speaker 4: and I think most people have comment on this, is
Speaker 4: that we have not gotten used to the nine ten
Speaker 4: percent of higher prices that hit us last year when
Speaker 4: the inflation was so high. So food still costs more
Speaker 4: than we think it should. Gasoline's getting in the right place,
Speaker 4: which is great. But you know, unless we expect massive deflation,
Speaker 4: which would be terrible for the economy, we're not going
Speaker 4: to go back to the prices the way they were
Speaker 4: and that's going to make us pretty unhappy for the
Speaker 4: middle run.
Speaker 2: And that's why Joe Biden looks at that historically low
Speaker 2: approval rating. He's in the upper thirties, low forties, depending
Speaker 2: on the poll that you're watching. Congressman, Can that change
Speaker 2: in the next year?
Speaker 4: I think so. And you know, if the Fed starts
Speaker 4: to move those rates down, that will be a wonderful thing.
Speaker 4: I mean, the markets are going to love it, and
Speaker 4: I think the people will feel much better about it.
Speaker 4: Here right now, it's pretty hard to buy a new
Speaker 4: home when you know thirty year interest rates or six
Speaker 4: seven eight percent. So I'm hoping that Jay Powell and
Speaker 4: his team look at these numbers and say, Okay, we've
Speaker 4: done enough. Let's start to move this loos in this
Speaker 4: economy a little bit more.
Speaker 2: Well, that would be a good thing. There's a thought, though,
Speaker 2: that what's happening on Capitol Hill is an economic risk
Speaker 2: in itself. Congressman, and I wonder your thoughts on this.
Speaker 2: As a member of the minority party, you're a bystander
Speaker 2: in some cases when it comes to the dysfunction that
Speaker 2: we've seen. But is it likely we're going to go
Speaker 2: into this recess next week without anything being accomplished on
Speaker 2: funding for Israel, for Ukraine on the border, or for
Speaker 2: overall government funding.
Speaker 4: Joe, there's three big things hanging over us in the
Speaker 4: next six seven days. One are the FAISA seven h
Speaker 4: two law, which is basically came after nine to eleven,
Speaker 4: which gives our Intelligence Committee the ability to listen in
Speaker 4: on foreign conversations. That expires twelve thirty one, and we
Speaker 4: really dare not have it be out of not the
Speaker 4: law for even a day, so we've got to get
Speaker 4: that done. The FAA is about to expire again, so
Speaker 4: we need the Federal Aviation Administration to be authorized this week.
Speaker 4: But the big thing is Ukraine's out of money and
Speaker 4: they're out of weapons. They desperately need the new investment
Speaker 4: from the USA, and that's you know, sixty billion dollars
Speaker 4: is what the President's asked for. Israel is really looking
Speaker 4: forward to its investment, and the people in Palestine need
Speaker 4: that humanitarian assistance. All three of them right now are
Speaker 4: hinging on whether or not we can get agreement on
Speaker 4: border control. Basically, the Center Republicans have said, without significant
Speaker 4: change in the border laws, you know, it's just toughening
Speaker 4: up the border. They won't move forward. They've turned down
Speaker 4: all the Biden us for more money for Bord regards
Speaker 4: for judges to process assilent applications. I'm hoping that Senator
Speaker 4: Chris Murphy, a Democrat from Connecticut, who's leading the charge
Speaker 4: on our side, will be able to come up with
Speaker 4: a good compromise and we can get that done this
Speaker 4: coming week.
Speaker 2: Well, I'm by the boys.
Speaker 1: Now.
Speaker 2: That would be a piece.
Speaker 4: It is a dangerous thing in terms of handing Ukraine
Speaker 4: back to Putin.
Speaker 2: I get it. If you accomplished that next week, though,
Speaker 2: this would be this would be a screamer of a headline.
Speaker 2: As we say in the business, it's been twenty thirty
Speaker 2: years in the making to actually get Republicans and Democrats
Speaker 2: together here and pass legislation, not just an agreement, but
Speaker 2: make it law. Congressman, there's a report from Reuters today
Speaker 2: the Biden administration is considering supporting new restrictions on who
Speaker 2: can seek asylum, defining asylum more narrowly, as well as
Speaker 2: an expanded deportation process, maybe open to designating additional safe
Speaker 2: third countries. Is that what you're hearing from the White House.
Speaker 2: Would you support those measures?
Speaker 4: Yes? I would, and I think, you know, Joe, we're
Speaker 4: looking at eleven twelve thousand people a day crossing the border.
Speaker 4: And these aren't folks swimming across the Rio Grande. They're
Speaker 4: walking across the bridge from Warez to l Passo and
Speaker 4: turning themselves in and claiming asylum. And we have a
Speaker 4: very generous asylum system. Because we can't process them it's two, three,
Speaker 4: four years to get a hearing, we release them into
Speaker 4: the countryside the so called you know, humanitarian parole, and
Speaker 4: then we end up with ever more people without papers
Speaker 4: in the US who can't work in the normal economy.
Speaker 4: We've got to do something. Even when democratic city is
Speaker 4: like New York and Chicago are pushing back hard, we
Speaker 4: know that there has to be a bipartisan solution.
Speaker 2: That's an important statement for a Democrat to say to
Speaker 2: your colleagues you're talking with when reporters like me are
Speaker 2: not around feel the same way, or is this going
Speaker 2: to be something that Democrats need to do some soul
Speaker 2: searching on before voting next week If it really came
Speaker 2: to that.
Speaker 4: Yes, some soul searching. And certainly not everyone on the
Speaker 4: Democratic side agrees with me. You know, we have a
Speaker 4: there's a natural conflict between our compassion, our desire to
Speaker 4: help every human being and take care of people who
Speaker 4: are fleeing your murder and sexual assault and deep poverty
Speaker 4: at the same time, recognizing, as Barack Obama said that
Speaker 4: we're not a country if we don't have a border,
Speaker 4: and I think there are ways we can work together.
Speaker 4: One of the pushbacks from my Republican pals is they
Speaker 4: don't want to give citizenship access to the Dreamers or
Speaker 4: to the people that have been here on temporary protective
Speaker 4: status sometimes for decades. And one of the things we
Speaker 4: want to see, as Democrats in fact seen reright House
Speaker 4: officials said, you know, I'll trade all kinds of border
Speaker 4: security for the right of our dreamers to have a
Speaker 4: path to citizenship.
Speaker 2: Well, all right, so let's stop right there, because I
Speaker 2: haven't heard that word from a Democrat on the program, Congressmen,
Speaker 2: since this debate began about border security, the throws of
Speaker 2: debate that we're in right now, the idea is, instead
Speaker 2: of asking for help with Dreamers, Democrats will trade border
Speaker 2: reform for Ukraine funding. What about dreamers? My goodness, they're
Speaker 2: old enough to have kids themselves now.
Speaker 4: Oh, I thank you a lot of them now. There
Speaker 4: are many in my district in northern Virginia, and you know,
Speaker 4: they're the heart of our economy. They're all valedictorians of
Speaker 4: their high school classes, and they're doing really well in
Speaker 4: our Virginia colleges and universities. But you're right, some of
Speaker 4: them are getting to be into their thirties with families
Speaker 4: of their own and still don't feel like they can
Speaker 4: be American citizens, no green cards. It's really unfair.
Speaker 2: But they're not going to be part of this deal, though,
Speaker 2: are they?
Speaker 5: Well?
Speaker 4: I wish they were. I'm not a senator, so I'm
Speaker 4: not part of those conversations. I'm certainly hoping that people
Speaker 4: like Christoph Murphy are asking that as our part of
Speaker 4: the deal.
Speaker 2: Spending time with Congressman Don Byer on Bloomberg's sound on Congressman,
Speaker 2: I'd love to ask you about the rub when it
Speaker 2: comes to Israel as well, because a number of progressive Democrats,
Speaker 2: and in this case, many Senators, are asking for humanitarian
Speaker 2: strings attached to the money, if you will, it's not
Speaker 2: just Israel technically as Ukraine as well, but Chris van
Speaker 2: Holland about a dozen progressive Democratic senators have put up
Speaker 2: this amendment to the supplemental that would require exported offensive
Speaker 2: weapons be used quote in accordance with US law, international
Speaker 2: humanitarian law, and the law of armed conflict. Would also
Speaker 2: require a report to Congress on each country's use of
Speaker 2: US supplied weapons. Isn't that already implied in an arms
Speaker 2: sharing agreement? Congressman, do we need that?
Speaker 1: Well?
Speaker 4: I think all that Senator Van Hollo is trying to
Speaker 4: do is emphasize it because it already is the law.
Speaker 4: We certainly inspect Israel and Ukraine and Russia and well
Speaker 4: comas not to obey international law and Geneva Convention and
Speaker 4: all that. Yeah, so I have no objection to the amendment,
Speaker 4: but it should be being being done already.
Speaker 2: You know one thing we started on the jobs report
Speaker 2: last thing we talked about when you were here. As
Speaker 2: someone who has worked a career in the auto business, Congressman,
Speaker 2: that of course would be you. We saw the impact
Speaker 2: of the UAW strike coming to an end. It's partly
Speaker 2: why this Job's report was so strong. Are you happy
Speaker 2: with the terms of that contractor that they get too
Speaker 2: much from the Big Three?
Speaker 4: No? I am happy for the terms with it and Sadly,
Speaker 4: the incomes of the top executives were so out of
Speaker 4: skew with what the average worker was making. They had
Speaker 4: a really strong case to make. And those auto workers
Speaker 4: they've sucked it up, sucked it up and took a
Speaker 4: big hit in two thousand and eight, two thousand and
Speaker 4: nine at the Great Recession when the Carter Governor stepped
Speaker 4: into say at the car manufacturers. Now they're just trying
Speaker 4: to begin to catch up from all those years of
Speaker 4: the left behind. I think it was a good deal.
Speaker 2: Glad you could join us, Congressman. I hope you have
Speaker 2: a great weekend. If I don't see you again, have
Speaker 2: a great holiday season. And thanks for the insights from
Speaker 2: the great state of Virginia. Congressman Don Byer, the Democrat
Speaker 2: with the setting us up for our panel, Rick and
Speaker 2: Junie or on the way in next.
Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch the
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Speaker 2: We should hear from the RNC on whether it's going
Speaker 2: to allow Republican presidential candidates to take part in unsanctioned debates.
Speaker 2: The funny part is they're already scheduling them, and I'm
Speaker 2: not sure what that says about the role of the
Speaker 2: RNC is playing here. As we reassembled our panel, we've
Speaker 2: got a couple of pretty important headlines on the campaign trail.
Speaker 2: Reminding we told you about this yesterday. There are debates
Speaker 2: coming together in Iowa about five days before the caucuses
Speaker 2: and two days before New Hampshire. In Manchester, there might
Speaker 2: even be competing debates. We'll see who shows up. I'm
Speaker 2: assuming Ronda Santis will still be there as we bring
Speaker 2: you the story here, great reporting from Nancy Cook. It's
Speaker 2: an exclusive at Bloomberg Ronda Santa's super pack canceling a
Speaker 2: donor event before the debate the other night that would
Speaker 2: have included a ticket to the event, citing a lack
Speaker 2: of interest among donors. That's tough. Rick Davis and Genie
Speaker 2: Shanzo back with us. Rick, this Republican is having trouble resonating.
Speaker 2: You've suggested he might not make it to New Hampshire.
Speaker 2: Where's your head today?
Speaker 6: Yeah, I think that's still the case. You have to
Speaker 6: have a rationale to how to win, and and if
Speaker 6: if you predicate all of that on saying you're going
Speaker 6: to win Iowa, and Ron DeSantis, for instance, said I'm
Speaker 6: going to win Iowa. Now, anything short of winning Iowa
Speaker 6: is going to be looking like a big defeat for him.
Speaker 6: I don't know why he would have put that marker out,
Speaker 6: it was a relatively recent thing, and maybe just feeling
Speaker 6: defensive about his flagging campaign. But the bottom line is
Speaker 6: he sets expectations, the media will follow those expectations to
Speaker 6: where he is, and then if he doesn't win, even
Speaker 6: if he has a great showing, they're going to say, oh,
Speaker 6: but he said he was going to win and now
Speaker 6: he didn't.
Speaker 2: So and there's no expectation that.
Speaker 6: Anybody has of him being competitive until maybe when they
Speaker 6: get back down to Florida.
Speaker 2: But that's way too long.
Speaker 6: The last the lesson we learned from Rudy Giuliani is
Speaker 6: he can't lose, lose, lose, and then expect to win.
Speaker 2: You can't start your campaign in Florida. I don't know
Speaker 2: if we're reading into this a little bit here, Genie.
Speaker 2: But the Never Back Down a pack had planned this luncheon.
Speaker 2: They invited three thousand people and it wasn't cheap. Ten
Speaker 2: thousand dollars contribution would give you access to this luncheon. This,
Speaker 2: by the way, was in Tuscaloosa. This is Rick Davis
Speaker 2: Country here as well as a ticket to the debate
Speaker 2: itself and an invite to a post debate celebration if
Speaker 2: you want to hang out with the governor. Just before
Speaker 2: the debate, Never back Down decided to cancel the lunch, Genie,
Speaker 2: What does that mean?
Speaker 7: Never back Down has backed down Joe, And you.
Speaker 2: Know, yes, that's right.
Speaker 7: I'm seldom empathetic to run DeSantis, but as you go
Speaker 7: through that in such detail, it makes me feel badly
Speaker 7: for him. You know, his campaign has been in a
Speaker 7: bit of chaos. Never back Down losing leadership, been in chaos.
Speaker 7: His poll numbers have been going in exactly the wrong direction.
Speaker 4: You know.
Speaker 7: I think we have to keep in mind we don't
Speaker 7: get a lot of public polls from Iowa of late.
Speaker 7: But I think this is, you know, another in a
Speaker 7: continuing assign that his campaign is faltering. I agree, he
Speaker 7: may not be there. Maybe he shouldn't be there in
Speaker 7: New Hampshire depending on what happens in Iowa. But keep
Speaker 7: in mind, even if he was able to squeak out
Speaker 7: Iowa after his ninety nine county tour, Iowa is seldom
Speaker 7: a predictor of the winner of the primary, and his
Speaker 7: numbers simply don't look good in the remaining states as
Speaker 7: of now, So he is not in a good position.
Speaker 7: I think we're gonna see Sununu in New Hampshire make
Speaker 7: an endorsement fairly soon, and I suspect he is not
Speaker 7: looking as kindly at Disantis as he would have been
Speaker 7: maybe six or eight months ago.
Speaker 2: Similar events in Miami around the debate there in November
Speaker 2: raised roughly a million dollars for Never Back Down pack Rick.
Speaker 2: You've put events like that together. Is this just the
Speaker 2: nature of the business. Sometimes they don't pan out. You
Speaker 2: go to Tuscaloosa, maybe you don't have the network there
Speaker 2: you thought you had, or is this actually a signed
Speaker 2: that we should be looking at.
Speaker 6: It's hard to get people to go to Tee Town
Speaker 6: other than on Saturdays of home games, and so I
Speaker 6: think that if Alabama was playing Auburn, you wouldn't have
Speaker 6: you'd have a crowd but the bottom line is his
Speaker 6: pack is in trouble. Most of their senior leadership have left.
Speaker 6: They've actually, you know, tried to start a new super
Speaker 6: pack to support the DeSantis campaign. What do you need
Speaker 6: a new one for if the one you currently have
Speaker 6: that you gave, you know, eighty million dollars to is
Speaker 6: working fine. So there's just something that smells bad under
Speaker 6: the cover. None of this stuff adds up. And as
Speaker 6: you say, if you're having trouble raising money at an
Speaker 6: event where arguably he did a pretty good job at
Speaker 6: the debate, so they clearly had a lot running on that,
Speaker 6: I think it's just it's an indication that there's a
Speaker 6: level of dysfunction that could be problematic. And and if
Speaker 6: they're running out of money, that's even a bigger problem
Speaker 6: because different from most Superpa super packs, never backed out
Speaker 6: is actually running the campaign. I mean, it's almost like
Speaker 6: the Santas campaign is a guest of never back down
Speaker 6: in this election, and they're doing all the organizational work
Speaker 6: in Iowa. They're doing all the get out to vote,
Speaker 6: they're doing all the caucus organizing, they're doing the ID
Speaker 6: This is all things that campaigns generally take responsibily for
Speaker 6: because they know if anything goes wrong, you're completely out
Speaker 6: of the race. And that seems to be what's happening here.
Speaker 2: Wow, we'll get ready for the ads. Axios had some
Speaker 2: fascinating numbers this morning, Genie on political advertising group m
Speaker 2: forecasting that ad spend could reach fifteen point nine billion
Speaker 2: dollars in twenty twenty four, seventeen billion when you include
Speaker 2: direct mail, while ad Impact tells this more than one
Speaker 2: hundred million dollars was spent September through September on Republican
Speaker 2: primary rate. That's more than we've seen in any other cycle.
Speaker 2: We're about to get delu'sed, Genie, when does Joe Biden
Speaker 2: start spending some money on ads?
Speaker 7: Already spending he has spent more than most of his
Speaker 7: predecessors to this point. But to your point, he is
Speaker 7: going to be investing more. But you know, gosh, who
Speaker 7: wants to live in one of these swing states now?
Speaker 7: Because you know those of us saying we're not going
Speaker 7: to be getting these But if you are in Michigan
Speaker 7: or you're in Pennsylvania, your life is pretty much going
Speaker 7: to be these ads. And that's true whether you're watching
Speaker 7: TV or whether you're online I mean it is going
Speaker 7: to be insanity in those five or six or seven
Speaker 7: if you will state so you know, get ready, you
Speaker 7: got to buckle in. They're prepared for it. But it's bad.
Speaker 2: It's a lot of money here, Rick, one hundred million dollars,
Speaker 2: so it really will come down to a battle of
Speaker 2: dollars at some point. I find it fascinating. Now streaming
Speaker 2: TV is the new frontier for political advertising. Is it
Speaker 2: worth the money?
Speaker 6: Yeah?
Speaker 2: Look I love streaming TV. You get all kinds of
Speaker 2: feedback mechanisms.
Speaker 6: You know whether or not somebody who's actually watching when
Speaker 6: your commercial ran, You know the demographics of the people,
Speaker 6: you know the exact location.
Speaker 2: The targeting is amazing. Rick Davis, Genie Shanzano insiders with
Speaker 2: us every day on sound On. I'm Joe Matthew in Washington.
Speaker 2: I'm glad you're with us. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us
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Speaker 2: We're just coming off that week long pause. They never
Speaker 2: used that word because it has implications. Secretary General who
Speaker 2: Terra has talked about this yesterday.
Speaker 8: There is a high risk of the total collapse of
Speaker 8: the humanitarian support system in Gaza, which would have devastating consequences.
Speaker 2: Devastating consequences. That vote could come as little as an
Speaker 2: hour's time. And we're joined right now by Nick Wadams,
Speaker 2: who runs our national security team here at Bloomberg in Washington.
Speaker 2: It's good to see you.
Speaker 1: Next.
Speaker 2: The significance of this vote, knowing that Tel Aviv will
Speaker 2: not respond to it.
Speaker 9: Is what, Well, that's a great question. And when we
Speaker 9: ask a lot at the UN when there is just
Speaker 9: so much talk and so often so little action, this
Speaker 9: one does feel a little bit different, though, because what
Speaker 9: you're seeing here is whether the US is going to
Speaker 9: veto this resolution and really just stay in lockstep with
Speaker 9: Israel and give Israel the cover it needs to press ahead,
Speaker 9: or whether this US is going to signal it's sort
Speaker 9: of growing alarm and dissatisfaction with the way Israel has
Speaker 9: conducted this campaign. So it might not vote yes, but
Speaker 9: it might not vote no. It might abstain, allow the
Speaker 9: vote to pass, put more scrutiny on Israel and say Listen,
Speaker 9: you guys, if you want our support, you need to
Speaker 9: get your act together. The calls for something, you know,
Speaker 9: protection of civilians is getting louder, and you got to
Speaker 9: do something because what we're seeing so far is not
Speaker 9: up to snuff.
Speaker 2: Has the Security Council done the same thing for the
Speaker 2: war in Ukraine knowing that Russia is a member.
Speaker 9: Well, I mean they can't do anything on Ukraine because
Speaker 9: Russia just paralyzes absolutely everything. And you're seeing that play
Speaker 9: out a little bit here as well, where you know,
Speaker 9: the US and Russia are so at odds over absolutely everything,
Speaker 9: including this one, and so it's just absolutely freezes things.
Speaker 9: So if they the US did abstain from a resolution
Speaker 9: last month where they called for humanitarian pauses different from
Speaker 9: a ceasefires, but you know, so they did allow some
Speaker 9: action to get through. But you know, it's looking pretty
Speaker 9: bad on this one.
Speaker 1: I have to say.
Speaker 2: The IDF is driving into southern Gaza. We've been talking
Speaker 2: about this for a couple of days now. There are
Speaker 2: great concerns about civilian casualties that we've been hearing about
Speaker 2: that as well. As a matter of fact, Anthony Blincoln
Speaker 2: spoke about this in an unrelated news conference earlier today.
Speaker 2: Listen to the Secretary of State.
Speaker 8: It is imperative, it remains imperative that Israel put a
Speaker 8: premium on civilian protection. And there does remain a gap
Speaker 8: between exactly what I said when I was there, the
Speaker 8: intent to protect civilians, and the actual results that were
Speaker 8: seeing on the ground.
Speaker 2: What do you make of that line, a gap between
Speaker 2: intent and results? What does the White House want to see?
Speaker 9: Well, the days he's referring to something very specific there,
Speaker 9: which is that when he went to Israel last week,
Speaker 9: he came out and said he got very specific assurances
Speaker 9: from Israeli leaders that they would create safe zones, they
Speaker 9: would warn people about when they were going to strike
Speaker 9: certain areas, all with the intent of not doing what
Speaker 9: they had done in northern Gaza to the south. He
Speaker 9: had been very clear listening, you cannot cause the almost
Speaker 9: total destruction of northern Gaza in the south. And he
Speaker 9: came out and said, you know, listen, my trip was
Speaker 9: successful because Israeli leaders assured me that they would put
Speaker 9: these protections in place. That was the whole reason he
Speaker 9: went to Israel on that trip. He's now saying, well,
Speaker 9: I'm back in the US, they're prosecuting that campaign and
Speaker 9: reality is not living up to the promises that they made.
Speaker 9: To me, question is what is he going to do
Speaker 9: about that? And so far the US has not really
Speaker 9: done much.
Speaker 3: Well.
Speaker 2: He did balance that statement with some of the things
Speaker 2: you just mentioned. He said they're doing a better job.
Speaker 2: They're evacuating neighborhoods instead of cities, they're establishing the safe
Speaker 2: zones you mentioned, they're focusing on a more narrow area.
Speaker 2: What else did Israel.
Speaker 9: Promise, Well, that's we don't exactly know what they promised,
Speaker 9: but I think what he's referring there also is a
Speaker 9: couple of instances where you have had these mass casualty
Speaker 9: events striking buildings, where you've had dozens of people killed
Speaker 9: at once. I mean, it's a very difficult balance for
Speaker 9: the US because on the one hand, they're calling for
Speaker 9: Israel to protect civilians. On the other hand, the US
Speaker 9: is sending Israel these bunker buster bombs artillery shells that
Speaker 9: are not cannot be narrowly targeted. So, you know, you
Speaker 9: can make the argument that in some ways the US
Speaker 9: is talking out of both sides of his amouth, saying hey,
Speaker 9: you got to do this, But at the same time,
Speaker 9: we're going to send you these two thousand pound bunker
Speaker 9: buster bombs whose whole point is to not be terribly
Speaker 9: discriminate in their actions, so I think, but what he's
Speaker 9: saying there really is like you made those promises. We
Speaker 9: are seeing some things on the ground, but you're not
Speaker 9: doing enough, and we can't keep having these attacks where
Speaker 9: dozens of people are killed all at once, you know,
Speaker 9: innocent civilians.
Speaker 2: It's really helpful, Nicki're reporting has been indispensable since this
Speaker 2: all started, much like it has been the last two
Speaker 2: years in Ukraine, and we thank you for shank you
Speaker 2: with us. As always, he runs our national security team
Speaker 2: here at Bloomberg and Washington, Nick Watdams as we add
Speaker 2: the voice of General Ben Hodges back with us here
Speaker 2: on Bloomberg's sound on former Commanding General US Army Europe.
Speaker 2: It's good to see you. General. Thank you for coming
Speaker 2: to Nick's point. I know you were listening to our conversation.
Speaker 2: Is the US showing a double standard here sending the munitions,
Speaker 2: the bunker busting bombs one hundred and fifty five millimeters
Speaker 2: shells that Nick is referring to, but then also demanding
Speaker 2: restraints and the preservation of civilian life. Are we asking
Speaker 2: too much?
Speaker 5: Well, I have to say I was very impressed with
Speaker 5: Nick's reporting there. I mean that really was a good
Speaker 5: description of the situation and the challenge, and also the
Speaker 5: efforts by Irish Secretary of State to press Israel. It's
Speaker 5: not that we're setting a double standard. It's that Israel
Speaker 5: has failed to have a political outcome as part of
Speaker 5: the overall strategic in state that they want for this war.
Speaker 5: It's all kinetic. And if I put myself in the
Speaker 5: shoes of an Israeli battalion commander or a company commander,
Speaker 5: and my mission is to destroy Hamas without having a
Speaker 5: political in state, that should be something like a two
Speaker 5: state solution where we're going to have to live with
Speaker 5: Arabs after this is over. It makes it extremely difficult
Speaker 5: for soldiers to do their job, and so you end
Speaker 5: up with people looking over your shoulder, whether it's the
Speaker 5: media or lawyers telling you, well, you can't hit that building,
Speaker 5: but you can hit that building, or you can't use this,
Speaker 5: but you can use this. And I think the fatal
Speaker 5: error that the nen Yahoo government is making here is
Speaker 5: that they have not come up with a strategic instate
Speaker 5: with a political component that will inform how the military
Speaker 5: does its job.
Speaker 2: General, you served in both the Afghanistan and Iraq wars.
Speaker 2: We spent a lot of talk about urban warfare, about
Speaker 2: what the IDF is facing and why in some cases
Speaker 2: they don't find it appropriate to send boots into these neighborhoods,
Speaker 2: striking from a distance or from above. In terms of
Speaker 2: the air war, here is Gaza another Fallujah. How do
Speaker 2: you look at it?
Speaker 5: Well, this is much worse than Felujah for sure, partly because, yes,
Speaker 5: because of the density of civilians that are packed in there,
Speaker 5: and the Hamas unwillingness to let them or to continue
Speaker 5: using them as shields, because they can see that the
Speaker 5: objective given to the IDF by Prime Minster Nan Yahoo,
Speaker 5: it's it's guaranteed that they're going to continue using force
Speaker 5: against civilian targets. I'm sure that whatever Secretary of Lincoln
Speaker 5: was told they were sincere. But the Prime Minister ultimately
Speaker 5: is responsible, and soldiers are responsible. Even if Hamas uses
Speaker 5: innocent people as shields, the burden of responsibility for protecting
Speaker 5: this villion still falls, according to the law of armed
Speaker 5: conflict in this case Israeli soldiers. So of course there
Speaker 5: should be enormous global pressure on Hamas to stop doing this,
Speaker 5: but don't. I don't sense any of that is coming.
Speaker 5: And of course this creates a massive not only a
Speaker 5: massive political problem for our president, but frankly worse, the
Speaker 5: Kremlin is the biggest beneficiary of all of this. I mean,
Speaker 5: Hamas accomplished in one day what Putin could not do
Speaker 5: in two years, and that was to make the West
Speaker 5: forget about Ukraine and so and the way. This thing
Speaker 5: is such a mess, and it's it's so devastating for
Speaker 5: innocent people, and you've got people focused on Israel and
Speaker 5: not own helping Ukraine defeat Russia. So it's not just
Speaker 5: about resources being diverted, but it's about institutional and emotional
Speaker 5: energy that's being diverted. Iran is Russia's closest and only
Speaker 5: real ally. Russia is Iran's closest and only real ally.
Speaker 5: This is not a coincidence that Hamas has attacked Israel
Speaker 5: right now when Russia needed it the most.
Speaker 2: That's remarkable because it's certainly turned our tension here in
Speaker 2: Washington as well. General. I don't have to tell you,
Speaker 2: I'm sure this is partly why lawmakers don't feel as
Speaker 2: motivated to fund the war in Ukraine. There seems to
Speaker 2: be a much greater appetite to help Israel, which I
Speaker 2: think you could argue needs the money less. What do
Speaker 2: you think?
Speaker 5: Yeah, I think you're exactly right in that. This is
Speaker 5: where the President has got to lay out to the
Speaker 5: Commress and to the American people why Ukraine matters to us.
Speaker 5: Why our economy, our prosperity is tied to European security,
Speaker 5: instability and prosperity. Russia's attack on Ukraine has disrupted energy
Speaker 5: and food supplies. Inflation is driven in large part by
Speaker 5: what Russia is doing now. So this is about us
Speaker 5: our interests, not just Ukraine. And of course if Russia
Speaker 5: has not stopped in Ukraine, they've made it very clear
Speaker 5: they will continue, So you could end up with them
Speaker 5: going against a NATO and then you've got US forces
Speaker 5: are going to have to be involved, and of course
Speaker 5: the Chinese are watching to see does the US, with
Speaker 5: all of our allies, do we have the political will,
Speaker 5: the industrial capacity, and the military capability to help Ukraine
Speaker 5: defeat Russia, help Israel defeat Hamas, while still pushing Israel
Speaker 5: to accept a two state solution deter Iran from expanding
Speaker 5: or escalating this conflict, and then for China to see
Speaker 5: that we still have enough leftover to deter them from
Speaker 5: making a terrible miscalculation. So we've got to get organized
Speaker 5: in the West. We've got all these allies, but we're
Speaker 5: not addressing these challenges as a whole, and I think
Speaker 5: that's what we've got to do.
Speaker 2: General, more than one hundred and thirty hostages are still
Speaker 2: being held by Hamas. Presumably they are still alive that
Speaker 2: according to Israel, at what point do we see special
Speaker 2: forces begin extracting them or do they simply not know
Speaker 2: where they are?
Speaker 5: Excellent question. I'm sure that the Israeli Defense force and
Speaker 5: intelligence have more information on what's out there and who's
Speaker 5: still alive and where they might be, then we will
Speaker 5: know publicly. But it's still got to be very difficult Hamas.
Speaker 5: I mean, Hamas doesn't even control all of the bad
Speaker 5: guys in there, so it will be difficult to get
Speaker 5: one hundred percent confidence that we know where everybody is
Speaker 5: and that we can get them out. And of course,
Speaker 5: you know, if it was my daughter or a friend
Speaker 5: or somebody that was a hostage, I would be in
Speaker 5: total agony wanting to do anything to get them out.
Speaker 5: But if you can step back from it and put
Speaker 5: yourself in the shoes of national leaders, hostages, even if
Speaker 5: you rescued every one of them, hamask could go get more.
Speaker 5: So at some point somebody is going to have to
Speaker 5: make a really, really hard decision about do you continue
Speaker 5: with the attack, how much risk do you take to
Speaker 5: go in and try and extract hostages. I think the
Speaker 5: Israelis will do everything in their power to get every hostage,
Speaker 5: just like the United States would. But we have to
Speaker 5: find that balance because terrorist organizations will stop in nothing
Speaker 5: to continue getting hostages when they see the incredible leverage
Speaker 5: that they get from having them.
Speaker 2: I have to ask you, General about what appears to
Speaker 2: be progress here and an effort to block military promotions
Speaker 2: from being confirmed in the Senate. I'm referring to Tommy
Speaker 2: Tubberville's blockade, the senator from Alabama that was a protest
Speaker 2: against the Pentagon's abortion travel policy. He's decided, General to
Speaker 2: a lot of them all go through except the four stars.
Speaker 2: You know a little bit about this, and Tommy Tuberville
Speaker 2: has suggested that four star generals don't have a heck
Speaker 2: of a lot to do anyway, they've got big staffs
Speaker 2: to get paid too much money. What does it mean
Speaker 2: to hold up these eleven four stars in the meantime?
Speaker 5: Such an abuse of his power there as a senator,
Speaker 5: and it creates a cynicism about the Congress, which is
Speaker 5: really unfortunate. I served three times in Army Congressional Liaison
Speaker 5: as I was coming up, and of course members will
Speaker 5: use their ability to block promotions, whether it's ambassadors, judges,
Speaker 5: or flag officers for individual reasons. But I've never seen
Speaker 5: it in many years, such a blanket abuse of this.
Speaker 5: And of course every time I listened to the senator
Speaker 5: from Alabama, it was clear he had no clue about
Speaker 5: the impact of what he was doing or else he
Speaker 5: absolutely didn't care, which is unfortunate for a senator on
Speaker 5: the Senate Armed Services Committee and from a state that
Speaker 5: has a significant military presence. So of course it damages
Speaker 5: not only the families of all the people involved, but
Speaker 5: it sends a statement that you okay having a senior officer,
Speaker 5: whether it's an admiral or general in these positions, well,
Speaker 5: it doesn't matter, and that undermines confidence that people have
Speaker 5: in the whole system.
Speaker 2: Well, general. I want to thank you for coming on today.
Speaker 2: Ben Hodges, a voice of experience and authority when we
Speaker 2: need it most. I'm Joe Matthew. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us
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Speaker 2: Hackers have breached computers at less than ten water facilities
Speaker 2: in different parts of the country. There's one specifically in
Speaker 2: Pennsylvania that made news and led to a series of
Speaker 2: reports on the extent of this threat. And it's where
Speaker 2: we begin our conversation with and Newburger. I'm glad to
Speaker 2: say we're going to go to the White House for
Speaker 2: this because it's important to the administration, it's important to us.
Speaker 2: The Deputy National Security Advisor for Cyber and Emerging Technology
Speaker 2: and Newburger with us from a sunny North lawn and
Speaker 2: it's great to see you and welcome back to Bloomberg.
Speaker 2: How concerned are you and what should we know about
Speaker 2: these apparent attacks on water facilities?
Speaker 10: Thanks Joe. So companies critical services in this country face persistent,
Speaker 10: significant cyber attacks. It's a top priority for the administration.
Speaker 10: We're pushing out actionable information. We're pushing out guidelines on
Speaker 10: how to secure against it. Some companies and state and
Speaker 10: local governments have acted. We need everyone to take this
Speaker 10: as a call to action to follow that cybersecurity advice
Speaker 10: and really lock their digital doors against the threat.
Speaker 2: Are you able to trace the source of these attacks?
Speaker 2: What's prompting them?
Speaker 10: Great question. So two particular sets of attacks we're concerned
Speaker 10: about at this moment time. One is criminal cyber attacks
Speaker 10: against the hospital chain. It had real impact rural clinics,
Speaker 10: closed some hospitals in three states, turning away ambulances, and
Speaker 10: canceling elective services. That's done by criminals, and the White
Speaker 10: House has pushed out guidelines on how to tackle that.
Speaker 10: Second set of attacks we're tracking is an increased by
Speaker 10: Iran in cyber attacks against ten water systems in this country.
Speaker 10: And in a similar way, there are basic cybersecurity practices
Speaker 10: like changing defall passwords and limiting administrator account access that
Speaker 10: could prevent those attacks being successful.
Speaker 2: So that is officially, though the line from the White
Speaker 2: House that Iran was behind these ten attacks against water
Speaker 2: treatment facilities here in the United States, it.
Speaker 10: Is, But I want to be clear, each and every
Speaker 10: day American companies critical services are facing persistent cyber attacks,
Speaker 10: and we absolutely need to do more to lock our
Speaker 10: digital doors to defend against them. Yes, sometimes in periods
Speaker 10: of crises we'll see an increase in a particular type
Speaker 10: of attack, but every single day we have too many
Speaker 10: unlocked doors and open windows in our digital cyberspace.
Speaker 1: Yeah.
Speaker 2: That specifically the plant in Pennsylvania that I mentioned outside Pittsburgh,
Speaker 2: the Municipal Water Authority of all Equippa serves about fifteen
Speaker 2: thousand people. We have no reason to believe that anyone
Speaker 2: is at risk. Are they just trying to let us
Speaker 2: know what they can do?
Speaker 10: In absolutely no one is at risk. That attack had
Speaker 10: minimal impact. The water system is operating the water system manually.
Speaker 2: What's the response then, is there an answer from the
Speaker 2: administration to an attack like this?
Speaker 10: So there's an US and a them, and the first
Speaker 10: response needs to be to absolutely lock our digital doors
Speaker 10: against these attacks. So, for example, in the case of
Speaker 10: the water system, just last year, EPA issued a rule
Speaker 10: putting in place minimum cybersecurity practices, things like changing defall
Speaker 10: passwords things like removing or limiting the accounts administrator access.
Speaker 10: Have that rule face litigation and had to be pulled back,
Speaker 10: but there is absolutely nothing preventing every water system in
Speaker 10: this country. Doesn't cost any money to change defall passwords,
Speaker 10: to put in place those basic cybersecurity practice. So that's
Speaker 10: the first part. There's the US part of this, which
Speaker 10: is to say we have to lock our digital doors.
Speaker 10: And then of course there's the them piece. And from
Speaker 10: a US government perspective, there are actions we're taking every day,
Speaker 10: you know, taking down digital infrastructure, ensuring that we're making
Speaker 10: we're following the trail of who is responsible for that
Speaker 10: and handling it appropriately.
Speaker 2: How about just remove the door. I know you want
Speaker 2: to close the door, but should these facilities be online
Speaker 2: at all? How about we take all this equipment off
Speaker 2: the internet.
Speaker 10: And you know, it's a great question. There are real
Speaker 10: reasons to automate operations across critical services, whether it's water systems,
Speaker 10: whether it's systems. We believe that can be done securely
Speaker 10: and safely, and that's why the White House and the
Speaker 10: US government, FBI, SISA have been pushing out practical cybersecurity
Speaker 10: guidelines so we can get the benefit of new technology
Speaker 10: improve the services. Critical services are available to American citizens,
Speaker 10: but do so in a safe and secure way.
Speaker 2: We're spending time talking with Anne Neuberger, who works inside
Speaker 2: the National Security Apparatus in the White House with a
Speaker 2: specific focus on cyber which many would say is the
Speaker 2: new frontier here. And this is the question you probably
Speaker 2: don't want to answer or cannot answer. Does the United
Speaker 2: States have offensive capabilities to go after bad actors in
Speaker 2: a place like Iran? When it comes to cyber.
Speaker 10: Every capable nation in cyberspace is using every tool possible.
Speaker 10: The first and most important tool is defense. Absolutely, the
Speaker 10: US government also has capabilities when necessary to go on offense.
Speaker 10: But I can't emphasize enough how much the most important
Speaker 10: thing to do is to close our doors and lock
Speaker 10: our windows. I think you know in some parts of
Speaker 10: the country people feel safe leaving their car keys in
Speaker 10: their car. In cyberspace, we face persistent criminal attacks each
Speaker 10: and every day. We don't need to wait for sophisticated
Speaker 10: countries because there is the basic cyber attacks that we
Speaker 10: can defend against and be better protected against by following
Speaker 10: the cybersecurity guidelines which US government is pushing out actively.
Speaker 10: The resources we're making available. Were absolutely committed to ensuring
Speaker 10: every American and every critical service is safe online. But
Speaker 10: we need the partnership of those owners and operators to
Speaker 10: work with us to put in place these practices to
Speaker 10: ensure we're safe online.
Speaker 2: So I need to change my one two three ABC password.
Speaker 2: I guess is what you're going to tell me? And Newburger,
Speaker 2: I'm on it. I just I wonder in your role,
Speaker 2: because this is relatively new for a lot of our
Speaker 2: viewers and listeners, what it is that you actually do
Speaker 2: at the White House here in the balance of distributing
Speaker 2: policy to actually pushing guidelines when it comes to managing
Speaker 2: utilities like these or other public facilities that could be targets.
Speaker 10: Absolutely, the President has made securing digital infrastructure and absolute priority,
Speaker 10: and there's a few parts to that, right. One part
Speaker 10: of that is tracking the threat understanding who are the
Speaker 10: countries who are capable, what are the roles criminals are playing,
Speaker 10: what's financially driven crime, who are the countries harboring those individuals.
Speaker 10: That's one piece of it, so we really understand the
Speaker 10: threats we face as a country. The second piece of
Speaker 10: it is saying what do we need to do to
Speaker 10: be most effective. There's the policy level, for example, the
Speaker 10: minimum cybersecurity practices that the Administration is put in place
Speaker 10: for pipelines, for aviation, for rail so that those sectors
Speaker 10: are doing the basics they need to do so that
Speaker 10: they can be confident their operations are safe online. And
Speaker 10: then there's the resources, the guide books, the fiscal resources
Speaker 10: that the Administration is made available as well to help
Speaker 10: small and medium companies, state on local governments make the
Speaker 10: most of the resources they have to be safe as well.
Speaker 10: And then there's the international partnership. So last month, for example,
Speaker 10: the end of October, actually we brought together fifty partners
Speaker 10: forty eight countries, INTERPOL, the International Police Force, and the
Speaker 10: European Union to talk about how we tackle the transnational
Speaker 10: cybercrime threat together things like how do we trace crypto
Speaker 10: the payments, the ransom payments that are fueling criminal activity
Speaker 10: around the world, how do we identify the infrastructure and
Speaker 10: take it down, and how do we ensure that countries
Speaker 10: around the world who may be less capable know how
Speaker 10: to do forensics, know the best and the most effective
Speaker 10: cybersecurity practices. And finally, the role of tech companies in
Speaker 10: building more secure tech to make it easier to use
Speaker 10: that tech safely. So not only are we focused in
Speaker 10: understanding the threat, doing what we need to do at
Speaker 10: home with our partners, but also working around the world
Speaker 10: because it's such a transnational threat.
Speaker 2: Yeah, and from your perch at the White House, you
Speaker 2: look down Pennsylvania Avenue and that big old building in
Speaker 2: the US Capitol where they have a lot of work
Speaker 2: to do, a lot of unresolved issues to manage before
Speaker 2: a year end. And this could be anything from funding
Speaker 2: our allies to the government certain renewals at the end
Speaker 2: of the year. I wonder to what extent the actions
Speaker 2: or a lack of action by this Congress impacts the
Speaker 2: national security of our country.
Speaker 10: The Hill is a key partner in so many initiatives,
Speaker 10: So for example, in the area of artificial intelligence, an
Speaker 10: emerging technology area that has real promise in helping US
Speaker 10: build more secure code, in helping us find militia cyberactivity,
Speaker 10: and also real risk in terms of potentially accelerating criminals
Speaker 10: and countries finding and exploiting vulnerabilities. You see the work
Speaker 10: that Leader Schumer is doing to convene to understand to
Speaker 10: think about the regulation needed in that space. Building upon
Speaker 10: the President's historic executive order, building upon the voluntary commitments
Speaker 10: the White has negotiated with companies. So I think that's
Speaker 10: an area where we're seeing and in cyber more broadly,
Speaker 10: really by PARTI is in partnership to take on the
Speaker 10: threats that Congress can uniquely take on and address well.
Speaker 2: And I want you to know your area of expertise
Speaker 2: is awfully important to us and our audience here at Bloomberg.
Speaker 2: We'd love to stay in touch with you as these
Speaker 2: threats continue to emerge. I'm Joe Matthew. This is Bloomberg.
Speaker 2: Thanks for listening to the Sound On podcast. Make sure
Speaker 2: to subscribe if you haven't already, at Apple, Spotify, and
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Speaker 2: Eastern Time at Bloomberg dot com.