1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,560 --> 00:00:16,560 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:33,879 Speaker 1: on the Bloomberg. So much to talk about with Jared Bernstein, 6 00:00:33,920 --> 00:00:36,720 Speaker 1: former economic advisor, device president Joe Biden, now a Senior 7 00:00:36,760 --> 00:00:39,040 Speaker 1: Fellow at the Center on Budget and Policy Priorities. He 8 00:00:39,120 --> 00:00:41,120 Speaker 1: joins Tom in our Bloomberg ninety one one news room 9 00:00:41,159 --> 00:00:44,760 Speaker 1: down in Washington, d C. And Tom a great interview. Uh. 10 00:00:44,880 --> 00:00:46,920 Speaker 1: Stand Fisher is still a believer, still believes we're gonna 11 00:00:46,920 --> 00:00:49,520 Speaker 1: have higher inflation. He really does. I mean, Jared walked 12 00:00:49,560 --> 00:00:51,559 Speaker 1: in the Durance. So what do you think? This is 13 00:00:51,600 --> 00:00:54,200 Speaker 1: always and really this goes as Jared knows back to 14 00:00:54,240 --> 00:00:56,960 Speaker 1: the history of stand Fisher through the seventies and eighties 15 00:00:57,000 --> 00:01:01,360 Speaker 1: as someone always airing towards an normalization rates in a 16 00:01:01,400 --> 00:01:04,840 Speaker 1: time of accommodation. And I'll be honest between the lines, 17 00:01:04,880 --> 00:01:08,280 Speaker 1: and it's always that kind of interview with a fedeficial Uh, David, 18 00:01:08,360 --> 00:01:11,280 Speaker 1: it was that kind of interview. We were ultra accommodative 19 00:01:11,360 --> 00:01:15,480 Speaker 1: and we're less ultra accommodative right now. Thank you to 20 00:01:15,520 --> 00:01:18,319 Speaker 1: the many people listening with senting some worth these uh 21 00:01:18,680 --> 00:01:23,640 Speaker 1: sending kind notes they were listening to, Really, David a 22 00:01:23,720 --> 00:01:27,720 Speaker 1: time of transition, which means that Jared Bernstein is absolutely 23 00:01:27,760 --> 00:01:29,880 Speaker 1: the perfect person to speak to. Now for those of 24 00:01:29,880 --> 00:01:32,840 Speaker 1: you that don't know Jared Bernstein, as I've said for years, 25 00:01:32,840 --> 00:01:36,280 Speaker 1: as a liberal, conservatives must listen to a force at 26 00:01:36,280 --> 00:01:39,920 Speaker 1: the Economic Policy Institute for years is public service to 27 00:01:40,040 --> 00:01:44,720 Speaker 1: Vice President Biden. Yes he's a liberal economist. Oh my word, 28 00:01:45,640 --> 00:01:48,080 Speaker 1: don't mention it on air. And now at the Center 29 00:01:48,240 --> 00:01:54,600 Speaker 1: on Budget Administration, h Jared, how far is a divide 30 00:01:54,600 --> 00:01:58,360 Speaker 1: between liberal and conservative economists? I would suggest it's not 31 00:01:58,480 --> 00:02:00,800 Speaker 1: as wide as the media put. I mean, this is 32 00:02:00,840 --> 00:02:03,840 Speaker 1: gonna sound a little annoying to people, but you know, 33 00:02:03,880 --> 00:02:07,440 Speaker 1: Paul Krugman says, the facts have a liberal bias. Uh So, 34 00:02:07,640 --> 00:02:10,600 Speaker 1: I really do try to go by the numbers. So 35 00:02:10,680 --> 00:02:13,080 Speaker 1: when I when I look at take the Federal Reserve, 36 00:02:13,120 --> 00:02:16,239 Speaker 1: for example, when I look at inflation, I form a view. 37 00:02:16,280 --> 00:02:21,639 Speaker 1: Their inflation obviously very quiescent. So the normalization campaign should 38 00:02:21,720 --> 00:02:23,880 Speaker 1: move very very slowly in my view, when I look 39 00:02:23,880 --> 00:02:26,360 Speaker 1: at tax policy, I look at I look at the numbers, 40 00:02:26,360 --> 00:02:28,520 Speaker 1: and that's how how we make our call. I think 41 00:02:28,639 --> 00:02:31,639 Speaker 1: too often in economics we have ideology trumping data, and 42 00:02:31,680 --> 00:02:33,920 Speaker 1: I just try to avoid that. Jack Berson, help us 43 00:02:33,960 --> 00:02:36,640 Speaker 1: mark this moment that Tom mentioning the transition we're seeing 44 00:02:36,680 --> 00:02:38,960 Speaker 1: at the Fed stand Fisher here with just days left 45 00:02:39,160 --> 00:02:41,880 Speaker 1: in that role before he moves on to whatever's next. 46 00:02:42,120 --> 00:02:44,480 Speaker 1: There's a lot of transition happening here. I mentioned the 47 00:02:44,520 --> 00:02:47,080 Speaker 1: vacancies at the top of the show. How how transformative 48 00:02:47,080 --> 00:02:51,480 Speaker 1: a moment is this. I think it's potentially quite transformative, 49 00:02:51,480 --> 00:02:54,360 Speaker 1: and I actually think this is a somewhat difficult time 50 00:02:54,360 --> 00:02:57,560 Speaker 1: to be going through so many transitions. The Federal Reserve 51 00:02:57,800 --> 00:03:01,480 Speaker 1: is involved in a very delicate ask right now. Obviously 52 00:03:01,520 --> 00:03:04,960 Speaker 1: I'm talking about unwinding the very large balance sheet, but 53 00:03:05,040 --> 00:03:09,160 Speaker 1: also the kind of data driven normalization campaign. You know 54 00:03:09,240 --> 00:03:14,600 Speaker 1: you've got essentially Janet Yellen at the wheel communicating I 55 00:03:14,639 --> 00:03:19,600 Speaker 1: think very clearly to markets, giving I think extremely useful 56 00:03:19,680 --> 00:03:23,840 Speaker 1: forward guidance, talking about the data, talking about the models, 57 00:03:24,120 --> 00:03:27,120 Speaker 1: and at a time like this, to be replacing sciety 58 00:03:27,120 --> 00:03:30,080 Speaker 1: of your starting team with with unknowns, I think it 59 00:03:30,160 --> 00:03:34,160 Speaker 1: creates a potentially creates a level of uncertainty that is 60 00:03:34,200 --> 00:03:36,840 Speaker 1: potentially damaging. It's one of the reasons, by the way, 61 00:03:36,880 --> 00:03:40,080 Speaker 1: that I've really been stressing the importance of Donald Trump 62 00:03:40,160 --> 00:03:43,720 Speaker 1: reappointing Janet Yellen. Uh. That might sound like an outside 63 00:03:43,720 --> 00:03:45,840 Speaker 1: the box idea, but as we all know, she still 64 00:03:45,920 --> 00:03:47,920 Speaker 1: is a frontrunner. What do you make is as you 65 00:03:47,960 --> 00:03:49,480 Speaker 1: watch a call it a parlor game. As you watch 66 00:03:49,520 --> 00:03:51,480 Speaker 1: all of this play out, the reports of Kevin warsh 67 00:03:51,480 --> 00:03:53,160 Speaker 1: head into the White House to meet with the President, 68 00:03:53,200 --> 00:03:56,120 Speaker 1: tour J. Powell having a conversation with him and with 69 00:03:56,160 --> 00:03:58,840 Speaker 1: the Treasury Secretary as what are you looking for? How 70 00:03:58,840 --> 00:04:00,680 Speaker 1: do you how do you you try to figure out 71 00:04:00,720 --> 00:04:02,840 Speaker 1: how do you try to piece together what their perspective 72 00:04:02,840 --> 00:04:06,160 Speaker 1: on monetary policy is? Well, look, I mean we parlor 73 00:04:06,200 --> 00:04:07,960 Speaker 1: game is the right word, and and and we we 74 00:04:08,080 --> 00:04:12,400 Speaker 1: do in Washington have this unfortunate tendency of kind of uh, 75 00:04:12,440 --> 00:04:15,080 Speaker 1: you know, going through the entrails of anything having to 76 00:04:15,120 --> 00:04:18,719 Speaker 1: do with the Federal Reserve. I think the best advice 77 00:04:18,839 --> 00:04:20,799 Speaker 1: when it comes to all of this is to ignore 78 00:04:20,839 --> 00:04:23,719 Speaker 1: it all for the most part, because Donald Trump is 79 00:04:23,839 --> 00:04:26,640 Speaker 1: completely unpredictable and you can't figure out what he's going 80 00:04:26,680 --> 00:04:28,840 Speaker 1: to do based on a meeting he's had with someone else. 81 00:04:29,080 --> 00:04:30,919 Speaker 1: The better idea is to kind of think through the 82 00:04:31,000 --> 00:04:33,880 Speaker 1: substance what would make most sense, and for those of 83 00:04:33,960 --> 00:04:36,480 Speaker 1: us with some sort of a public voice to to 84 00:04:36,480 --> 00:04:38,280 Speaker 1: to put that forth. And that's what I've been trying 85 00:04:38,279 --> 00:04:40,800 Speaker 1: to do in this reappoint yelling campaign. There's so many 86 00:04:40,839 --> 00:04:44,680 Speaker 1: themes to talk about, and with you and with your 87 00:04:44,720 --> 00:04:49,320 Speaker 1: true expertise and fiscal dynamics, How urgent do you feel, 88 00:04:49,400 --> 00:04:53,159 Speaker 1: Jared to get a score on a nine page tax 89 00:04:53,240 --> 00:04:56,560 Speaker 1: reform proposal or is it just a media frenzy and 90 00:04:56,600 --> 00:05:00,200 Speaker 1: we wait till sometime next year. You know it is 91 00:05:00,400 --> 00:05:03,200 Speaker 1: urgent in the following sense. I mean we are uh 92 00:05:03,640 --> 00:05:07,000 Speaker 1: you mentioned fiscal or fiscal constraints. We are a country 93 00:05:07,320 --> 00:05:11,279 Speaker 1: that's simply based on our aging demographics alone, we're going 94 00:05:11,320 --> 00:05:14,440 Speaker 1: to need more revenues down the road, not less. So 95 00:05:14,640 --> 00:05:17,640 Speaker 1: when I hear the Republicans putting forth a bill that 96 00:05:17,720 --> 00:05:21,960 Speaker 1: threatens to lose at least two trillion over ten years 97 00:05:22,000 --> 00:05:25,719 Speaker 1: based on pretty conventional score keeping based on the details 98 00:05:25,760 --> 00:05:29,440 Speaker 1: we know so far, that strikes me as extremely problematic. 99 00:05:29,520 --> 00:05:31,680 Speaker 1: So yes, we we definitely need to pay attention to 100 00:05:31,720 --> 00:05:34,600 Speaker 1: those numbers. I mean, within into the numbers, and I've 101 00:05:34,640 --> 00:05:36,839 Speaker 1: seen one point five trillion and it goes out to 102 00:05:36,880 --> 00:05:39,120 Speaker 1: two point four trillion is maybe the high point I've 103 00:05:39,160 --> 00:05:42,080 Speaker 1: seen in different punditry explained to our audience what that 104 00:05:42,200 --> 00:05:45,279 Speaker 1: number actually is. I mean, I guess it's a tenth 105 00:05:45,320 --> 00:05:47,760 Speaker 1: of our fiscal budget. But what does it mean to 106 00:05:47,800 --> 00:05:49,839 Speaker 1: a pro like you, Well, I mean in terms of 107 00:05:50,160 --> 00:05:52,200 Speaker 1: you really should scale those numbers by g d P 108 00:05:52,440 --> 00:05:54,760 Speaker 1: and uh, you know, over a ten year period, we're 109 00:05:54,800 --> 00:05:57,039 Speaker 1: talking about the percent maybe less than a percent of 110 00:05:57,080 --> 00:05:59,720 Speaker 1: g d P. But what we're what we're what we're 111 00:05:59,720 --> 00:06:01,919 Speaker 1: talking about from my perspective is the fact that the 112 00:06:01,920 --> 00:06:04,560 Speaker 1: Congressional Budget Office tells us And on this point, I 113 00:06:04,600 --> 00:06:07,080 Speaker 1: don't think there's really any argumentation at all that over 114 00:06:07,120 --> 00:06:09,160 Speaker 1: the next ten years we're going to need two and 115 00:06:09,200 --> 00:06:11,840 Speaker 1: a half percent of GDP more revenue to meet our 116 00:06:11,880 --> 00:06:16,719 Speaker 1: obligations VISA B, Social Security, medicare other some of these 117 00:06:17,000 --> 00:06:19,920 Speaker 1: larger government programs of social insurance programs, if you will. 118 00:06:20,279 --> 00:06:23,320 Speaker 1: So the idea that we can somehow meet our promises 119 00:06:23,360 --> 00:06:28,320 Speaker 1: at the same time that we cut taxes uh that severely. 120 00:06:28,520 --> 00:06:31,479 Speaker 1: It's just it's just not arithmetic, it's just it's just fantasy. 121 00:06:31,480 --> 00:06:33,320 Speaker 1: And then when you start talking about how how growth 122 00:06:33,360 --> 00:06:35,200 Speaker 1: effects are going to make up the difference, you know, 123 00:06:35,279 --> 00:06:38,160 Speaker 1: nobody who's not being paid to believe that believes it. 124 00:06:38,600 --> 00:06:40,440 Speaker 1: Let me bring things full circle here. We're gonna come 125 00:06:40,440 --> 00:06:42,080 Speaker 1: back with you for another block as well. But Tom 126 00:06:42,080 --> 00:06:44,839 Speaker 1: asked you about the difference between liberal economics and conservative economics. 127 00:06:44,880 --> 00:06:46,520 Speaker 1: Let me ask you about the state of non partisan 128 00:06:46,520 --> 00:06:49,160 Speaker 1: economic analysis in Washington, d C. We're all struck by 129 00:06:49,160 --> 00:06:51,159 Speaker 1: this story about a paper being pulled from the Treasury 130 00:06:51,160 --> 00:06:54,919 Speaker 1: Department website recently at tax analysis paper, the conclusions of 131 00:06:54,920 --> 00:06:57,480 Speaker 1: which ran contrary to what the Treasury Secretary thinks about 132 00:06:57,600 --> 00:07:00,320 Speaker 1: tax reform. I'm struck by what's been said about the 133 00:07:00,320 --> 00:07:03,360 Speaker 1: Tax Policy Centers analysis of this proposal that was released 134 00:07:03,440 --> 00:07:06,080 Speaker 1: last week, Kevin Brady saying the analysis a work of 135 00:07:06,120 --> 00:07:08,520 Speaker 1: fiction that Stephen King would have been proud of were 136 00:07:08,520 --> 00:07:11,200 Speaker 1: in hatched, the Chairman of the Senate Finance Committee saying 137 00:07:11,200 --> 00:07:14,040 Speaker 1: here that no respectable academic or researcher was willing to 138 00:07:14,040 --> 00:07:17,560 Speaker 1: have their name associated with something so haphazardly cobbled together. 139 00:07:17,600 --> 00:07:19,560 Speaker 1: I think Donald Marin, former head of the CBO might 140 00:07:19,560 --> 00:07:23,120 Speaker 1: take exception to that. What's the state of nonpartisan analysis? 141 00:07:23,160 --> 00:07:25,960 Speaker 1: And washingtond see how imperiled is it? You know that 142 00:07:25,960 --> 00:07:28,120 Speaker 1: that litany you just ran through. I gotta say, it's 143 00:07:28,160 --> 00:07:32,320 Speaker 1: just downright depressing to me, because you've seen a tax 144 00:07:32,360 --> 00:07:35,720 Speaker 1: on the Congressional Budget Office, on the nonpartisan Tax Policy Center. 145 00:07:35,760 --> 00:07:38,640 Speaker 1: By the way, I recently found out that the three 146 00:07:38,680 --> 00:07:41,840 Speaker 1: top directors of the of the TPC, the Tax Policy Center, 147 00:07:42,000 --> 00:07:44,760 Speaker 1: all used to work for Republicans. And so these these 148 00:07:44,760 --> 00:07:47,800 Speaker 1: are by the numbers folks, and they don't have a 149 00:07:47,840 --> 00:07:52,000 Speaker 1: thumb on the scale. Now Washington is filled with partisan economics. 150 00:07:52,000 --> 00:07:54,360 Speaker 1: You know, I think it was Manuchin the other day, 151 00:07:54,360 --> 00:07:57,160 Speaker 1: said Treasury Sectary. Manuchin said, I can get lots of 152 00:07:57,200 --> 00:07:59,960 Speaker 1: economists on TV to endorse my plan and to tell 153 00:08:00,120 --> 00:08:02,600 Speaker 1: you that it will pay for itself. That's true, but 154 00:08:02,680 --> 00:08:04,600 Speaker 1: that doesn't mean that the plan will pay for itself. 155 00:08:04,640 --> 00:08:07,480 Speaker 1: That just means that they can cherry pick the opinions 156 00:08:07,480 --> 00:08:10,800 Speaker 1: they want. I was I was just very quickly here, Jared, 157 00:08:10,840 --> 00:08:12,600 Speaker 1: and will come back. Wonderful to have you with us 158 00:08:12,600 --> 00:08:15,760 Speaker 1: for this half already get started in Washington. I would 159 00:08:15,960 --> 00:08:19,440 Speaker 1: just you and whole seeking or and maybe modestly different pages. 160 00:08:19,840 --> 00:08:22,520 Speaker 1: But there's Douglas Holtekin the other day saying the vector 161 00:08:22,520 --> 00:08:24,920 Speaker 1: on deficit to GDP is five six and he was 162 00:08:24,960 --> 00:08:28,160 Speaker 1: the first one who said seven percent of GDP. Do 163 00:08:28,200 --> 00:08:31,720 Speaker 1: you share the same concern that the vector that we're 164 00:08:31,720 --> 00:08:35,320 Speaker 1: seeing now could continue out to something newsworthy. Yeah, Doug 165 00:08:35,320 --> 00:08:37,040 Speaker 1: and I share this view of Doug is in a 166 00:08:37,360 --> 00:08:39,880 Speaker 1: he's a good example of an economist on the other 167 00:08:39,920 --> 00:08:42,280 Speaker 1: side of the aisle who I I very much respect, 168 00:08:42,320 --> 00:08:44,760 Speaker 1: and he's like myself and like, by the way, lots 169 00:08:44,800 --> 00:08:48,000 Speaker 1: of economists on from from a more conservative perspective to 170 00:08:48,000 --> 00:08:50,960 Speaker 1: whom I've discussed about this. We are all worried about 171 00:08:51,000 --> 00:08:53,440 Speaker 1: the impact of this tax plan on deficits and debt. 172 00:08:53,640 --> 00:08:56,080 Speaker 1: And it just shows you that these alleged deficit hawks 173 00:08:56,120 --> 00:08:58,080 Speaker 1: there chicken hawks when it comes to the real deal. 174 00:08:58,480 --> 00:09:01,480 Speaker 1: This is what we love to do, Bloomberg surveillance folks. 175 00:09:01,559 --> 00:09:05,080 Speaker 1: David Gern New York. I'm Tim Keen FM News bureau 176 00:09:05,320 --> 00:09:08,480 Speaker 1: in Washington. To have the Vice Chairman of the Fed 177 00:09:08,559 --> 00:09:10,440 Speaker 1: with us, and then to follow up with one of 178 00:09:10,440 --> 00:09:14,960 Speaker 1: the great analysts of monetary and fiscal economics in Washington, 179 00:09:15,040 --> 00:09:20,040 Speaker 1: Jared Bernstein, of the Center on Budget and Policy UH 180 00:09:20,200 --> 00:09:23,200 Speaker 1: priorities as well. Thrilled to have them with us UH 181 00:09:23,320 --> 00:09:25,600 Speaker 1: this morning. We've talked a lot about monetary policy. Jared, 182 00:09:25,679 --> 00:09:28,720 Speaker 1: let me ask you about the debate over tax reform. 183 00:09:29,200 --> 00:09:31,240 Speaker 1: We've seen one page go to two pages, go to 184 00:09:31,320 --> 00:09:33,520 Speaker 1: nine pages. We've seen the framework sent up to Capitol 185 00:09:33,600 --> 00:09:36,200 Speaker 1: Hill senator or in hatch saying the Senate Finance committees 186 00:09:36,200 --> 00:09:38,480 Speaker 1: where this thing is going to be written. What are 187 00:09:38,480 --> 00:09:40,600 Speaker 1: you gonna be watching for as you as you look 188 00:09:40,600 --> 00:09:45,120 Speaker 1: for points of agreement and disagreement among the Republican ranks particularly, Actually, 189 00:09:45,120 --> 00:09:47,520 Speaker 1: there's a very important thing to be watching for this 190 00:09:47,720 --> 00:09:51,800 Speaker 1: very day. Republicans are suggesting now that they're going to 191 00:09:51,840 --> 00:09:54,439 Speaker 1: give up on their repeal of the state and local 192 00:09:54,679 --> 00:09:57,839 Speaker 1: tax deduction. That is, they were going to repeal UH 193 00:09:57,960 --> 00:10:01,040 Speaker 1: this deduction in order to help pay for their for 194 00:10:01,080 --> 00:10:04,240 Speaker 1: their tax cut. Now they're either cutting that back or 195 00:10:04,240 --> 00:10:06,320 Speaker 1: they're going to leave it in place. So the thing 196 00:10:06,400 --> 00:10:10,000 Speaker 1: to watch for is will they now cut their ask 197 00:10:10,200 --> 00:10:13,559 Speaker 1: in terms of the magnitude of the tax cut because 198 00:10:13,600 --> 00:10:15,640 Speaker 1: they're cutting a pay for as they lose part of 199 00:10:15,640 --> 00:10:18,240 Speaker 1: a pay for, the arithmetic would suggest they'd have to 200 00:10:18,280 --> 00:10:21,120 Speaker 1: cut back what they're asking for in tax cuts. If 201 00:10:21,160 --> 00:10:25,400 Speaker 1: they don't, it's a signal that they're really completely detached 202 00:10:25,440 --> 00:10:28,840 Speaker 1: from any concerns about the deficit or dead implications of 203 00:10:28,880 --> 00:10:31,800 Speaker 1: this plan. Even if they do, those implications are already 204 00:10:31,840 --> 00:10:35,280 Speaker 1: quite negative. The leaders you're watching here, I mentioned Senator Hatch, 205 00:10:35,520 --> 00:10:37,360 Speaker 1: Chairman Kevin Brady, the chairman of the House Ways and 206 00:10:37,360 --> 00:10:41,199 Speaker 1: Means Committee, obviously working on this issue very minute in 207 00:10:41,240 --> 00:10:43,920 Speaker 1: details as well. Are you looking to them? Are you 208 00:10:44,000 --> 00:10:46,640 Speaker 1: looking to to House Speaker Paul Ryan? Are you even 209 00:10:46,679 --> 00:10:49,080 Speaker 1: casting your eyes the Little West looking at the White 210 00:10:49,120 --> 00:10:51,240 Speaker 1: House as well? I'm not so much looking at the 211 00:10:51,240 --> 00:10:53,360 Speaker 1: White House because they're kind of distracted with a bunch 212 00:10:53,360 --> 00:10:55,400 Speaker 1: of other things, And I'm not so much looking at 213 00:10:55,600 --> 00:10:58,320 Speaker 1: the quote Big six, the architects of the plan. What 214 00:10:58,400 --> 00:11:01,560 Speaker 1: I'm looking at is the Republican Caucus. Remember it with 215 00:11:01,600 --> 00:11:05,160 Speaker 1: the Republican Caucus that brought down their attempt to repeal 216 00:11:05,800 --> 00:11:09,280 Speaker 1: the Affordable Care Act. And it's not a slam dunk 217 00:11:09,320 --> 00:11:11,720 Speaker 1: that they're going to have their be able to muster 218 00:11:11,800 --> 00:11:14,200 Speaker 1: their troops behind them on the tax cut either. So 219 00:11:14,280 --> 00:11:16,200 Speaker 1: that's where I think you want to look if you're 220 00:11:16,200 --> 00:11:18,480 Speaker 1: trying to figure out where this is going, I mean, 221 00:11:18,760 --> 00:11:21,400 Speaker 1: within all of this. And I guess I'm touching back 222 00:11:21,440 --> 00:11:23,560 Speaker 1: to the sixties because I've been watching the ken Burns, 223 00:11:23,559 --> 00:11:26,880 Speaker 1: the Vietnam War, the effort, which folks, is spectacular. If 224 00:11:26,920 --> 00:11:29,280 Speaker 1: you like tri X film from Eastman Codec, you'll love 225 00:11:29,360 --> 00:11:32,400 Speaker 1: the black and white photos are just breathtaking what they've 226 00:11:32,440 --> 00:11:36,240 Speaker 1: done in the restoration of another time and place. The 227 00:11:36,480 --> 00:11:39,920 Speaker 1: arch fear of your world. Jared Bernstein is, Oh, no, 228 00:11:40,320 --> 00:11:44,960 Speaker 1: we're gonna have the Walter Hellers sixties runaway inflation. Remember 229 00:11:44,960 --> 00:11:49,960 Speaker 1: that phrase whip inflation. Now we're miles from that, aren't we. Yeah, 230 00:11:50,440 --> 00:11:54,079 Speaker 1: We're miles from the arch Republican fear, aren't we? Yeah? 231 00:11:54,240 --> 00:11:57,439 Speaker 1: I think we are. And Uh, it's interesting gets back 232 00:11:57,480 --> 00:11:59,800 Speaker 1: to our where we started our discussion. I think you 233 00:11:59,840 --> 00:12:02,559 Speaker 1: have have to be very careful if you're administering monetary 234 00:12:02,600 --> 00:12:06,600 Speaker 1: policy to not be fighting really old wars. Uh and 235 00:12:06,600 --> 00:12:10,000 Speaker 1: and and Actually Cherry Yellen was quite articulate about this 236 00:12:10,040 --> 00:12:12,000 Speaker 1: in a speech he gave last week to the to 237 00:12:12,120 --> 00:12:14,800 Speaker 1: the Nave, which people said it was an important speech. 238 00:12:14,880 --> 00:12:17,040 Speaker 1: I found it to be very important because she really 239 00:12:17,120 --> 00:12:20,280 Speaker 1: was scratching her head about the underlying model. And I 240 00:12:20,320 --> 00:12:23,400 Speaker 1: think saying quite clearly, we really have to think the 241 00:12:23,480 --> 00:12:27,120 Speaker 1: fundamental forces driving inflation. So to the extent that you're 242 00:12:27,160 --> 00:12:32,239 Speaker 1: pulling monetary policy based on memories of runaway sixties and seventies, 243 00:12:32,520 --> 00:12:35,280 Speaker 1: I would recommend that you you do a pretty serious 244 00:12:35,320 --> 00:12:38,199 Speaker 1: rethink on that. I wanna untilt here in the final 245 00:12:38,240 --> 00:12:43,280 Speaker 1: minute that we've got with you two democratic eco politics. 246 00:12:43,320 --> 00:12:46,800 Speaker 1: You did public service with Vice President Biden. Some say 247 00:12:46,880 --> 00:12:49,680 Speaker 1: that Joe will take another run at it. Do we 248 00:12:49,760 --> 00:12:53,760 Speaker 1: need to see democratic economic theory move from a progressive 249 00:12:53,920 --> 00:12:57,800 Speaker 1: East coast, left coast mentality to something more Scoop Jackson, 250 00:12:57,960 --> 00:13:01,280 Speaker 1: something more mainstream, something more Joe Biden. Do you see 251 00:13:01,320 --> 00:13:04,720 Speaker 1: any evidence of that? I do in the following sense, 252 00:13:04,760 --> 00:13:07,880 Speaker 1: I think that you know, Joe Biden in particular had 253 00:13:07,880 --> 00:13:10,840 Speaker 1: a way of connecting with a lot of a set 254 00:13:10,840 --> 00:13:12,960 Speaker 1: of voters who turned out to be decisive in in 255 00:13:13,040 --> 00:13:17,000 Speaker 1: the last election. Sent kind of center left folks from 256 00:13:17,000 --> 00:13:20,720 Speaker 1: both the Democrats and the Republican Party had ignored those concerns, 257 00:13:20,720 --> 00:13:25,480 Speaker 1: particularly around globalization, for really decades on end, so putting 258 00:13:25,520 --> 00:13:28,079 Speaker 1: policy aside because I think it's a different discussion. You 259 00:13:28,200 --> 00:13:32,040 Speaker 1: definitely someone who can connect with with with blue collar voters. 260 00:13:32,160 --> 00:13:35,199 Speaker 1: Did you see any evidence of that? Uh? And by 261 00:13:35,280 --> 00:13:37,720 Speaker 1: in terms of I mean it's too early, I mean 262 00:13:37,760 --> 00:13:39,520 Speaker 1: to me, it's too early, right kind of wait for 263 00:13:39,520 --> 00:13:41,280 Speaker 1: the mid terms. Yeah, And I think I think we 264 00:13:41,360 --> 00:13:43,160 Speaker 1: have to wait wait for the I think the policy 265 00:13:43,240 --> 00:13:45,400 Speaker 1: question is actually very interesting as well, which is that 266 00:13:45,600 --> 00:13:47,840 Speaker 1: you know, should Democrats attack to the center, should they 267 00:13:47,840 --> 00:13:50,280 Speaker 1: attack to the left? And I tend to think that, Uh, 268 00:13:50,320 --> 00:13:53,400 Speaker 1: there are a lot of folks asking Democrats, really, what 269 00:13:53,480 --> 00:13:56,320 Speaker 1: have you got to answer for the fact that even 270 00:13:56,360 --> 00:13:58,240 Speaker 1: as we close in on full employment, there are a 271 00:13:58,240 --> 00:14:00,440 Speaker 1: lot of folks are being left behind. And that's a 272 00:14:00,480 --> 00:14:03,040 Speaker 1: really tough question. I got about fourteen more questions. We 273 00:14:03,040 --> 00:14:05,319 Speaker 1: will do it again with Jared Bernstein in the Center 274 00:14:06,040 --> 00:14:09,280 Speaker 1: on budget and policy priorities as well. Let me do 275 00:14:09,320 --> 00:14:11,000 Speaker 1: a day to check a little weight to the tape 276 00:14:11,040 --> 00:14:12,960 Speaker 1: after this day, that day, in the next day of 277 00:14:13,040 --> 00:14:17,079 Speaker 1: record highs, reminding where the TAO is twenty two thousand, 278 00:14:17,160 --> 00:14:23,040 Speaker 1: sixty one spur and the vix stunning nine point six nine. 279 00:14:23,560 --> 00:14:27,800 Speaker 1: Sherman Greenspan would call that a quite essence. VIX from 280 00:14:27,960 --> 00:14:31,359 Speaker 1: New York, from Washington, stay with us. This is Bloomberg. 281 00:14:42,640 --> 00:14:44,440 Speaker 1: Steve Rattner with us here in our Bloomberg LEMN three 282 00:14:44,520 --> 00:14:46,920 Speaker 1: studios in New York. He's the chairman of Willed ADVISORIESET, 283 00:14:46,960 --> 00:14:50,160 Speaker 1: managing Michael Bloomberg's personal and philanthropic assets. Michael Bloomer, of course, 284 00:14:50,440 --> 00:14:54,760 Speaker 1: the majority owner of the eponymous Brig LP, which owns 285 00:14:54,840 --> 00:14:56,960 Speaker 1: Bloomberg Grady, among other properties. That Steve great to have 286 00:14:57,000 --> 00:14:58,400 Speaker 1: you with us here. We've been talking a little bit 287 00:14:58,400 --> 00:15:00,960 Speaker 1: about a tax reform in the budget throughout the morning. 288 00:15:01,120 --> 00:15:03,520 Speaker 1: Give us your perspective on what we've gotten so far. 289 00:15:04,160 --> 00:15:06,120 Speaker 1: It's safe to say there's more detail. I suppose it's 290 00:15:06,120 --> 00:15:09,600 Speaker 1: all relative here. We've got nine pages plenty of unanswered questions. 291 00:15:10,080 --> 00:15:12,800 Speaker 1: Lawmakers are now charged with writing this thing, translating that 292 00:15:12,840 --> 00:15:15,520 Speaker 1: into hundreds, if not more than a thousand pages of legislation. 293 00:15:16,080 --> 00:15:17,920 Speaker 1: What are you watching? What are you most keenly interested 294 00:15:17,960 --> 00:15:20,880 Speaker 1: in seeing how things are getting hammered down? I think 295 00:15:20,920 --> 00:15:23,440 Speaker 1: the most interesting recent development, which I believe I heard 296 00:15:23,440 --> 00:15:25,960 Speaker 1: on Bloomberg Radio this morning, is the question about the 297 00:15:26,000 --> 00:15:29,560 Speaker 1: state and local tax deduction, Because that is UH that 298 00:15:29,680 --> 00:15:31,720 Speaker 1: was going to create a pay for of one point 299 00:15:31,720 --> 00:15:35,440 Speaker 1: eight or one point nine trillion dollars, essentially funding a 300 00:15:35,560 --> 00:15:38,160 Speaker 1: very large portion of the corporate tax cuts. There has 301 00:15:38,200 --> 00:15:42,480 Speaker 1: been enormous pushback. The politics are ugly. There's uh anywhere 302 00:15:42,480 --> 00:15:45,680 Speaker 1: from forty to fifty. I have heard different numbers Republicans 303 00:15:45,800 --> 00:15:47,840 Speaker 1: in high tax states who are going to have trouble 304 00:15:47,960 --> 00:15:50,320 Speaker 1: voting for this, starting with people like Peter King on 305 00:15:50,360 --> 00:15:53,960 Speaker 1: Long Island. And if they lose that or have to 306 00:15:54,000 --> 00:15:58,280 Speaker 1: carve it back substantially, Uh, it really calls into serious 307 00:15:58,360 --> 00:16:01,120 Speaker 1: question what is already a difficult problem of the deficit 308 00:16:01,480 --> 00:16:03,960 Speaker 1: aspects of this plan. You know, we had to we 309 00:16:04,000 --> 00:16:06,920 Speaker 1: had this conversation about healthcare that it was so closely 310 00:16:06,920 --> 00:16:10,000 Speaker 1: tied the reconciliation process. We're seeing that used here again. 311 00:16:10,240 --> 00:16:12,440 Speaker 1: What are the consequences of that? And and and does 312 00:16:12,440 --> 00:16:15,560 Speaker 1: this the hope for tax reform have longevity if if 313 00:16:15,560 --> 00:16:17,600 Speaker 1: that process can't be used, if if we can't stick 314 00:16:17,640 --> 00:16:20,040 Speaker 1: to this very short timetable that's been laid out by 315 00:16:20,080 --> 00:16:22,560 Speaker 1: Republicans on the whole, Well, I think the short time 316 00:16:22,600 --> 00:16:26,680 Speaker 1: table and reconciliation are slightly disconnected. Reconciliation requires it to 317 00:16:26,760 --> 00:16:29,119 Speaker 1: be done within the budget. Year doesn't. But the Republicans 318 00:16:29,120 --> 00:16:31,960 Speaker 1: wanted done this year because the politics are such that 319 00:16:32,040 --> 00:16:34,600 Speaker 1: next year will be very very difficult. The only way 320 00:16:34,640 --> 00:16:37,640 Speaker 1: this will happen is through reconciliation. I don't you can 321 00:16:37,640 --> 00:16:40,560 Speaker 1: see how difficult it has been the for the Republicans 322 00:16:40,600 --> 00:16:43,040 Speaker 1: to put together fifty votes for any of the various 323 00:16:43,040 --> 00:16:46,560 Speaker 1: healthcare proposals. Imagine trying to put together sixty votes across 324 00:16:46,600 --> 00:16:50,160 Speaker 1: party lines for any tax care attacks that cut proposal. 325 00:16:50,200 --> 00:16:52,720 Speaker 1: It's just not going to happen. So what the Republicans 326 00:16:52,800 --> 00:16:55,560 Speaker 1: have to do is try to get fifty people in 327 00:16:55,600 --> 00:16:57,640 Speaker 1: their party to agree on this thing. And it's going 328 00:16:57,680 --> 00:16:59,640 Speaker 1: to be tough. And just one last point is, of course, 329 00:17:00,120 --> 00:17:02,720 Speaker 1: within reconciliation, it has to be it has to be 330 00:17:02,720 --> 00:17:05,720 Speaker 1: budget neutral. After the ten uere window or else those 331 00:17:05,720 --> 00:17:08,560 Speaker 1: tax cuts expired. And I think this general agreement that 332 00:17:08,640 --> 00:17:10,840 Speaker 1: it's one thing to monkey around with individuals and say 333 00:17:10,840 --> 00:17:12,960 Speaker 1: your tax cuts are gonna expire. If you do that 334 00:17:13,000 --> 00:17:15,119 Speaker 1: with business, you're probably losing a large part of the 335 00:17:15,160 --> 00:17:18,480 Speaker 1: benefit you're getting by cutting the taxes in the first place. Steve, 336 00:17:18,560 --> 00:17:23,240 Speaker 1: whatever anybody's politics, a lot of people taking in and 337 00:17:24,000 --> 00:17:28,280 Speaker 1: rethinking or the new thinking of Ken Burns, the Vietnam War, 338 00:17:28,640 --> 00:17:32,520 Speaker 1: and within that is in concept of month after month 339 00:17:32,640 --> 00:17:35,840 Speaker 1: after month in the White House around that table the 340 00:17:35,880 --> 00:17:39,399 Speaker 1: best and brightest. You are as qualified as anyone in 341 00:17:39,400 --> 00:17:42,280 Speaker 1: this nation to talk about the best and brightest. They 342 00:17:42,320 --> 00:17:44,639 Speaker 1: were so frustrated that they bring you in his bizar. 343 00:17:45,560 --> 00:17:47,040 Speaker 1: I don't know if the czar is the best and 344 00:17:47,040 --> 00:17:51,600 Speaker 1: the brightest, But are we just moved on from actual 345 00:17:51,800 --> 00:17:56,600 Speaker 1: merit and skill sets? Is being an item of importance 346 00:17:56,720 --> 00:18:00,480 Speaker 1: an economics stand fisher, or if we have we given 347 00:18:00,560 --> 00:18:05,320 Speaker 1: up on the concept of best and brightest? Well, obviously 348 00:18:05,400 --> 00:18:07,359 Speaker 1: I have. I have a bit of a bias about this. 349 00:18:07,480 --> 00:18:10,880 Speaker 1: I think the current president has appointed many people who 350 00:18:10,920 --> 00:18:13,200 Speaker 1: no one would regard among the best and brightest. He's 351 00:18:13,200 --> 00:18:16,840 Speaker 1: appointed some who people would regard, whether it's Jim Mattison 352 00:18:17,040 --> 00:18:20,240 Speaker 1: or hr McMaster or John Kelly, who people would regard 353 00:18:20,240 --> 00:18:23,280 Speaker 1: as among the best and the brightest. I think, I 354 00:18:23,320 --> 00:18:27,000 Speaker 1: think again, I'm perhaps biased. I think President Obama did 355 00:18:27,040 --> 00:18:29,520 Speaker 1: have a team, uh an all star team for the 356 00:18:29,560 --> 00:18:33,639 Speaker 1: most part of people advising and helping him. So, okay, 357 00:18:33,600 --> 00:18:35,800 Speaker 1: I hope we go back to the best of the brightest. 358 00:18:35,840 --> 00:18:38,040 Speaker 1: I hope we hope we just fill these empty jobs 359 00:18:38,119 --> 00:18:40,840 Speaker 1: because we need people. We need good people down there. 360 00:18:40,880 --> 00:18:43,760 Speaker 1: But the problem, of course, at the moment is Again, 361 00:18:43,800 --> 00:18:46,880 Speaker 1: this may sound like a political Statement's not meant that way. 362 00:18:47,160 --> 00:18:49,000 Speaker 1: Nobody is going willing to go to work in the 363 00:18:49,040 --> 00:18:52,520 Speaker 1: Trump administration right this minute. The Ratner charm is that 364 00:18:52,600 --> 00:18:56,399 Speaker 1: you follow up pundentry with actual hard nails work. You know, 365 00:18:56,480 --> 00:19:00,000 Speaker 1: real reports that you put together call from other sources 366 00:19:00,080 --> 00:19:03,399 Speaker 1: is of great acuity. What is the Ratner acuity on 367 00:19:03,520 --> 00:19:06,560 Speaker 1: tax reform? What is the distinction you've come up with, 368 00:19:06,680 --> 00:19:08,840 Speaker 1: or I should say, what you're going to look forward 369 00:19:08,840 --> 00:19:12,320 Speaker 1: to into two eight. One of the things that has 370 00:19:12,359 --> 00:19:14,960 Speaker 1: struck me about this a tax bill, which I don't 371 00:19:15,000 --> 00:19:18,159 Speaker 1: think the White House has really disputed, is that in fact, 372 00:19:18,320 --> 00:19:20,119 Speaker 1: and we don't have all the details, but based on 373 00:19:20,200 --> 00:19:23,639 Speaker 1: what we know, it's something like a three hundred billion 374 00:19:23,680 --> 00:19:27,720 Speaker 1: dollar tax increase for individuals as a whole and something 375 00:19:27,760 --> 00:19:30,200 Speaker 1: like a two and a half billion dollar tax cut 376 00:19:30,359 --> 00:19:33,720 Speaker 1: for companies as a whole. A lot of that through 377 00:19:33,760 --> 00:19:36,600 Speaker 1: the pass throughs, which BA which, contrary to what the 378 00:19:36,600 --> 00:19:40,960 Speaker 1: White House says, essentially benefits high income tax payers. And 379 00:19:41,119 --> 00:19:43,800 Speaker 1: I understand and agree with the importance of cutting the 380 00:19:43,880 --> 00:19:46,840 Speaker 1: corporate tax rate and reforming the torque corporate tax code, 381 00:19:47,200 --> 00:19:49,560 Speaker 1: but there's an element of fairness in this that seems 382 00:19:49,600 --> 00:19:51,159 Speaker 1: to be missing, and I think that's what you're going 383 00:19:51,240 --> 00:19:53,400 Speaker 1: to see a lot of pushback on from both parties. 384 00:19:53,720 --> 00:19:56,200 Speaker 1: From a fiscal perspective, how do you fix the problem 385 00:19:56,240 --> 00:19:59,680 Speaker 1: like get Puerto Rico. We're seeing this in acute focus now, 386 00:20:00,040 --> 00:20:03,399 Speaker 1: President saying yesterday that the island's debt needs to be 387 00:20:03,440 --> 00:20:07,000 Speaker 1: wiped out. Uh, that doesn't seem feasible to me. But 388 00:20:07,080 --> 00:20:08,800 Speaker 1: it's safe to say that what we've seen happen here 389 00:20:08,800 --> 00:20:11,840 Speaker 1: with this hurricane two weeks ago, has heightened the problems 390 00:20:11,840 --> 00:20:14,560 Speaker 1: this island has already been facing for some time now. 391 00:20:15,040 --> 00:20:17,720 Speaker 1: From from an investing perspective, what's the way out here 392 00:20:17,720 --> 00:20:20,000 Speaker 1: for this this this part of the United States. Well, 393 00:20:20,040 --> 00:20:24,160 Speaker 1: it's a restructuring problem. And I don't I the President, 394 00:20:24,280 --> 00:20:27,159 Speaker 1: you know, not not uncharacteristically, it's just sort of waving 395 00:20:27,160 --> 00:20:29,119 Speaker 1: his hand and saying stuff that frankly doesn't make a 396 00:20:29,119 --> 00:20:30,760 Speaker 1: lot of sense. As you know, we just went through 397 00:20:30,800 --> 00:20:34,560 Speaker 1: a very painful restructure in Puerto Rico. UM reduced the 398 00:20:34,600 --> 00:20:37,040 Speaker 1: debt somewhat, it's still a lot of debt, I don't 399 00:20:37,040 --> 00:20:40,600 Speaker 1: think frankly, however horrible this hurricane has been. The Puerto 400 00:20:40,720 --> 00:20:43,440 Speaker 1: Ricans are entitled to simply have their debt wiped out. 401 00:20:43,880 --> 00:20:46,960 Speaker 1: This is this this is a moral hazard issue at 402 00:20:47,000 --> 00:20:50,320 Speaker 1: a credit and a credit market issue. I think the 403 00:20:50,359 --> 00:20:53,159 Speaker 1: Puerto Ricans deserved a massive amount of federal aid, just 404 00:20:53,280 --> 00:20:56,199 Speaker 1: as Louisiana and New Jersey and lots of Florida and 405 00:20:56,240 --> 00:20:59,439 Speaker 1: Texas have gotten when they've had hurricanes, and then I 406 00:20:59,480 --> 00:21:01,800 Speaker 1: think we need to really take another look at economic 407 00:21:01,880 --> 00:21:05,320 Speaker 1: development there. But the Puerto Ricans unfortunately will and should 408 00:21:05,320 --> 00:21:07,600 Speaker 1: be left with a substantial amount of debt because they 409 00:21:07,640 --> 00:21:10,359 Speaker 1: accumulated it. You know, there's been a lot of talking 410 00:21:10,359 --> 00:21:15,040 Speaker 1: here about the president's legislative agenda, what he's prioritizing safety, 411 00:21:15,119 --> 00:21:17,399 Speaker 1: say that's changed week by week by week, and now 412 00:21:17,440 --> 00:21:20,240 Speaker 1: that these events that have introceded as well, to what 413 00:21:20,320 --> 00:21:22,399 Speaker 1: degree is that the White House is responsibility to shepherd 414 00:21:22,400 --> 00:21:25,320 Speaker 1: through the tax reform process that you've worked within an administration, 415 00:21:26,000 --> 00:21:28,960 Speaker 1: how essentially is a leadership role from the executive branch 416 00:21:28,960 --> 00:21:31,560 Speaker 1: when it's something that's in the provenance of of of 417 00:21:31,600 --> 00:21:34,800 Speaker 1: the legislative branch to figure out there's a pendulum in 418 00:21:34,840 --> 00:21:37,520 Speaker 1: this whole thing. There are there are times when an 419 00:21:37,560 --> 00:21:40,080 Speaker 1: administration will just go to Congress and say we want 420 00:21:40,119 --> 00:21:43,160 Speaker 1: to do healthcare, you figure it out. Uh. There are 421 00:21:43,200 --> 00:21:45,520 Speaker 1: times when and then people say, well, the White House 422 00:21:45,560 --> 00:21:47,800 Speaker 1: isn't doing its job. It's not actually putting together a plant. 423 00:21:48,119 --> 00:21:50,080 Speaker 1: There are times when the White House puts together a 424 00:21:50,160 --> 00:21:53,520 Speaker 1: highly detailed plan, sends it to Congress, and immediately Congress 425 00:21:53,520 --> 00:21:55,800 Speaker 1: has it's dead on arrival. So it's a it's a 426 00:21:55,880 --> 00:21:59,480 Speaker 1: very complicated dance between the two ends of Pennsylvania Avenue. 427 00:21:59,680 --> 00:22:03,760 Speaker 1: But yes, absolutely the White House bears a major responsibility 428 00:22:03,840 --> 00:22:07,000 Speaker 1: to herd. The cats go through the process and try 429 00:22:07,040 --> 00:22:10,200 Speaker 1: to bring people together. I just I can see it now, 430 00:22:10,280 --> 00:22:15,200 Speaker 1: Steve Rattner his next position czar of Cats, something like that. 431 00:22:15,520 --> 00:22:18,159 Speaker 1: Steve Rattner, thank you so much. As always greatly appreciated 432 00:22:18,760 --> 00:22:23,200 Speaker 1: Tom informed perspective here from many sources in his own opinion. 433 00:22:23,200 --> 00:22:30,240 Speaker 1: Occasionally as well, Mr Ratner will advisers, Oh, look there's 434 00:22:30,280 --> 00:22:33,959 Speaker 1: cats out the window here in Washington. I can see them. Now. 435 00:22:34,000 --> 00:22:36,760 Speaker 1: Should we do a day to Trump Hotel Thomas, you're 436 00:22:36,800 --> 00:22:38,520 Speaker 1: so fond of doing on this trip. Now, you've been 437 00:22:38,560 --> 00:22:42,160 Speaker 1: nursing this call. I did not. I've been nursing the plague. Um, 438 00:22:42,520 --> 00:22:44,320 Speaker 1: I did not make it. It's actually a bit of 439 00:22:44,320 --> 00:22:47,320 Speaker 1: a ways away. It's like blocks more than blocks. The 440 00:22:47,359 --> 00:22:51,120 Speaker 1: tower visible from all corners of the city, though lost time, 441 00:22:51,160 --> 00:22:53,439 Speaker 1: but anyway, you have to be like a donor to 442 00:22:53,840 --> 00:22:55,520 Speaker 1: go up the town. I get to the data. Sorry, 443 00:22:55,560 --> 00:23:13,199 Speaker 1: but this is without question the interview of the Morning. 444 00:23:13,240 --> 00:23:15,080 Speaker 1: And some of you may be stunned at that, after 445 00:23:15,160 --> 00:23:18,399 Speaker 1: the Vladimir Putin comments at Moscow, and of course my 446 00:23:18,560 --> 00:23:21,639 Speaker 1: conversation with the vice chairman of the Fellow Reserve, Stanley Fisher. 447 00:23:22,200 --> 00:23:24,560 Speaker 1: But indeed this is the interview of the Morning. It 448 00:23:24,720 --> 00:23:29,240 Speaker 1: is extraordinary that the leader, and someone who has done 449 00:23:29,280 --> 00:23:31,199 Speaker 1: so much in the last ten years for the Consul 450 00:23:31,240 --> 00:23:35,199 Speaker 1: on Foreign Relations, Richard Hass, has simply come out and 451 00:23:35,280 --> 00:23:37,760 Speaker 1: reaffirmed what we saw a few days ago, which is 452 00:23:37,800 --> 00:23:41,800 Speaker 1: the Secretary State of the United States of America should resign. 453 00:23:41,800 --> 00:23:44,840 Speaker 1: Ambassador Hass joins us. Now his book is, of course 454 00:23:44,920 --> 00:23:48,800 Speaker 1: A World and Disarray. Richard, this is a thunderous moment 455 00:23:49,320 --> 00:23:51,840 Speaker 1: when someone of the establishment, and of course your bi 456 00:23:51,920 --> 00:23:58,160 Speaker 1: party establishment says the Secretary State must go. Please discuss well, 457 00:23:58,160 --> 00:24:00,959 Speaker 1: I want the Secretary of State Tom to be successful. 458 00:24:01,040 --> 00:24:03,920 Speaker 1: I wanted to be effective, and I just don't think 459 00:24:04,040 --> 00:24:07,119 Speaker 1: it is possible under the circumstances, and part it's because 460 00:24:07,160 --> 00:24:10,679 Speaker 1: of this president and how he's organized this administration, his 461 00:24:10,760 --> 00:24:14,600 Speaker 1: own conduct with the tweeting, his public disparagement of the 462 00:24:14,600 --> 00:24:17,000 Speaker 1: Secretary of State like we saw the other day, the 463 00:24:17,080 --> 00:24:20,000 Speaker 1: lack of resources and staff that he's given to the 464 00:24:20,040 --> 00:24:23,480 Speaker 1: Secretary of State, the special role for Jared Pushner at 465 00:24:23,520 --> 00:24:26,919 Speaker 1: the White House. All this makes any Secretary of States 466 00:24:27,000 --> 00:24:30,800 Speaker 1: job extraordinarily difficult. But this Secretary of State, I think 467 00:24:30,880 --> 00:24:34,000 Speaker 1: has made it, made it even tougher on himself by 468 00:24:34,000 --> 00:24:38,480 Speaker 1: not pressing for resources, by not pressing for staff. Now 469 00:24:38,520 --> 00:24:42,040 Speaker 1: he has his own criticism of the President that that's 470 00:24:42,160 --> 00:24:45,680 Speaker 1: come out, and I just don't see how this how 471 00:24:46,040 --> 00:24:47,800 Speaker 1: this can work again. I want this. This is not 472 00:24:47,880 --> 00:24:51,480 Speaker 1: an ad hominum attack on rex Hillis and Ivan's uh. 473 00:24:51,560 --> 00:24:54,040 Speaker 1: It's simply my own take is that he cannot succeed 474 00:24:54,040 --> 00:24:56,520 Speaker 1: in this job. I also think that this show has 475 00:24:56,560 --> 00:24:58,680 Speaker 1: listened to by a lot of business people. I think 476 00:24:58,680 --> 00:25:02,320 Speaker 1: it's also a lesson that what works in a corporate 477 00:25:02,400 --> 00:25:06,960 Speaker 1: environment doesn't necessarily translate or transfer when it's moved into 478 00:25:07,040 --> 00:25:10,080 Speaker 1: a political environment. We saw it with Paul O'Neil, a 479 00:25:10,160 --> 00:25:12,680 Speaker 1: Treasury who did not succeed and I think we're seeing 480 00:25:12,680 --> 00:25:16,440 Speaker 1: it with Rex Stillerson its State, David jump vide your place. Yeah, 481 00:25:16,480 --> 00:25:18,159 Speaker 1: I wanted to ask you just about him, what you 482 00:25:18,160 --> 00:25:19,840 Speaker 1: would have liked to see in terms of reaction. I 483 00:25:19,880 --> 00:25:22,760 Speaker 1: was putting stuff together as we saw the tweets about 484 00:25:22,800 --> 00:25:27,159 Speaker 1: North Korea and Secretary Taylorson. I looked at the secretary schedule. 485 00:25:27,160 --> 00:25:28,600 Speaker 1: He would have been in air at that point. He 486 00:25:28,680 --> 00:25:31,800 Speaker 1: spent twelve hours in Beijing meeting with officials there, including 487 00:25:31,800 --> 00:25:34,360 Speaker 1: the country's president. How would you like to have seen 488 00:25:34,440 --> 00:25:37,359 Speaker 1: him respond? And and and was there a moment for 489 00:25:37,440 --> 00:25:41,320 Speaker 1: him to speak out against what he was reading on Twitter? Well, 490 00:25:41,320 --> 00:25:43,919 Speaker 1: when the president did those tweets, if I had been 491 00:25:43,920 --> 00:25:45,560 Speaker 1: in his shoes, that's when I would have left. I 492 00:25:45,560 --> 00:25:47,840 Speaker 1: would have said, you're pulling the rug out from under me. 493 00:25:48,280 --> 00:25:52,199 Speaker 1: Diplomacy is an essential national security tool. The Secretary of 494 00:25:52,240 --> 00:25:56,440 Speaker 1: State is the country's chief diplomat. My success is your success, 495 00:25:56,560 --> 00:25:59,680 Speaker 1: Mr President, and you need to empower me, not undermine me. 496 00:25:59,800 --> 00:26:01,520 Speaker 1: So either I would have resigned or I would have 497 00:26:01,560 --> 00:26:05,240 Speaker 1: had a showdown, though I expect given the last eight months, 498 00:26:05,240 --> 00:26:07,240 Speaker 1: there would have been any number of previous show donce 499 00:26:07,440 --> 00:26:09,960 Speaker 1: I interviewed the former Treasury Secretary last week, and in 500 00:26:10,000 --> 00:26:12,119 Speaker 1: doing research for that, noted that he was the Deputy 501 00:26:12,119 --> 00:26:14,560 Speaker 1: Secretary of State from Management and Resources for a time, 502 00:26:14,600 --> 00:26:16,760 Speaker 1: and we were going to talk about staffing at the Treasury. 503 00:26:16,760 --> 00:26:19,240 Speaker 1: But I noticed that that position at the State Department 504 00:26:19,320 --> 00:26:22,359 Speaker 1: right now is is unfilled. The gentleman filling that role, 505 00:26:22,440 --> 00:26:26,040 Speaker 1: John Sullivan, has been elevated to deputy secretary overall. Uh. 506 00:26:26,080 --> 00:26:28,080 Speaker 1: And the sense that I got from talking to Nick Wadhams, 507 00:26:28,119 --> 00:26:30,720 Speaker 1: who covers the State Department force, is there's no effort 508 00:26:30,760 --> 00:26:33,200 Speaker 1: underway to fill that position. This is like the CEO 509 00:26:33,920 --> 00:26:36,879 Speaker 1: of the State Department is as I understand it, given 510 00:26:36,880 --> 00:26:40,000 Speaker 1: what's happened here, what's been filled and what hasn't uh, 511 00:26:40,359 --> 00:26:42,639 Speaker 1: how bad shape is the State Department in right now? 512 00:26:42,640 --> 00:26:44,920 Speaker 1: In other words, if if Secretary Taylorson were to leave, 513 00:26:44,960 --> 00:26:49,520 Speaker 1: what would his successor inherit? What if successor would inherit 514 00:26:49,600 --> 00:26:53,600 Speaker 1: as a state department? That's the terrible morale senior Foreign 515 00:26:53,600 --> 00:26:58,199 Speaker 1: Service officers taking early retirement. Virtually all the regional and 516 00:26:58,240 --> 00:27:02,240 Speaker 1: functional assistant secretary jobs are are empty. The more senior 517 00:27:02,280 --> 00:27:05,600 Speaker 1: under secretary jobs are empty. Most of our embassies are 518 00:27:05,600 --> 00:27:09,560 Speaker 1: not being headed by ambassadors. So what his successors should do, 519 00:27:09,640 --> 00:27:12,760 Speaker 1: if and when that comes about, is make dealing with 520 00:27:12,800 --> 00:27:15,280 Speaker 1: all this a condition of taking the job. And again 521 00:27:15,320 --> 00:27:18,520 Speaker 1: the argument should be, Mr President, in order to succeed, 522 00:27:18,760 --> 00:27:21,800 Speaker 1: I need this, and my success is your success. He 523 00:27:21,960 --> 00:27:24,600 Speaker 1: was just joining us Bloomberg Saveillas from Washington from New 524 00:27:24,680 --> 00:27:27,560 Speaker 1: York today in a conversation with Richard Hass. He's President 525 00:27:27,960 --> 00:27:31,840 Speaker 1: the Council on Foreign Relations, author of wonderfully Concise and 526 00:27:31,920 --> 00:27:35,240 Speaker 1: must read a world in disarray, And he has said 527 00:27:35,840 --> 00:27:38,040 Speaker 1: in a statement on Twitter, a statement I should say, 528 00:27:38,080 --> 00:27:40,960 Speaker 1: I don't know if it was a hundred characters, remember 529 00:27:41,720 --> 00:27:45,480 Speaker 1: something to the effect the Secretary of State now must resign. 530 00:27:45,720 --> 00:27:48,920 Speaker 1: I've been watching Ken Burns, the Vietnam War, Ambassador Hass, 531 00:27:48,920 --> 00:27:51,560 Speaker 1: and you look at the best and brightest around the table, 532 00:27:51,760 --> 00:27:53,840 Speaker 1: and I think a name that so many of our 533 00:27:53,840 --> 00:27:59,440 Speaker 1: listeners don't know, Dean Rusk, was everything opposite of what 534 00:27:59,480 --> 00:28:03,000 Speaker 1: we're dealing with now in Washington. If we move on, 535 00:28:03,600 --> 00:28:06,560 Speaker 1: are there other Dean Rusts out There's people that are 536 00:28:06,840 --> 00:28:12,560 Speaker 1: steeped in qualifications to finally take a given position. Again, 537 00:28:12,600 --> 00:28:15,000 Speaker 1: it's it's it takes to both sides of the relationship. 538 00:28:15,080 --> 00:28:18,800 Speaker 1: Tom This president has to be prepared. Uh here, what 539 00:28:18,880 --> 00:28:21,720 Speaker 1: he needs is to diplomatic equivalent, say of what Secretary 540 00:28:21,760 --> 00:28:24,359 Speaker 1: Maddis is doing at the Pentagon. He needs somebody a 541 00:28:24,400 --> 00:28:26,840 Speaker 1: real stature. But then he needs to give him, He 542 00:28:26,920 --> 00:28:29,879 Speaker 1: needs to give him authority. He hasn't been willing to 543 00:28:29,920 --> 00:28:31,919 Speaker 1: do it on the diplomatic side, and that would mean 544 00:28:32,040 --> 00:28:34,399 Speaker 1: raining in his own tweets. I think raining in the 545 00:28:34,520 --> 00:28:37,120 Speaker 1: role of Jared Kushner. Again, this is not an ad 546 00:28:37,119 --> 00:28:42,000 Speaker 1: hominum attack. It's simply you can't have multiple secretaries of 547 00:28:42,000 --> 00:28:44,240 Speaker 1: a state, and he has to stand behind the Secretary 548 00:28:44,240 --> 00:28:46,000 Speaker 1: of State in the way to say that George Herbert 549 00:28:46,000 --> 00:28:48,920 Speaker 1: Walker Bush did with with Jim Baker. But there's people 550 00:28:48,920 --> 00:28:51,640 Speaker 1: out there, there's people for foreign policy experience who could 551 00:28:51,920 --> 00:28:54,680 Speaker 1: could could do the job, but only if the president 552 00:28:54,760 --> 00:28:57,160 Speaker 1: allows them to do the job. As you've observed all 553 00:28:57,200 --> 00:28:59,200 Speaker 1: of this, I wonder if you could help us understand 554 00:28:59,240 --> 00:29:01,440 Speaker 1: the difference here. But Queen, how effectively I don't think 555 00:29:01,520 --> 00:29:05,240 Speaker 1: arguably Jim Madis has run the Pentagon versus how Rex 556 00:29:05,280 --> 00:29:08,360 Speaker 1: Tillerson has run the State Department. It seems like he 557 00:29:08,440 --> 00:29:10,640 Speaker 1: has been immune from a lot of the scrutiny and 558 00:29:10,680 --> 00:29:13,400 Speaker 1: criticism that Rex Tillerson has been has he been able 559 00:29:13,440 --> 00:29:15,240 Speaker 1: to work with what seems like a lot of autonomy 560 00:29:15,280 --> 00:29:18,400 Speaker 1: even with his criticism out this morning of the president 561 00:29:18,440 --> 00:29:20,480 Speaker 1: stands on the irandeal, He's able to say things that 562 00:29:20,520 --> 00:29:24,080 Speaker 1: are influential and not meet the might of the president 563 00:29:24,120 --> 00:29:27,120 Speaker 1: in doing that. What's he done that Rex Tillerson hasn't Well? 564 00:29:27,120 --> 00:29:29,240 Speaker 1: First of all, he began with an advantage which he 565 00:29:29,320 --> 00:29:32,320 Speaker 1: had real standing in the foreign policy national security world 566 00:29:32,360 --> 00:29:35,560 Speaker 1: given his military background. He also had much more experience 567 00:29:36,080 --> 00:29:38,720 Speaker 1: in the in the ways of policy making. Rex Tillerson 568 00:29:38,880 --> 00:29:41,840 Speaker 1: was knowledgeable or is knowledgeable about the world. That's not 569 00:29:41,920 --> 00:29:44,080 Speaker 1: to say it's not the same thing as being knowledgeable, 570 00:29:44,120 --> 00:29:47,000 Speaker 1: but how palace policy has made in Washington, d C. 571 00:29:47,640 --> 00:29:50,240 Speaker 1: Then Jim Madis at the Pentagon got a large amount 572 00:29:50,240 --> 00:29:53,880 Speaker 1: of resources Secretary Tillers Tison is not and didn't didn't 573 00:29:53,920 --> 00:29:57,240 Speaker 1: asker them. Maddis began with all the military in place, 574 00:29:57,520 --> 00:30:01,120 Speaker 1: so you had a large bureaucracy. Plus he's dealt rather 575 00:30:01,200 --> 00:30:04,120 Speaker 1: regularly with the Washington establishment in the press. He hasn't 576 00:30:04,160 --> 00:30:07,240 Speaker 1: isolated himself in the same way. So virtually every step 577 00:30:07,280 --> 00:30:10,160 Speaker 1: of the way he's going about performing his job differently. 578 00:30:10,640 --> 00:30:13,280 Speaker 1: But we don't how those two gentlemen get along the 579 00:30:13,520 --> 00:30:16,040 Speaker 1: way in which they're working together on foreign policy, if 580 00:30:16,080 --> 00:30:18,680 Speaker 1: at all. But I think to be getting along. I 581 00:30:18,720 --> 00:30:22,120 Speaker 1: think that, you know, Secretary Tillerson along with Secretary Manus 582 00:30:22,120 --> 00:30:25,400 Speaker 1: and others, seem to have a decent working relationship. But 583 00:30:25,480 --> 00:30:28,440 Speaker 1: it doesn't matter if the national security process doesn't work well. 584 00:30:28,480 --> 00:30:31,520 Speaker 1: You can't have a situation, for example, where we're dealing 585 00:30:31,520 --> 00:30:33,800 Speaker 1: with North Korea and the United States is threatening a 586 00:30:33,840 --> 00:30:37,800 Speaker 1: trade war with South Korea or or or charging the 587 00:30:37,800 --> 00:30:40,560 Speaker 1: South Korean president with appeasement. You need a much more 588 00:30:40,600 --> 00:30:44,320 Speaker 1: discipline national security process. I need the president to put 589 00:30:44,320 --> 00:30:47,000 Speaker 1: away his his Twitter account. You just can't have that. 590 00:30:47,480 --> 00:30:51,040 Speaker 1: Is General McMaster part of this equation or has he 591 00:30:51,120 --> 00:30:53,360 Speaker 1: been pushed to the side I heard so little about 592 00:30:53,440 --> 00:30:56,240 Speaker 1: him recently. Well, he's part of the equation. He's a 593 00:30:56,240 --> 00:30:59,160 Speaker 1: good man. But again he's in a near impossible or 594 00:30:59,280 --> 00:31:03,680 Speaker 1: to be more general, extremely difficult job given in the 595 00:31:03,760 --> 00:31:08,160 Speaker 1: whole the essential quality of a national security process is discipline, 596 00:31:08,760 --> 00:31:11,280 Speaker 1: and it's very hard to run a disciplined operation in 597 00:31:11,280 --> 00:31:15,000 Speaker 1: this administration. Richard hass thank you so much on short notice, 598 00:31:15,040 --> 00:31:17,880 Speaker 1: this warning, Ambassador House, of course, the author of a 599 00:31:17,920 --> 00:31:21,680 Speaker 1: world in disarray, the president of the Council on Foreign Relations. David, 600 00:31:21,760 --> 00:31:23,680 Speaker 1: you have the ambassador's tweet in front of you. I 601 00:31:23,680 --> 00:31:26,520 Speaker 1: can pull it up to here very quickly. But certainly 602 00:31:26,560 --> 00:31:30,120 Speaker 1: something that he has put into more forceful for him here. 603 00:31:30,120 --> 00:31:32,080 Speaker 1: He was something that he tweeted a little bit earlier 604 00:31:32,480 --> 00:31:34,400 Speaker 1: in the week, but he's saying here. Rex Taylorson has 605 00:31:34,400 --> 00:31:35,960 Speaker 1: been dealt a bad hand by the President of the 606 00:31:36,000 --> 00:31:38,640 Speaker 1: United States and has played it badly. For both reasons, 607 00:31:38,640 --> 00:31:41,520 Speaker 1: he cannot be effective Secretary of State and should resign. 608 00:31:51,480 --> 00:31:55,640 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 609 00:31:55,720 --> 00:32:01,080 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 610 00:32:01,160 --> 00:32:04,680 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David 611 00:32:04,760 --> 00:32:08,880 Speaker 1: Gura is at David Gura. Before the podcast, you can 612 00:32:08,960 --> 00:32:12,040 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.