WEBVTT - OPEC's Influence Is No More, Weinberg Says 0:00:00.080 --> 0:00:02.920 Brought you by Bank of America, Mary Lynch. Investing in 0:00:03.000 --> 0:00:07.840 local communities, economies and a sustainable future. That's the power 0:00:08.080 --> 0:00:12.360 of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 0:00:12.760 --> 0:00:26.400 Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 0:00:26.440 --> 0:00:29.920 I'm Tom Keene with David Gura. Daily we bring you 0:00:29.960 --> 0:00:34.800 insight from the best of economics, finance, investment, and international relations. 0:00:35.240 --> 0:00:40.760 Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 0:00:40.800 --> 0:00:48.159 and of course, on the Bloomberg. Carl Weinberg is the 0:00:48.159 --> 0:00:51.400 founder of in the chief economist at High Frequency Economics. 0:00:51.400 --> 0:00:53.560 He's here in our bloombergod leveming three studios. It's great 0:00:54.040 --> 0:00:55.920 to see you as always. Let's start with the data 0:00:56.000 --> 0:00:59.120 this week. What you're looking for especially, I mean industrial 0:00:59.120 --> 0:01:01.440 production tomorrow, Matt. And that's a big one you'll be 0:01:01.440 --> 0:01:03.639 paying attention to this week. Yeah, I mean, we think 0:01:03.680 --> 0:01:06.040 the industrial production number is probably going to turn out 0:01:06.080 --> 0:01:08.520 okay based on the surveys that we're seeing. You know, 0:01:08.640 --> 0:01:11.280 the economy is chugging along. You know, we're not going 0:01:11.360 --> 0:01:14.320 to see any great numbers out of industrial production though. Um. 0:01:14.360 --> 0:01:16.080 You know we're looking about maybe seven tenths of a 0:01:16.160 --> 0:01:18.520 percent for the month. At high frequency, that's a little 0:01:18.520 --> 0:01:21.600 bit more than the consensus. Uh. But overall, you know, 0:01:21.640 --> 0:01:24.160 the economic growth numbers are not going to knock anybody's 0:01:24.160 --> 0:01:26.640 socks off anytime soon, as we're only looking for about 0:01:26.720 --> 0:01:29.440 you know, two plus percent growth for the year, and 0:01:29.680 --> 0:01:32.160 that's not going to be a scary number for most people. 0:01:32.760 --> 0:01:34.600 We have the House of Representatives back in session in 0:01:34.640 --> 0:01:37.920 Washington at d C this week. They were off last week, 0:01:37.959 --> 0:01:40.600 the Senate was there. They were not what's your sense 0:01:40.640 --> 0:01:42.520 of what's happening in Washington right now? The degree which 0:01:42.520 --> 0:01:46.440 that's that's influencing the direction of this economy in the US. Wow, Well, 0:01:46.480 --> 0:01:50.160 you know, I don't really know exactly how to go 0:01:50.320 --> 0:01:52.560 at that answer, you know, without going getting into the 0:01:52.600 --> 0:01:55.640 politics of it. You know, the Commey affair has turned 0:01:55.680 --> 0:01:58.680 into a big distraction. And we had been skeptical at 0:01:58.760 --> 0:02:01.720 High Frequency Economics about the prospects for a lot of 0:02:01.760 --> 0:02:05.040 fiscal stimulus to begin with, for a really strong tax 0:02:05.080 --> 0:02:07.240 reform package to begin with, and now with all of 0:02:07.320 --> 0:02:10.440 these distractions, were even more skeptical. So work in the 0:02:10.480 --> 0:02:13.320 process of marking down you know, it only takes a 0:02:13.360 --> 0:02:15.799 tenth of a percent or two tenths off of GDP growth. 0:02:15.840 --> 0:02:17.720 But when you're only growing on two and a half percent, 0:02:17.800 --> 0:02:19.720 you can't really afford to lose a lot of it. 0:02:19.960 --> 0:02:21.680 And we think we might see a little bit of 0:02:21.720 --> 0:02:24.720 tax cuts coming up, but no major tax reform as 0:02:24.760 --> 0:02:27.480 anybody had hoped for, and not the big, not very 0:02:27.480 --> 0:02:29.760 little of the big infrastructure spending that people have been 0:02:29.760 --> 0:02:32.200 looking for just a few months ago. What's distracting the 0:02:32.480 --> 0:02:34.200 Fed Reserve right now is they push your head to 0:02:34.240 --> 0:02:36.120 their next meeting and they're looking at all of the 0:02:36.200 --> 0:02:38.040 data that we've gotten recently in the data will get 0:02:38.040 --> 0:02:41.040 here before they gather again in the equals building. What's 0:02:41.240 --> 0:02:44.440 what's preoccupying them, Well, their eyes are crossed right now. 0:02:44.680 --> 0:02:47.799 You know, they're looking at, you know, a lot of inconsistencies. 0:02:47.800 --> 0:02:50.640 They're looking at, you know, an unemployment rate that's at 0:02:50.680 --> 0:02:53.320 their level of nairo They're looking at inflation numbers that 0:02:53.360 --> 0:02:56.160 aren't delivering the inflation that you would expect to see. 0:02:56.320 --> 0:02:58.400 And they're looking at an economy that should be growing 0:02:58.440 --> 0:03:01.000 even though you know, interest rates are down at zero 0:03:01.400 --> 0:03:04.880 right now. So they are walking a lot of different things. 0:03:05.040 --> 0:03:06.800 I think that core belief is that at the end 0:03:06.800 --> 0:03:08.840 of the day, the laws of supply and demand haven't 0:03:08.880 --> 0:03:11.760 been repealed, that their job is to protect the country 0:03:11.760 --> 0:03:15.480 from the worst possible outcome, which, given their mandate, is 0:03:15.520 --> 0:03:18.000 not a recession as much as it is an overshoot 0:03:18.000 --> 0:03:21.799 of inflation. So with rising risks of inflation on the horizon, 0:03:22.080 --> 0:03:24.720 we think they're going to be responding to reducing this 0:03:24.840 --> 0:03:29.480 chance of the worst possible outcome given their mandate. Oh yeah, 0:03:29.600 --> 0:03:31.960 back in the nearest students, I remember where the red buttons. 0:03:33.080 --> 0:03:37.200 There's a guy to my right, Good morning, sir. Yeah. 0:03:40.920 --> 0:03:46.920 It is one of the great early successes of Boston Biotechnology, 0:03:47.000 --> 0:03:51.400 Thermo Fishers Scientific Certific. It's fifty five thou employees out 0:03:51.400 --> 0:03:56.160 of Scenic Waltham, Massachusetts, and they've got themselves a new transaction. 0:03:56.200 --> 0:03:58.560 It's a seven billion dollar deal to billion Dad. It's 0:03:58.560 --> 0:04:01.960 not that big, but it's just what Thermo Fisher has done, 0:04:02.000 --> 0:04:06.880 Thermo Scientific has done. David Gura for years. I remember that. 0:04:07.280 --> 0:04:09.880 I was like, who are these guys? Who are these guys? 0:04:10.640 --> 0:04:14.160 And they have just built and built and built this 0:04:14.240 --> 0:04:18.400 thing forever. Thermo Fisher takes up Pathion as well. Seven 0:04:18.440 --> 0:04:23.040 billion dollars um David, you know, it's good to be here. 0:04:23.960 --> 0:04:26.320 It's nice to have a global cyber attack. So we 0:04:26.400 --> 0:04:30.600 got something to talk about besides the administration. What did 0:04:30.600 --> 0:04:32.600 you come back? You came back Friday right after the show. 0:04:32.839 --> 0:04:35.359 British Airways did it right actually, and what what was 0:04:35.400 --> 0:04:39.080 sad was the pilots actually listened to us. I met 0:04:39.120 --> 0:04:45.320 the pilots and they did the one of those YouTube 0:04:45.400 --> 0:04:49.440 landings JFK. They came in a little bit sideways in 0:04:49.520 --> 0:04:52.320 the pouring rain, and then we thank them for landing 0:04:52.320 --> 0:04:55.799 the beast on the ground. Carl Weinberg knows about sheer. 0:04:56.240 --> 0:04:59.360 There's wind shear within the economy. Where's the risk now 0:04:59.440 --> 0:05:02.560 for the U. S. Economy? Is it a lack of investment? 0:05:02.720 --> 0:05:05.560 Is it this this colossal reality we may not get 0:05:05.560 --> 0:05:08.919 wage growth? What's the wind shear out there for this economy? 0:05:09.080 --> 0:05:10.920 You know, I am a pilot and I can explain 0:05:10.960 --> 0:05:13.479 that that crooked landing to you. We were doing it. 0:05:13.520 --> 0:05:17.680 We're we're looking at Connecticut when we landed in great detail. 0:05:17.880 --> 0:05:20.000 You know the risk of the U. S. Economy? I think, 0:05:20.000 --> 0:05:23.200 first of all, from I'm the international guidet high frequency economics, 0:05:23.240 --> 0:05:25.480 so I look overseas, you know, and we're looking at 0:05:25.520 --> 0:05:28.479 a world where the I m S forecast of accelerating 0:05:28.520 --> 0:05:31.760 growth just isn't happening. And most of their hopes at 0:05:31.760 --> 0:05:35.120 the i m F annual meetings for an acceleration of 0:05:35.120 --> 0:05:37.359 world growth over the next two years was that the 0:05:37.400 --> 0:05:40.279 emerging world was going to pick up the pace. And 0:05:40.320 --> 0:05:42.680 they're growing their bigger share of world GDP now, so 0:05:42.760 --> 0:05:45.640 they matter and they do. But now with commodity prices 0:05:45.680 --> 0:05:48.279 on the down swing, and I don't consider fifty fifty 0:05:48.320 --> 0:05:50.960 two dollars in oil barrels being an upswing, I considered 0:05:51.000 --> 0:05:53.360 to be a down swing, we're seeing their incomes being 0:05:53.360 --> 0:05:56.280 trimmed again. That's a hit to world trade, that's a 0:05:56.360 --> 0:05:58.680 hit to their ability to import, and that's a hit 0:05:58.760 --> 0:06:01.880 to our ability to x sport. So to me, the 0:06:01.920 --> 0:06:05.000 from the international guy at High Frequency Economics, to me, 0:06:05.080 --> 0:06:07.599 that's where the biggest threats are right now. Help us 0:06:07.640 --> 0:06:09.720 understand what's going on with with OLPEC. We saw I 0:06:09.839 --> 0:06:11.880 take up a little bit, could be the broader downturn 0:06:11.920 --> 0:06:14.360 you're talking about gently, but did see oil prices move 0:06:14.400 --> 0:06:16.719 on on reports that there was going to be an agreement, 0:06:16.800 --> 0:06:19.080 perhaps a longer agreement than was expected to extend the 0:06:19.320 --> 0:06:22.559 production cuts. What what's the influence that that OPEC plays 0:06:22.640 --> 0:06:25.000 right now in oil oil prices? Well, the influence that 0:06:25.040 --> 0:06:27.480 OLPEX plays right now is that they have don't have 0:06:27.520 --> 0:06:30.599 an influence, and that their ability to influence prices is 0:06:30.640 --> 0:06:34.360 increasingly decreasing with the rise of not just shell oil 0:06:34.400 --> 0:06:37.400 producers in the United States, but emerging market oil everywhere. 0:06:37.680 --> 0:06:39.520 You know, there are now a much smaller part of 0:06:39.520 --> 0:06:41.240 the world or oil market than they were in the 0:06:41.279 --> 0:06:44.720 nineteen seventies. And the adaptation or the consequence of that 0:06:44.800 --> 0:06:47.360 is that with everybody pumping the stuff up, there's more 0:06:47.400 --> 0:06:51.080 supply than demand. Uh. The OLPEC ministers talk about getting 0:06:51.120 --> 0:06:54.119 inventories back down to the levels of the last five years, 0:06:54.279 --> 0:06:57.000 but that's the wrong bar. Oil prices have tumbled over 0:06:57.040 --> 0:06:59.520 the last five years, hitting that bar. The real metric 0:06:59.600 --> 0:07:02.279 is that pair to the last twenty years average. Always 0:07:02.320 --> 0:07:05.839 see the inventories are over their normal range for twenty 0:07:05.920 --> 0:07:09.240 years by ten days of supply, that's half a billion 0:07:09.279 --> 0:07:12.000 barrels of oil for to come to market. And if 0:07:12.040 --> 0:07:15.760 they're a deal between Russia and Saudi Arabia manages to 0:07:15.840 --> 0:07:17.920 keep you know, a million barrels a day off of 0:07:17.920 --> 0:07:20.640 the market was still more than a year away from 0:07:20.640 --> 0:07:23.840 just getting inventories back down to normal, and their deal 0:07:24.080 --> 0:07:27.000 probably doesn't make even that much of a difference because 0:07:27.040 --> 0:07:29.920 everybody ramped the production beforehand to come back with Carl 0:07:29.920 --> 0:07:34.120 Weinberger US. Right now, we speak with Commander Weinberg on 0:07:34.600 --> 0:07:39.880 runway component thrust vector. Captain Weinberg, excuse me, Captain Weinberg, 0:07:39.960 --> 0:07:44.480 and they and they crab the crab the airplane. That's right. 0:07:44.520 --> 0:07:46.360 What does that mean? It means that they turn the 0:07:46.400 --> 0:07:48.920 airplane into the wind so that it tracts along the 0:07:49.000 --> 0:07:51.320 runway and then at the last minute they straighten it 0:07:51.360 --> 0:07:53.680 out so that it hits with the wheels pointing down 0:07:53.720 --> 0:07:56.280 the runway instead of towards the terminal too soon, so 0:07:56.360 --> 0:07:59.240 you go off the runway. Do they do They do 0:07:59.280 --> 0:08:01.840 it manually like a big plane, like a seven. I 0:08:01.840 --> 0:08:04.160 would say the odds of them flying it manually would 0:08:04.320 --> 0:08:06.920 be very low. It would depend on the currency of 0:08:06.960 --> 0:08:09.640 the captain who has to do certain number of medical landings. 0:08:09.640 --> 0:08:11.520 But for the most part they depend on the machines. 0:08:11.560 --> 0:08:13.680 The machines are so much better, and the machines do 0:08:13.760 --> 0:08:17.160 that tilting into the wind. The technology on these aircraft, 0:08:17.200 --> 0:08:21.640 these air busses and these bowing airplanes are just absolutely incredible. 0:08:21.640 --> 0:08:24.000 Auto land is what it's called. How many how many 0:08:24.120 --> 0:08:28.920 degrees do they go when they crab? It depends on 0:08:28.960 --> 0:08:32.840 it's well, if you were landing in a forty knot wind, 0:08:32.880 --> 0:08:34.439 it wouldn't be quite as much as that, but it 0:08:34.520 --> 0:08:36.720 might be substantial. But the planes coming in at a 0:08:36.800 --> 0:08:38.960 hundred and forty knots and if they have a ten 0:08:39.040 --> 0:08:41.760 or fifteen not cross wind component, they're probably not going 0:08:41.800 --> 0:08:45.679 to have to crab all that much. Why I mean, 0:08:45.800 --> 0:08:47.520 this is why we love to have these guests on 0:08:48.840 --> 0:08:53.120 driving planes. Driving planes. Yeah, that's the future. Now, I 0:08:53.120 --> 0:08:55.920 don't think so Tom could land one of these planes, 0:08:55.920 --> 0:08:59.400 that's what you're saying. No, my wife says that in 0:08:59.480 --> 0:09:01.559 our plane, that the way that I fly as I 0:09:01.640 --> 0:09:03.679 push buttons until it does what I wanted to do. 0:09:04.200 --> 0:09:05.840 And that's more or less what these guys on the 0:09:05.840 --> 0:09:07.360 big planes they do. I feel like I'm with hap 0:09:07.559 --> 0:09:10.800 Arnold or something. This is the founder of American aviation. 0:09:10.880 --> 0:09:13.560 Do you know David girl hap Arnold His first flight 0:09:13.640 --> 0:09:18.640 was with the Wright brothers. That is so cool. This 0:09:18.720 --> 0:09:22.600 is your surveillance aviation moment, Carl Heinberg. That was fabulous 0:09:22.720 --> 0:09:25.520 because all of us have confronted this bad weather and 0:09:25.559 --> 0:09:27.760 one of these big airplanes. We'll come back with Dr 0:09:27.760 --> 0:09:32.160 Weinberg and talk about international economics in the state of America. Carl. 0:09:32.200 --> 0:09:34.240 There was a jewel at the FED twenty years ago 0:09:34.640 --> 0:09:37.720 out of m my team named one Carl Whalen. Carl 0:09:37.720 --> 0:09:41.520 Whalen was fabulous. He's now at the Irish Central Bank 0:09:42.000 --> 0:09:45.080 and he wrote a paper which I remember called real 0:09:45.120 --> 0:09:49.040 Wage Dynamics in the Phillips Curve. That's where we are 0:09:49.200 --> 0:09:53.280 right now. If we get a better economy, does inflation 0:09:53.360 --> 0:09:57.000 go up faster than real wages go up? Where all 0:09:57.000 --> 0:10:00.800 of our listeners are gonna feel miserable because they inflation 0:10:00.840 --> 0:10:05.000 adjusted wages go flat or down. You know, someone else 0:10:05.120 --> 0:10:07.280 was talking about that on Bloomberg this morning and I 0:10:07.320 --> 0:10:10.240 nearly drove off the road I heard it, you know, John, 0:10:10.559 --> 0:10:12.120 it wasn't it was super early. I think it was 0:10:12.160 --> 0:10:13.800 one of those guys on the other side of the pond. 0:10:14.120 --> 0:10:17.560 You know, when you have inflation, inflation is a parallel 0:10:18.800 --> 0:10:23.000 increase in both prices, all prices and wages at the 0:10:23.040 --> 0:10:28.080 same time. So real incomes stay the same, Savers are poorer, 0:10:28.480 --> 0:10:32.040 spenders are richer, and there's an incentive to spend more 0:10:32.080 --> 0:10:34.920 when there's inflation, because you want to buy that refrigerator 0:10:34.800 --> 0:10:37.480 or that host today before the price goes up. And 0:10:37.520 --> 0:10:41.079 that's the traditional analysis of inflation. It's a windfall for some, 0:10:41.120 --> 0:10:43.800 but at the expense of savers? Is it a windfall 0:10:43.880 --> 0:10:46.640 for our listeners who are out there working in the 0:10:46.720 --> 0:10:49.160 real world. They're going to get a three percent pay raise. 0:10:49.760 --> 0:10:52.559 Is an inflation going to make that evaporate? It's going 0:10:52.920 --> 0:10:55.480 and if it's a true inflation, we're going to make 0:10:55.480 --> 0:10:58.199 it evaporate. But Tom, I'm just going to be critical here. 0:10:58.240 --> 0:11:00.560 You know, the world has gotten into this notion that 0:11:00.679 --> 0:11:04.240 CPI increases our inflation, and they're not all right, c 0:11:04.400 --> 0:11:07.080 p I. I'm not putting on my pointing headed economiside here. 0:11:08.360 --> 0:11:11.360 But every time every time the CPI goes up, all right, 0:11:11.440 --> 0:11:14.320 doesn't mean there's inflation. Every time there's inflation, the CPI 0:11:14.440 --> 0:11:17.079 goes up. But say the price of gasoline goes up, 0:11:17.240 --> 0:11:20.440 all right, that's a price change relative to everything else 0:11:20.480 --> 0:11:23.720 that makes people poor actually because their wages don't go up. 0:11:24.080 --> 0:11:27.880 David Blanche Flower would know about money illusion. Blanche Flower 0:11:28.000 --> 0:11:30.800 Oswald wage curve, which was done at the time of 0:11:30.880 --> 0:11:35.600 the Whaland paper, really suggests some pain within society. Are 0:11:35.640 --> 0:11:38.000 we going to see that? Well? If we if we 0:11:38.040 --> 0:11:41.520 get a true inflation, we will see that right right now. 0:11:41.679 --> 0:11:44.319 What we're all dissecting is an acceleration of the c 0:11:44.520 --> 0:11:47.440 p I and if we don't see a parallel and 0:11:47.480 --> 0:11:50.800 proportionate acceleration of wages to match it, then we'll either 0:11:50.840 --> 0:11:53.480 workers will either be better off or worse off, but 0:11:53.600 --> 0:11:57.160 always at the expense of someone else, like either capitalists, 0:11:57.360 --> 0:12:00.800 God forbid, or savers, which is more areous. With such 0:12:00.840 --> 0:12:05.000 a big baby boomer generation now approaching retirement, you start 0:12:05.040 --> 0:12:08.480 reducing the present purchasing value of their savings. Then you 0:12:08.520 --> 0:12:11.400 get into a situation where a big segment of society 0:12:11.480 --> 0:12:14.319 is worse off. Yesterday, the new president of France put 0:12:14.320 --> 0:12:16.160 on a snappy new suit and road around Paris in 0:12:16.200 --> 0:12:18.520 an open air jeep. Today I think he meets with 0:12:18.559 --> 0:12:21.320 his German counterpart. How much does the European economy change 0:12:21.360 --> 0:12:24.240 now with his election? We had a more state elections 0:12:24.240 --> 0:12:26.400 in Germany over the weekend. Does your outlook for the 0:12:26.400 --> 0:12:28.600 European economy change is a result of what we've seen 0:12:28.920 --> 0:12:31.079 in France and Germany over these last two weekends. Well, 0:12:31.120 --> 0:12:33.240 I think the betting has been on macall for some 0:12:33.320 --> 0:12:35.719 time now, so I think that there's no surprise to 0:12:35.760 --> 0:12:37.920 the markets this morning, right out of the box. So 0:12:38.080 --> 0:12:40.840 thinking longer term, one of the issues that Tom and 0:12:40.880 --> 0:12:44.320 I were discussing earlier today is this question of Ken 0:12:44.840 --> 0:12:49.000 Macon and Angela Merkel agree on what to do about England, 0:12:49.520 --> 0:12:52.000 and this I think is the most immediate question in 0:12:52.040 --> 0:12:55.839 front of everybody alright at stake. The biggest jewel out 0:12:55.880 --> 0:12:58.640 there is the city. Will they allow the city to 0:12:58.679 --> 0:13:02.079 continue to exist? Well, they want that business for Paris 0:13:02.440 --> 0:13:06.079 very high taxes of course, or Frankfurt much more of 0:13:06.320 --> 0:13:09.400 a friendly environment for these kinds of businesses. And the British, 0:13:09.440 --> 0:13:12.679 of course are concerned because uh percent of the UK 0:13:12.760 --> 0:13:15.280 economy comes from the city and two million jobs are 0:13:15.280 --> 0:13:18.360 associated with the financial sector. Those are more Carney's numbers. 0:13:18.600 --> 0:13:21.880 So I think that to me, the real question moving forward, 0:13:21.880 --> 0:13:23.280 what I want to see is what comes out of 0:13:23.280 --> 0:13:27.200 their meeting today and their subsequent communications on the Brexit question. 0:13:27.280 --> 0:13:30.120 That's the big elephant in the room. Very quickly. Here 0:13:30.480 --> 0:13:32.439 we have the snap election come up here in June. 0:13:32.720 --> 0:13:35.000 Are we're starting to see effects of Brexit playing out 0:13:35.000 --> 0:13:38.800 in the UK economy Now, Well, Tom was just over there, uh, 0:13:39.000 --> 0:13:40.880 and I think he's probably got a bigger sense of 0:13:40.880 --> 0:13:42.960 it than I do. But certainly, sitting over on this 0:13:43.000 --> 0:13:44.839 side of the pond, it looks to me like this 0:13:45.000 --> 0:13:48.120 election is a slam dunk. It just validates the national 0:13:48.160 --> 0:13:50.760 commitment to proceed with Brexit. I think there was a 0:13:50.760 --> 0:13:53.040 great cloud put over that by some of the stuff 0:13:53.080 --> 0:13:54.960 that came out that the court challenges and all that, 0:13:55.200 --> 0:13:58.440 And I think that Prime Minister May needs that unit 0:13:58.679 --> 0:14:01.520 unitiminity behind her in order to be able to confront 0:14:01.600 --> 0:14:03.480 the Europeans. I don't think it will help her any 0:14:03.679 --> 0:14:05.600 but it certainly puts her in a better position than 0:14:05.640 --> 0:14:07.600 she otherwise might have been. I don't know what was better. 0:14:07.679 --> 0:14:11.120 David Girl, Carl Weinberg on cross wind vectors at JFK 0:14:11.520 --> 0:14:15.080 or on the wage curve, cross winds and gray clouds 0:14:15.120 --> 0:14:30.320 with the Carl Weinberger. Michael Cannon joins US now. He's 0:14:30.360 --> 0:14:32.880 the director of Health Policy Studies at KATE the Cato Institute, 0:14:32.880 --> 0:14:35.200 and read from an op ed he wrote recently for 0:14:35.280 --> 0:14:37.200 The Hill. He said, the reality is that Republicans are 0:14:37.240 --> 0:14:40.360 not repealing Obamacare, They're making it worse and offering to 0:14:40.400 --> 0:14:43.080 take the blame for its failures, which will ultimately cement 0:14:43.200 --> 0:14:45.720 that law in place. A bleak assesspect of where things 0:14:45.760 --> 0:14:47.920 stand here on Capitol Hill at Michael Cannon. Great to 0:14:47.960 --> 0:14:51.440 see once again, Let's let's start with the state of play. Uh, 0:14:51.480 --> 0:14:53.120 this is out of the House, his hands now moves 0:14:53.160 --> 0:14:55.880 onto the Senate. Are you at all more optimistic that 0:14:55.920 --> 0:14:57.400 the law that you would like to see could be 0:14:57.400 --> 0:14:59.400 crafted by senators there? What do you think is that 0:14:59.520 --> 0:15:02.720 the stat of healthcare reform, of healthcare reform in Washington 0:15:02.840 --> 0:15:04.840 right now? Well, I think you have to start with 0:15:04.880 --> 0:15:07.680 what's happening in the marketplace right now, which is we're 0:15:07.680 --> 0:15:11.240 seeing insures flee the Obamacare exchanges to the point where 0:15:11.400 --> 0:15:14.000 you have some parts of the country where there are 0:15:14.040 --> 0:15:17.240 no carriers in the exchanges after December, and there are 0:15:17.280 --> 0:15:19.680 lots of lots more parts of the country where there's 0:15:19.720 --> 0:15:22.120 only one carrier in the exchanges, so there's just one 0:15:22.160 --> 0:15:25.920 insure exit away from having no exchange plans there, and 0:15:25.960 --> 0:15:29.560 the carriers that are remaining are asking for premium increases 0:15:29.600 --> 0:15:32.880 on the order that's uh that comes out of Maryland, 0:15:32.880 --> 0:15:34.960 where Blue Cross, Blue Shield has asked for that on 0:15:35.040 --> 0:15:40.040 top of all the past years increases like and and 0:15:40.080 --> 0:15:44.400 So this is obviously unsustainable. And the House didn't show 0:15:44.440 --> 0:15:46.880 much of an appetite for really repealing Obamacare. They want 0:15:46.920 --> 0:15:48.880 to leave in place the regulations that are causing all 0:15:48.880 --> 0:15:52.880 this instability, causing these premium increases, and it's unsure that 0:15:52.880 --> 0:15:54.760 the Senate has any more of an appetite for that. 0:15:54.920 --> 0:15:57.400 So it may have to get worse before it gets better. 0:15:57.440 --> 0:15:59.640 We may have to see more of these premium increases, 0:15:59.680 --> 0:16:03.000 more of these market collapses, more people going without health 0:16:03.000 --> 0:16:05.600 insurance to help them pay for the medical care they need, 0:16:06.200 --> 0:16:09.280 before Congress focuses on what the real problem is, which 0:16:09.280 --> 0:16:14.080 are these Obamacare regulations that are really destroying healthcare for something. 0:16:14.160 --> 0:16:16.320 Here's my question about those companies pulling out of these 0:16:16.320 --> 0:16:19.440 Obamacare exchanges. How much of that has to do with 0:16:19.520 --> 0:16:22.320 problems with the law and the marketplace itself versus just 0:16:22.360 --> 0:16:26.160 the uncertainty of the conversation about healthcare reform continuing. If 0:16:26.200 --> 0:16:29.120 if the CEO of ETNA Says Say cites the fact 0:16:29.120 --> 0:16:32.200 that there's uncertainty in the air. Uh, it seems like 0:16:32.280 --> 0:16:34.920 that's being contributed to or driven by the fact that 0:16:34.960 --> 0:16:38.160 there's still so much legislative uncertainty surrounding Obamacare, at least 0:16:38.200 --> 0:16:40.600 in part to agree with that. Well, yeah, that's certainly 0:16:40.600 --> 0:16:43.240 a part of it. But the the the centerpiece of 0:16:43.280 --> 0:16:46.600 Obamacare is a series of system of government price controls 0:16:46.640 --> 0:16:49.560 that the deeds stabilizes the market. Remember when the Obama 0:16:49.560 --> 0:16:52.280 administration went to the Supreme Court, they said, well, you 0:16:52.320 --> 0:16:55.520 can't block the individual mandate because Obamacare will destroy health 0:16:55.520 --> 0:16:58.000 insurance markets if you do that. So so the core 0:16:58.040 --> 0:17:02.120 of this law destabilizes insurance markets, and you need all 0:17:02.120 --> 0:17:05.119 sorts of subsidies in order to then stabilize the markets. 0:17:05.160 --> 0:17:08.000 And and and those subsidies were not authorized. There are 0:17:08.000 --> 0:17:10.160 a lot of them. Warrant as. If one federal judge 0:17:10.200 --> 0:17:11.960 told us, were you in that photo shoot at the 0:17:11.960 --> 0:17:17.280 White House? Did they invite you to the unless you 0:17:17.320 --> 0:17:20.320 have evidence, I'm just gonna what did you think of that? 0:17:20.560 --> 0:17:23.000 They took a victory lap before the thing even got 0:17:23.040 --> 0:17:26.080 to the Senate. Actually, it did seem it did seem bizarre. Yeah, 0:17:26.080 --> 0:17:28.200 it seemed like a mission accomplished. Moment because they're having 0:17:28.280 --> 0:17:31.840 this Rose garden Um press conference to sell lible grate 0:17:31.920 --> 0:17:34.200 House passage of a bill, which is you know, that's 0:17:34.240 --> 0:17:37.080 usually the sort of thing and you uh, you hold. 0:17:37.119 --> 0:17:39.760 After the bill passage, you have a signing ceremony, and 0:17:39.760 --> 0:17:42.120 that's when you invite everyone to I think that the 0:17:42.160 --> 0:17:44.919 Trump administration was desperate for a win. Okay, I'll go 0:17:44.960 --> 0:17:46.760 with that. In your essay, You've got a beautiful quote 0:17:46.760 --> 0:17:50.679 from President Clinton on the challenges of his Obamacare. I 0:17:50.760 --> 0:17:54.320 get that. Who's in support of Michael Cannon health economics 0:17:54.560 --> 0:17:58.600 who have those bodies on Capitol Hill? Want your vision 0:17:58.920 --> 0:18:01.640 of where we should go? Well, there are people who 0:18:02.480 --> 0:18:06.560 who have introduced the Health Saving Account expansion idea that 0:18:06.600 --> 0:18:08.640 I put forward a number of years ago, that would 0:18:08.640 --> 0:18:10.720 be a bigger tax cut than the reagular Bush tax 0:18:10.760 --> 0:18:13.119 cuts combined. Jeff Flake in the Senate, Dave Bratton the 0:18:13.119 --> 0:18:16.840 House of Interest gets the music, and and then and 0:18:16.840 --> 0:18:18.439 and there are others. There are other members of Congress 0:18:18.480 --> 0:18:21.120 who are working on legislation right now that would be 0:18:21.560 --> 0:18:23.960 that would actually appeal and replace Obamacare, and they're trying 0:18:24.000 --> 0:18:26.280 to get that into the debate. David gurn Time King 0:18:26.480 --> 0:18:30.120 Michael Cannon of Kato truly one of the nation's experts 0:18:30.160 --> 0:18:33.200 on healthcare. Michael CNN's got it. We thank singing and 0:18:33.280 --> 0:18:35.679 for this. And as the usual person who really needs 0:18:35.960 --> 0:18:40.359 healthcare coverage, she has cancer in Tennessee. Quote it's that 0:18:40.520 --> 0:18:42.760 or die? So what else would you do? Which I 0:18:42.760 --> 0:18:44.800 think is a question for a lot of us. You 0:18:44.840 --> 0:18:48.120 mentioned earlier. East Tennessee is an example of where this 0:18:48.200 --> 0:18:50.600 is not working out. Where are we going to be 0:18:50.640 --> 0:18:52.920 in one year? And her name is Melissa and Ants 0:18:53.000 --> 0:18:55.040 and she has an advanced form of leukemia. How did 0:18:55.080 --> 0:18:59.359 you know that? I know? All so uh so? And 0:18:59.400 --> 0:19:03.040 Melissa's one of those people who is having their access 0:19:03.080 --> 0:19:06.520 to care threatened by the instability created by Obamacare's regulations. Now, 0:19:06.520 --> 0:19:10.520 if Melissa has a pre existing condition in decent society, 0:19:10.560 --> 0:19:12.680 if she can't afford the medical care that she needs, 0:19:12.720 --> 0:19:15.200 we should do something to help her. We used to 0:19:15.240 --> 0:19:17.439 do that to be stable. Well, you know, there are 0:19:17.359 --> 0:19:19.080 a lot of people falling through the cracks of health 0:19:19.080 --> 0:19:21.800 care sector. But that has to be a stable system 0:19:21.960 --> 0:19:25.640 of assistance, and Obamacare is not that. Does Trump Care 0:19:25.800 --> 0:19:28.639 help that? No, actually makes it worse. She she and 0:19:28.680 --> 0:19:30.680 people like her would be I think even worse shape 0:19:30.720 --> 0:19:32.200 under Trump Care, because you have a race to the 0:19:32.240 --> 0:19:37.080 bottom even for those who have coverage. What's the motivation, 0:19:37.119 --> 0:19:39.840 as you see it, for structuring and completing and voting 0:19:39.920 --> 0:19:42.480 upon the law that Republicans in the House voted on. 0:19:42.560 --> 0:19:44.280 Are are you a a cynic who thinks this is 0:19:44.280 --> 0:19:46.200 all about politics? Or do you believe that there are 0:19:46.359 --> 0:19:48.879 Republicans that thought in good faith that they were doing 0:19:48.960 --> 0:19:52.720 something to change or two to better the Affordable Care Act? Well, 0:19:52.760 --> 0:19:55.159 you know, Republicans have their own sort of pre existing condition, 0:19:55.200 --> 0:19:57.720 which as they care about taxes and don't care about healthcare. 0:19:58.280 --> 0:20:00.400 Uh there. I like to call them the Christians scientists 0:20:00.400 --> 0:20:02.879 of public policy. They just don't do healthcare. And if 0:20:02.920 --> 0:20:04.879 you look at this bill, it really shows the motivation 0:20:04.920 --> 0:20:09.040 for this bill was to cut the taxes in Obamacare, 0:20:09.119 --> 0:20:11.399 set up tax reform, and who really cares about the 0:20:11.400 --> 0:20:15.000 healthcare part? And people who care about the healthcare part 0:20:15.000 --> 0:20:17.359 are people like Melissa and NaN's, people like me, people 0:20:17.400 --> 0:20:20.800 who actually want a stable system of subsidies to help 0:20:20.960 --> 0:20:24.520 those with expensive illnesses. So if if if I'm running 0:20:24.520 --> 0:20:27.600 a major health insurer, if this law were to pass, 0:20:27.640 --> 0:20:29.800 say the Senate were to adopt the bill as as written. 0:20:30.280 --> 0:20:32.280 Does that provide me with more certainty? And if so, 0:20:32.359 --> 0:20:35.359