Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,
Speaker 1: on the Bloomberg. So much to talk about with Jared Bernstein,
Speaker 1: former economic advisor, device president Joe Biden, now a Senior
Speaker 1: Fellow at the Center on Budget and Policy Priorities. He
Speaker 1: joins Tom in our Bloomberg ninety one one news room
Speaker 1: down in Washington, d C. And Tom a great interview. Uh.
Speaker 1: Stand Fisher is still a believer, still believes we're gonna
Speaker 1: have higher inflation. He really does. I mean, Jared walked
Speaker 1: in the Durance. So what do you think? This is
Speaker 1: always and really this goes as Jared knows back to
Speaker 1: the history of stand Fisher through the seventies and eighties
Speaker 1: as someone always airing towards an normalization rates in a
Speaker 1: time of accommodation. And I'll be honest between the lines,
Speaker 1: and it's always that kind of interview with a fedeficial Uh, David,
Speaker 1: it was that kind of interview. We were ultra accommodative
Speaker 1: and we're less ultra accommodative right now. Thank you to
Speaker 1: the many people listening with senting some worth these uh
Speaker 1: sending kind notes they were listening to, Really, David a
Speaker 1: time of transition, which means that Jared Bernstein is absolutely
Speaker 1: the perfect person to speak to. Now for those of
Speaker 1: you that don't know Jared Bernstein, as I've said for years,
Speaker 1: as a liberal, conservatives must listen to a force at
Speaker 1: the Economic Policy Institute for years is public service to
Speaker 1: Vice President Biden. Yes he's a liberal economist. Oh my word,
Speaker 1: don't mention it on air. And now at the Center
Speaker 1: on Budget Administration, h Jared, how far is a divide
Speaker 1: between liberal and conservative economists? I would suggest it's not
Speaker 1: as wide as the media put. I mean, this is
Speaker 1: gonna sound a little annoying to people, but you know,
Speaker 1: Paul Krugman says, the facts have a liberal bias. Uh So,
Speaker 1: I really do try to go by the numbers. So
Speaker 1: when I when I look at take the Federal Reserve,
Speaker 1: for example, when I look at inflation, I form a view.
Speaker 1: Their inflation obviously very quiescent. So the normalization campaign should
Speaker 1: move very very slowly in my view, when I look
Speaker 1: at tax policy, I look at I look at the numbers,
Speaker 1: and that's how how we make our call. I think
Speaker 1: too often in economics we have ideology trumping data, and
Speaker 1: I just try to avoid that. Jack Berson, help us
Speaker 1: mark this moment that Tom mentioning the transition we're seeing
Speaker 1: at the Fed stand Fisher here with just days left
Speaker 1: in that role before he moves on to whatever's next.
Speaker 1: There's a lot of transition happening here. I mentioned the
Speaker 1: vacancies at the top of the show. How how transformative
Speaker 1: a moment is this. I think it's potentially quite transformative,
Speaker 1: and I actually think this is a somewhat difficult time
Speaker 1: to be going through so many transitions. The Federal Reserve
Speaker 1: is involved in a very delicate ask right now. Obviously
Speaker 1: I'm talking about unwinding the very large balance sheet, but
Speaker 1: also the kind of data driven normalization campaign. You know
Speaker 1: you've got essentially Janet Yellen at the wheel communicating I
Speaker 1: think very clearly to markets, giving I think extremely useful
Speaker 1: forward guidance, talking about the data, talking about the models,
Speaker 1: and at a time like this, to be replacing sciety
Speaker 1: of your starting team with with unknowns, I think it
Speaker 1: creates a potentially creates a level of uncertainty that is
Speaker 1: potentially damaging. It's one of the reasons, by the way,
Speaker 1: that I've really been stressing the importance of Donald Trump
Speaker 1: reappointing Janet Yellen. Uh. That might sound like an outside
Speaker 1: the box idea, but as we all know, she still
Speaker 1: is a frontrunner. What do you make is as you
Speaker 1: watch a call it a parlor game. As you watch
Speaker 1: all of this play out, the reports of Kevin warsh
Speaker 1: head into the White House to meet with the President,
Speaker 1: tour J. Powell having a conversation with him and with
Speaker 1: the Treasury Secretary as what are you looking for? How
Speaker 1: do you how do you you try to figure out
Speaker 1: how do you try to piece together what their perspective
Speaker 1: on monetary policy is? Well, look, I mean we parlor
Speaker 1: game is the right word, and and and we we
Speaker 1: do in Washington have this unfortunate tendency of kind of uh,
Speaker 1: you know, going through the entrails of anything having to
Speaker 1: do with the Federal Reserve. I think the best advice
Speaker 1: when it comes to all of this is to ignore
Speaker 1: it all for the most part, because Donald Trump is
Speaker 1: completely unpredictable and you can't figure out what he's going
Speaker 1: to do based on a meeting he's had with someone else.
Speaker 1: The better idea is to kind of think through the
Speaker 1: substance what would make most sense, and for those of
Speaker 1: us with some sort of a public voice to to
Speaker 1: to put that forth. And that's what I've been trying
Speaker 1: to do in this reappoint yelling campaign. There's so many
Speaker 1: themes to talk about, and with you and with your
Speaker 1: true expertise and fiscal dynamics, How urgent do you feel,
Speaker 1: Jared to get a score on a nine page tax
Speaker 1: reform proposal or is it just a media frenzy and
Speaker 1: we wait till sometime next year. You know it is
Speaker 1: urgent in the following sense. I mean we are uh
Speaker 1: you mentioned fiscal or fiscal constraints. We are a country
Speaker 1: that's simply based on our aging demographics alone, we're going
Speaker 1: to need more revenues down the road, not less. So
Speaker 1: when I hear the Republicans putting forth a bill that
Speaker 1: threatens to lose at least two trillion over ten years
Speaker 1: based on pretty conventional score keeping based on the details
Speaker 1: we know so far, that strikes me as extremely problematic.
Speaker 1: So yes, we we definitely need to pay attention to
Speaker 1: those numbers. I mean, within into the numbers, and I've
Speaker 1: seen one point five trillion and it goes out to
Speaker 1: two point four trillion is maybe the high point I've
Speaker 1: seen in different punditry explained to our audience what that
Speaker 1: number actually is. I mean, I guess it's a tenth
Speaker 1: of our fiscal budget. But what does it mean to
Speaker 1: a pro like you, Well, I mean in terms of
Speaker 1: you really should scale those numbers by g d P
Speaker 1: and uh, you know, over a ten year period, we're
Speaker 1: talking about the percent maybe less than a percent of
Speaker 1: g d P. But what we're what we're what we're
Speaker 1: talking about from my perspective is the fact that the
Speaker 1: Congressional Budget Office tells us And on this point, I
Speaker 1: don't think there's really any argumentation at all that over
Speaker 1: the next ten years we're going to need two and
Speaker 1: a half percent of GDP more revenue to meet our
Speaker 1: obligations VISA B, Social Security, medicare other some of these
Speaker 1: larger government programs of social insurance programs, if you will.
Speaker 1: So the idea that we can somehow meet our promises
Speaker 1: at the same time that we cut taxes uh that severely.
Speaker 1: It's just it's just not arithmetic, it's just it's just fantasy.
Speaker 1: And then when you start talking about how how growth
Speaker 1: effects are going to make up the difference, you know,
Speaker 1: nobody who's not being paid to believe that believes it.
Speaker 1: Let me bring things full circle here. We're gonna come
Speaker 1: back with you for another block as well. But Tom
Speaker 1: asked you about the difference between liberal economics and conservative economics.
Speaker 1: Let me ask you about the state of non partisan
Speaker 1: economic analysis in Washington, d C. We're all struck by
Speaker 1: this story about a paper being pulled from the Treasury
Speaker 1: Department website recently at tax analysis paper, the conclusions of
Speaker 1: which ran contrary to what the Treasury Secretary thinks about
Speaker 1: tax reform. I'm struck by what's been said about the
Speaker 1: Tax Policy Centers analysis of this proposal that was released
Speaker 1: last week, Kevin Brady saying the analysis a work of
Speaker 1: fiction that Stephen King would have been proud of were
Speaker 1: in hatched, the Chairman of the Senate Finance Committee saying
Speaker 1: here that no respectable academic or researcher was willing to
Speaker 1: have their name associated with something so haphazardly cobbled together.
Speaker 1: I think Donald Marin, former head of the CBO might
Speaker 1: take exception to that. What's the state of nonpartisan analysis?
Speaker 1: And washingtond see how imperiled is it? You know that
Speaker 1: that litany you just ran through. I gotta say, it's
Speaker 1: just downright depressing to me, because you've seen a tax
Speaker 1: on the Congressional Budget Office, on the nonpartisan Tax Policy Center.
Speaker 1: By the way, I recently found out that the three
Speaker 1: top directors of the of the TPC, the Tax Policy Center,
Speaker 1: all used to work for Republicans. And so these these
Speaker 1: are by the numbers folks, and they don't have a
Speaker 1: thumb on the scale. Now Washington is filled with partisan economics.
Speaker 1: You know, I think it was Manuchin the other day,
Speaker 1: said Treasury Sectary. Manuchin said, I can get lots of
Speaker 1: economists on TV to endorse my plan and to tell
Speaker 1: you that it will pay for itself. That's true, but
Speaker 1: that doesn't mean that the plan will pay for itself.
Speaker 1: That just means that they can cherry pick the opinions
Speaker 1: they want. I was I was just very quickly here, Jared,
Speaker 1: and will come back. Wonderful to have you with us
Speaker 1: for this half already get started in Washington. I would
Speaker 1: just you and whole seeking or and maybe modestly different pages.
Speaker 1: But there's Douglas Holtekin the other day saying the vector
Speaker 1: on deficit to GDP is five six and he was
Speaker 1: the first one who said seven percent of GDP. Do
Speaker 1: you share the same concern that the vector that we're
Speaker 1: seeing now could continue out to something newsworthy. Yeah, Doug
Speaker 1: and I share this view of Doug is in a
Speaker 1: he's a good example of an economist on the other
Speaker 1: side of the aisle who I I very much respect,
Speaker 1: and he's like myself and like, by the way, lots
Speaker 1: of economists on from from a more conservative perspective to
Speaker 1: whom I've discussed about this. We are all worried about
Speaker 1: the impact of this tax plan on deficits and debt.
Speaker 1: And it just shows you that these alleged deficit hawks
Speaker 1: there chicken hawks when it comes to the real deal.
Speaker 1: This is what we love to do, Bloomberg surveillance folks.
Speaker 1: David Gern New York. I'm Tim Keen FM News bureau
Speaker 1: in Washington. To have the Vice Chairman of the Fed
Speaker 1: with us, and then to follow up with one of
Speaker 1: the great analysts of monetary and fiscal economics in Washington,
Speaker 1: Jared Bernstein, of the Center on Budget and Policy UH
Speaker 1: priorities as well. Thrilled to have them with us UH
Speaker 1: this morning. We've talked a lot about monetary policy. Jared,
Speaker 1: let me ask you about the debate over tax reform.
Speaker 1: We've seen one page go to two pages, go to
Speaker 1: nine pages. We've seen the framework sent up to Capitol
Speaker 1: Hill senator or in hatch saying the Senate Finance committees
Speaker 1: where this thing is going to be written. What are
Speaker 1: you gonna be watching for as you as you look
Speaker 1: for points of agreement and disagreement among the Republican ranks particularly, Actually,
Speaker 1: there's a very important thing to be watching for this
Speaker 1: very day. Republicans are suggesting now that they're going to
Speaker 1: give up on their repeal of the state and local
Speaker 1: tax deduction. That is, they were going to repeal UH
Speaker 1: this deduction in order to help pay for their for
Speaker 1: their tax cut. Now they're either cutting that back or
Speaker 1: they're going to leave it in place. So the thing
Speaker 1: to watch for is will they now cut their ask
Speaker 1: in terms of the magnitude of the tax cut because
Speaker 1: they're cutting a pay for as they lose part of
Speaker 1: a pay for, the arithmetic would suggest they'd have to
Speaker 1: cut back what they're asking for in tax cuts. If
Speaker 1: they don't, it's a signal that they're really completely detached
Speaker 1: from any concerns about the deficit or dead implications of
Speaker 1: this plan. Even if they do, those implications are already
Speaker 1: quite negative. The leaders you're watching here, I mentioned Senator Hatch,
Speaker 1: Chairman Kevin Brady, the chairman of the House Ways and
Speaker 1: Means Committee, obviously working on this issue very minute in
Speaker 1: details as well. Are you looking to them? Are you
Speaker 1: looking to to House Speaker Paul Ryan? Are you even
Speaker 1: casting your eyes the Little West looking at the White
Speaker 1: House as well? I'm not so much looking at the
Speaker 1: White House because they're kind of distracted with a bunch
Speaker 1: of other things, And I'm not so much looking at
Speaker 1: the quote Big six, the architects of the plan. What
Speaker 1: I'm looking at is the Republican Caucus. Remember it with
Speaker 1: the Republican Caucus that brought down their attempt to repeal
Speaker 1: the Affordable Care Act. And it's not a slam dunk
Speaker 1: that they're going to have their be able to muster
Speaker 1: their troops behind them on the tax cut either. So
Speaker 1: that's where I think you want to look if you're
Speaker 1: trying to figure out where this is going, I mean,
Speaker 1: within all of this. And I guess I'm touching back
Speaker 1: to the sixties because I've been watching the ken Burns,
Speaker 1: the Vietnam War, the effort, which folks, is spectacular. If
Speaker 1: you like tri X film from Eastman Codec, you'll love
Speaker 1: the black and white photos are just breathtaking what they've
Speaker 1: done in the restoration of another time and place. The
Speaker 1: arch fear of your world. Jared Bernstein is, Oh, no,
Speaker 1: we're gonna have the Walter Hellers sixties runaway inflation. Remember
Speaker 1: that phrase whip inflation. Now we're miles from that, aren't we. Yeah,
Speaker 1: We're miles from the arch Republican fear, aren't we? Yeah?
Speaker 1: I think we are. And Uh, it's interesting gets back
Speaker 1: to our where we started our discussion. I think you
Speaker 1: have have to be very careful if you're administering monetary
Speaker 1: policy to not be fighting really old wars. Uh and
Speaker 1: and and Actually Cherry Yellen was quite articulate about this
Speaker 1: in a speech he gave last week to the to
Speaker 1: the Nave, which people said it was an important speech.
Speaker 1: I found it to be very important because she really
Speaker 1: was scratching her head about the underlying model. And I
Speaker 1: think saying quite clearly, we really have to think the
Speaker 1: fundamental forces driving inflation. So to the extent that you're
Speaker 1: pulling monetary policy based on memories of runaway sixties and seventies,
Speaker 1: I would recommend that you you do a pretty serious
Speaker 1: rethink on that. I wanna untilt here in the final
Speaker 1: minute that we've got with you two democratic eco politics.
Speaker 1: You did public service with Vice President Biden. Some say
Speaker 1: that Joe will take another run at it. Do we
Speaker 1: need to see democratic economic theory move from a progressive
Speaker 1: East coast, left coast mentality to something more Scoop Jackson,
Speaker 1: something more mainstream, something more Joe Biden. Do you see
Speaker 1: any evidence of that? I do in the following sense,
Speaker 1: I think that you know, Joe Biden in particular had
Speaker 1: a way of connecting with a lot of a set
Speaker 1: of voters who turned out to be decisive in in
Speaker 1: the last election. Sent kind of center left folks from
Speaker 1: both the Democrats and the Republican Party had ignored those concerns,
Speaker 1: particularly around globalization, for really decades on end, so putting
Speaker 1: policy aside because I think it's a different discussion. You
Speaker 1: definitely someone who can connect with with with blue collar voters.
Speaker 1: Did you see any evidence of that? Uh? And by
Speaker 1: in terms of I mean it's too early, I mean
Speaker 1: to me, it's too early, right kind of wait for
Speaker 1: the mid terms. Yeah, And I think I think we
Speaker 1: have to wait wait for the I think the policy
Speaker 1: question is actually very interesting as well, which is that
Speaker 1: you know, should Democrats attack to the center, should they
Speaker 1: attack to the left? And I tend to think that, Uh,
Speaker 1: there are a lot of folks asking Democrats, really, what
Speaker 1: have you got to answer for the fact that even
Speaker 1: as we close in on full employment, there are a
Speaker 1: lot of folks are being left behind. And that's a
Speaker 1: really tough question. I got about fourteen more questions. We
Speaker 1: will do it again with Jared Bernstein in the Center
Speaker 1: on budget and policy priorities as well. Let me do
Speaker 1: a day to check a little weight to the tape
Speaker 1: after this day, that day, in the next day of
Speaker 1: record highs, reminding where the TAO is twenty two thousand,
Speaker 1: sixty one spur and the vix stunning nine point six nine.
Speaker 1: Sherman Greenspan would call that a quite essence. VIX from
Speaker 1: New York, from Washington, stay with us. This is Bloomberg.
Speaker 1: Steve Rattner with us here in our Bloomberg LEMN three
Speaker 1: studios in New York. He's the chairman of Willed ADVISORIESET,
Speaker 1: managing Michael Bloomberg's personal and philanthropic assets. Michael Bloomer, of course,
Speaker 1: the majority owner of the eponymous Brig LP, which owns
Speaker 1: Bloomberg Grady, among other properties. That Steve great to have
Speaker 1: you with us here. We've been talking a little bit
Speaker 1: about a tax reform in the budget throughout the morning.
Speaker 1: Give us your perspective on what we've gotten so far.
Speaker 1: It's safe to say there's more detail. I suppose it's
Speaker 1: all relative here. We've got nine pages plenty of unanswered questions.
Speaker 1: Lawmakers are now charged with writing this thing, translating that
Speaker 1: into hundreds, if not more than a thousand pages of legislation.
Speaker 1: What are you watching? What are you most keenly interested
Speaker 1: in seeing how things are getting hammered down? I think
Speaker 1: the most interesting recent development, which I believe I heard
Speaker 1: on Bloomberg Radio this morning, is the question about the
Speaker 1: state and local tax deduction, Because that is UH that
Speaker 1: was going to create a pay for of one point
Speaker 1: eight or one point nine trillion dollars, essentially funding a
Speaker 1: very large portion of the corporate tax cuts. There has
Speaker 1: been enormous pushback. The politics are ugly. There's uh anywhere
Speaker 1: from forty to fifty. I have heard different numbers Republicans
Speaker 1: in high tax states who are going to have trouble
Speaker 1: voting for this, starting with people like Peter King on
Speaker 1: Long Island. And if they lose that or have to
Speaker 1: carve it back substantially, Uh, it really calls into serious
Speaker 1: question what is already a difficult problem of the deficit
Speaker 1: aspects of this plan. You know, we had to we
Speaker 1: had this conversation about healthcare that it was so closely
Speaker 1: tied the reconciliation process. We're seeing that used here again.
Speaker 1: What are the consequences of that? And and and does
Speaker 1: this the hope for tax reform have longevity if if
Speaker 1: that process can't be used, if if we can't stick
Speaker 1: to this very short timetable that's been laid out by
Speaker 1: Republicans on the whole, Well, I think the short time
Speaker 1: table and reconciliation are slightly disconnected. Reconciliation requires it to
Speaker 1: be done within the budget. Year doesn't. But the Republicans
Speaker 1: wanted done this year because the politics are such that
Speaker 1: next year will be very very difficult. The only way
Speaker 1: this will happen is through reconciliation. I don't you can
Speaker 1: see how difficult it has been the for the Republicans
Speaker 1: to put together fifty votes for any of the various
Speaker 1: healthcare proposals. Imagine trying to put together sixty votes across
Speaker 1: party lines for any tax care attacks that cut proposal.
Speaker 1: It's just not going to happen. So what the Republicans
Speaker 1: have to do is try to get fifty people in
Speaker 1: their party to agree on this thing. And it's going
Speaker 1: to be tough. And just one last point is, of course,
Speaker 1: within reconciliation, it has to be it has to be
Speaker 1: budget neutral. After the ten uere window or else those
Speaker 1: tax cuts expired. And I think this general agreement that
Speaker 1: it's one thing to monkey around with individuals and say
Speaker 1: your tax cuts are gonna expire. If you do that
Speaker 1: with business, you're probably losing a large part of the
Speaker 1: benefit you're getting by cutting the taxes in the first place. Steve,
Speaker 1: whatever anybody's politics, a lot of people taking in and
Speaker 1: rethinking or the new thinking of Ken Burns, the Vietnam War,
Speaker 1: and within that is in concept of month after month
Speaker 1: after month in the White House around that table the
Speaker 1: best and brightest. You are as qualified as anyone in
Speaker 1: this nation to talk about the best and brightest. They
Speaker 1: were so frustrated that they bring you in his bizar.
Speaker 1: I don't know if the czar is the best and
Speaker 1: the brightest, But are we just moved on from actual
Speaker 1: merit and skill sets? Is being an item of importance
Speaker 1: an economics stand fisher, or if we have we given
Speaker 1: up on the concept of best and brightest? Well, obviously
Speaker 1: I have. I have a bit of a bias about this.
Speaker 1: I think the current president has appointed many people who
Speaker 1: no one would regard among the best and brightest. He's
Speaker 1: appointed some who people would regard, whether it's Jim Mattison
Speaker 1: or hr McMaster or John Kelly, who people would regard
Speaker 1: as among the best and the brightest. I think, I
Speaker 1: think again, I'm perhaps biased. I think President Obama did
Speaker 1: have a team, uh an all star team for the
Speaker 1: most part of people advising and helping him. So, okay,
Speaker 1: I hope we go back to the best of the brightest.
Speaker 1: I hope we hope we just fill these empty jobs
Speaker 1: because we need people. We need good people down there.
Speaker 1: But the problem, of course, at the moment is Again,
Speaker 1: this may sound like a political Statement's not meant that way.
Speaker 1: Nobody is going willing to go to work in the
Speaker 1: Trump administration right this minute. The Ratner charm is that
Speaker 1: you follow up pundentry with actual hard nails work. You know,
Speaker 1: real reports that you put together call from other sources
Speaker 1: is of great acuity. What is the Ratner acuity on
Speaker 1: tax reform? What is the distinction you've come up with,
Speaker 1: or I should say, what you're going to look forward
Speaker 1: to into two eight. One of the things that has
Speaker 1: struck me about this a tax bill, which I don't
Speaker 1: think the White House has really disputed, is that in fact,
Speaker 1: and we don't have all the details, but based on
Speaker 1: what we know, it's something like a three hundred billion
Speaker 1: dollar tax increase for individuals as a whole and something
Speaker 1: like a two and a half billion dollar tax cut
Speaker 1: for companies as a whole. A lot of that through
Speaker 1: the pass throughs, which BA which, contrary to what the
Speaker 1: White House says, essentially benefits high income tax payers. And
Speaker 1: I understand and agree with the importance of cutting the
Speaker 1: corporate tax rate and reforming the torque corporate tax code,
Speaker 1: but there's an element of fairness in this that seems
Speaker 1: to be missing, and I think that's what you're going
Speaker 1: to see a lot of pushback on from both parties.
Speaker 1: From a fiscal perspective, how do you fix the problem
Speaker 1: like get Puerto Rico. We're seeing this in acute focus now,
Speaker 1: President saying yesterday that the island's debt needs to be
Speaker 1: wiped out. Uh, that doesn't seem feasible to me. But
Speaker 1: it's safe to say that what we've seen happen here
Speaker 1: with this hurricane two weeks ago, has heightened the problems
Speaker 1: this island has already been facing for some time now.
Speaker 1: From from an investing perspective, what's the way out here
Speaker 1: for this this this part of the United States. Well,
Speaker 1: it's a restructuring problem. And I don't I the President,
Speaker 1: you know, not not uncharacteristically, it's just sort of waving
Speaker 1: his hand and saying stuff that frankly doesn't make a
Speaker 1: lot of sense. As you know, we just went through
Speaker 1: a very painful restructure in Puerto Rico. UM reduced the
Speaker 1: debt somewhat, it's still a lot of debt, I don't
Speaker 1: think frankly, however horrible this hurricane has been. The Puerto
Speaker 1: Ricans are entitled to simply have their debt wiped out.
Speaker 1: This is this this is a moral hazard issue at
Speaker 1: a credit and a credit market issue. I think the
Speaker 1: Puerto Ricans deserved a massive amount of federal aid, just
Speaker 1: as Louisiana and New Jersey and lots of Florida and
Speaker 1: Texas have gotten when they've had hurricanes, and then I
Speaker 1: think we need to really take another look at economic
Speaker 1: development there. But the Puerto Ricans unfortunately will and should
Speaker 1: be left with a substantial amount of debt because they
Speaker 1: accumulated it. You know, there's been a lot of talking
Speaker 1: here about the president's legislative agenda, what he's prioritizing safety,
Speaker 1: say that's changed week by week by week, and now
Speaker 1: that these events that have introceded as well, to what
Speaker 1: degree is that the White House is responsibility to shepherd
Speaker 1: through the tax reform process that you've worked within an administration,
Speaker 1: how essentially is a leadership role from the executive branch
Speaker 1: when it's something that's in the provenance of of of
Speaker 1: the legislative branch to figure out there's a pendulum in
Speaker 1: this whole thing. There are there are times when an
Speaker 1: administration will just go to Congress and say we want
Speaker 1: to do healthcare, you figure it out. Uh. There are
Speaker 1: times when and then people say, well, the White House
Speaker 1: isn't doing its job. It's not actually putting together a plant.
Speaker 1: There are times when the White House puts together a
Speaker 1: highly detailed plan, sends it to Congress, and immediately Congress
Speaker 1: has it's dead on arrival. So it's a it's a
Speaker 1: very complicated dance between the two ends of Pennsylvania Avenue.
Speaker 1: But yes, absolutely the White House bears a major responsibility
Speaker 1: to herd. The cats go through the process and try
Speaker 1: to bring people together. I just I can see it now,
Speaker 1: Steve Rattner his next position czar of Cats, something like that.
Speaker 1: Steve Rattner, thank you so much. As always greatly appreciated
Speaker 1: Tom informed perspective here from many sources in his own opinion.
Speaker 1: Occasionally as well, Mr Ratner will advisers, Oh, look there's
Speaker 1: cats out the window here in Washington. I can see them. Now.
Speaker 1: Should we do a day to Trump Hotel Thomas, you're
Speaker 1: so fond of doing on this trip. Now, you've been
Speaker 1: nursing this call. I did not. I've been nursing the plague. Um,
Speaker 1: I did not make it. It's actually a bit of
Speaker 1: a ways away. It's like blocks more than blocks. The
Speaker 1: tower visible from all corners of the city, though lost time,
Speaker 1: but anyway, you have to be like a donor to
Speaker 1: go up the town. I get to the data. Sorry,
Speaker 1: but this is without question the interview of the Morning.
Speaker 1: And some of you may be stunned at that, after
Speaker 1: the Vladimir Putin comments at Moscow, and of course my
Speaker 1: conversation with the vice chairman of the Fellow Reserve, Stanley Fisher.
Speaker 1: But indeed this is the interview of the Morning. It
Speaker 1: is extraordinary that the leader, and someone who has done
Speaker 1: so much in the last ten years for the Consul
Speaker 1: on Foreign Relations, Richard Hass, has simply come out and
Speaker 1: reaffirmed what we saw a few days ago, which is
Speaker 1: the Secretary State of the United States of America should resign.
Speaker 1: Ambassador Hass joins us. Now his book is, of course
Speaker 1: A World and Disarray. Richard, this is a thunderous moment
Speaker 1: when someone of the establishment, and of course your bi
Speaker 1: party establishment says the Secretary State must go. Please discuss well,
Speaker 1: I want the Secretary of State Tom to be successful.
Speaker 1: I wanted to be effective, and I just don't think
Speaker 1: it is possible under the circumstances, and part it's because
Speaker 1: of this president and how he's organized this administration, his
Speaker 1: own conduct with the tweeting, his public disparagement of the
Speaker 1: Secretary of State like we saw the other day, the
Speaker 1: lack of resources and staff that he's given to the
Speaker 1: Secretary of State, the special role for Jared Pushner at
Speaker 1: the White House. All this makes any Secretary of States
Speaker 1: job extraordinarily difficult. But this Secretary of State, I think
Speaker 1: has made it, made it even tougher on himself by
Speaker 1: not pressing for resources, by not pressing for staff. Now
Speaker 1: he has his own criticism of the President that that's
Speaker 1: come out, and I just don't see how this how
Speaker 1: this can work again. I want this. This is not
Speaker 1: an ad hominum attack on rex Hillis and Ivan's uh.
Speaker 1: It's simply my own take is that he cannot succeed
Speaker 1: in this job. I also think that this show has
Speaker 1: listened to by a lot of business people. I think
Speaker 1: it's also a lesson that what works in a corporate
Speaker 1: environment doesn't necessarily translate or transfer when it's moved into
Speaker 1: a political environment. We saw it with Paul O'Neil, a
Speaker 1: Treasury who did not succeed and I think we're seeing
Speaker 1: it with Rex Stillerson its State, David jump vide your place. Yeah,
Speaker 1: I wanted to ask you just about him, what you
Speaker 1: would have liked to see in terms of reaction. I
Speaker 1: was putting stuff together as we saw the tweets about
Speaker 1: North Korea and Secretary Taylorson. I looked at the secretary schedule.
Speaker 1: He would have been in air at that point. He
Speaker 1: spent twelve hours in Beijing meeting with officials there, including
Speaker 1: the country's president. How would you like to have seen
Speaker 1: him respond? And and and was there a moment for
Speaker 1: him to speak out against what he was reading on Twitter? Well,
Speaker 1: when the president did those tweets, if I had been
Speaker 1: in his shoes, that's when I would have left. I
Speaker 1: would have said, you're pulling the rug out from under me.
Speaker 1: Diplomacy is an essential national security tool. The Secretary of
Speaker 1: State is the country's chief diplomat. My success is your success,
Speaker 1: Mr President, and you need to empower me, not undermine me.
Speaker 1: So either I would have resigned or I would have
Speaker 1: had a showdown, though I expect given the last eight months,
Speaker 1: there would have been any number of previous show donce
Speaker 1: I interviewed the former Treasury Secretary last week, and in
Speaker 1: doing research for that, noted that he was the Deputy
Speaker 1: Secretary of State from Management and Resources for a time,
Speaker 1: and we were going to talk about staffing at the Treasury.
Speaker 1: But I noticed that that position at the State Department
Speaker 1: right now is is unfilled. The gentleman filling that role,
Speaker 1: John Sullivan, has been elevated to deputy secretary overall. Uh.
Speaker 1: And the sense that I got from talking to Nick Wadhams,
Speaker 1: who covers the State Department force, is there's no effort
Speaker 1: underway to fill that position. This is like the CEO
Speaker 1: of the State Department is as I understand it, given
Speaker 1: what's happened here, what's been filled and what hasn't uh,
Speaker 1: how bad shape is the State Department in right now?
Speaker 1: In other words, if if Secretary Taylorson were to leave,
Speaker 1: what would his successor inherit? What if successor would inherit
Speaker 1: as a state department? That's the terrible morale senior Foreign
Speaker 1: Service officers taking early retirement. Virtually all the regional and
Speaker 1: functional assistant secretary jobs are are empty. The more senior
Speaker 1: under secretary jobs are empty. Most of our embassies are
Speaker 1: not being headed by ambassadors. So what his successors should do,
Speaker 1: if and when that comes about, is make dealing with
Speaker 1: all this a condition of taking the job. And again
Speaker 1: the argument should be, Mr President, in order to succeed,
Speaker 1: I need this, and my success is your success. He
Speaker 1: was just joining us Bloomberg Saveillas from Washington from New
Speaker 1: York today in a conversation with Richard Hass. He's President
Speaker 1: the Council on Foreign Relations, author of wonderfully Concise and
Speaker 1: must read a world in disarray, And he has said
Speaker 1: in a statement on Twitter, a statement I should say,
Speaker 1: I don't know if it was a hundred characters, remember
Speaker 1: something to the effect the Secretary of State now must resign.
Speaker 1: I've been watching Ken Burns, the Vietnam War, Ambassador Hass,
Speaker 1: and you look at the best and brightest around the table,
Speaker 1: and I think a name that so many of our
Speaker 1: listeners don't know, Dean Rusk, was everything opposite of what
Speaker 1: we're dealing with now in Washington. If we move on,
Speaker 1: are there other Dean Rusts out There's people that are
Speaker 1: steeped in qualifications to finally take a given position. Again,
Speaker 1: it's it's it takes to both sides of the relationship.
Speaker 1: Tom This president has to be prepared. Uh here, what
Speaker 1: he needs is to diplomatic equivalent, say of what Secretary
Speaker 1: Maddis is doing at the Pentagon. He needs somebody a
Speaker 1: real stature. But then he needs to give him, He
Speaker 1: needs to give him authority. He hasn't been willing to
Speaker 1: do it on the diplomatic side, and that would mean
Speaker 1: raining in his own tweets. I think raining in the
Speaker 1: role of Jared Kushner. Again, this is not an ad
Speaker 1: hominum attack. It's simply you can't have multiple secretaries of
Speaker 1: a state, and he has to stand behind the Secretary
Speaker 1: of State in the way to say that George Herbert
Speaker 1: Walker Bush did with with Jim Baker. But there's people
Speaker 1: out there, there's people for foreign policy experience who could
Speaker 1: could could do the job, but only if the president
Speaker 1: allows them to do the job. As you've observed all
Speaker 1: of this, I wonder if you could help us understand
Speaker 1: the difference here. But Queen, how effectively I don't think
Speaker 1: arguably Jim Madis has run the Pentagon versus how Rex
Speaker 1: Tillerson has run the State Department. It seems like he
Speaker 1: has been immune from a lot of the scrutiny and
Speaker 1: criticism that Rex Tillerson has been has he been able
Speaker 1: to work with what seems like a lot of autonomy
Speaker 1: even with his criticism out this morning of the president
Speaker 1: stands on the irandeal, He's able to say things that
Speaker 1: are influential and not meet the might of the president
Speaker 1: in doing that. What's he done that Rex Tillerson hasn't Well?
Speaker 1: First of all, he began with an advantage which he
Speaker 1: had real standing in the foreign policy national security world
Speaker 1: given his military background. He also had much more experience
Speaker 1: in the in the ways of policy making. Rex Tillerson
Speaker 1: was knowledgeable or is knowledgeable about the world. That's not
Speaker 1: to say it's not the same thing as being knowledgeable,
Speaker 1: but how palace policy has made in Washington, d C.
Speaker 1: Then Jim Madis at the Pentagon got a large amount
Speaker 1: of resources Secretary Tillers Tison is not and didn't didn't
Speaker 1: asker them. Maddis began with all the military in place,
Speaker 1: so you had a large bureaucracy. Plus he's dealt rather
Speaker 1: regularly with the Washington establishment in the press. He hasn't
Speaker 1: isolated himself in the same way. So virtually every step
Speaker 1: of the way he's going about performing his job differently.
Speaker 1: But we don't how those two gentlemen get along the
Speaker 1: way in which they're working together on foreign policy, if
Speaker 1: at all. But I think to be getting along. I
Speaker 1: think that, you know, Secretary Tillerson along with Secretary Manus
Speaker 1: and others, seem to have a decent working relationship. But
Speaker 1: it doesn't matter if the national security process doesn't work well.
Speaker 1: You can't have a situation, for example, where we're dealing
Speaker 1: with North Korea and the United States is threatening a
Speaker 1: trade war with South Korea or or or charging the
Speaker 1: South Korean president with appeasement. You need a much more
Speaker 1: discipline national security process. I need the president to put
Speaker 1: away his his Twitter account. You just can't have that.
Speaker 1: Is General McMaster part of this equation or has he
Speaker 1: been pushed to the side I heard so little about
Speaker 1: him recently. Well, he's part of the equation. He's a
Speaker 1: good man. But again he's in a near impossible or
Speaker 1: to be more general, extremely difficult job given in the
Speaker 1: whole the essential quality of a national security process is discipline,
Speaker 1: and it's very hard to run a disciplined operation in
Speaker 1: this administration. Richard hass thank you so much on short notice,
Speaker 1: this warning, Ambassador House, of course, the author of a
Speaker 1: world in disarray, the president of the Council on Foreign Relations. David,
Speaker 1: you have the ambassador's tweet in front of you. I
Speaker 1: can pull it up to here very quickly. But certainly
Speaker 1: something that he has put into more forceful for him here.
Speaker 1: He was something that he tweeted a little bit earlier
Speaker 1: in the week, but he's saying here. Rex Taylorson has
Speaker 1: been dealt a bad hand by the President of the
Speaker 1: United States and has played it badly. For both reasons,
Speaker 1: he cannot be effective Secretary of State and should resign.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio.