1 00:00:02,520 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple, Cockley and Android 4 00:00:17,160 --> 00:00:20,560 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:25,080 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,440 --> 00:00:28,600 Speaker 2: Before Trump can get to his agenda on Friday, he 7 00:00:28,680 --> 00:00:31,000 Speaker 2: has a lot to do here in Washington in the 8 00:00:31,040 --> 00:00:33,240 Speaker 2: next few days. He will of course be attending former 9 00:00:33,280 --> 00:00:36,519 Speaker 2: President Jimmy Carter state funeral tomorrow, and ahead of that, 10 00:00:36,680 --> 00:00:38,760 Speaker 2: this evening, he is expected to meet at the Capitol 11 00:00:39,080 --> 00:00:42,479 Speaker 2: with Senate Republicans as lawmakers look for some clarity on 12 00:00:42,600 --> 00:00:46,120 Speaker 2: what exactly the legislative path forward is he would like 13 00:00:46,200 --> 00:00:48,680 Speaker 2: to pursue. There's a little bit of a difference between 14 00:00:48,840 --> 00:00:51,920 Speaker 2: the Senate and the House here, and it's on the 15 00:00:51,920 --> 00:00:54,240 Speaker 2: House that we'd like to focus with our next guest, 16 00:00:54,280 --> 00:00:56,800 Speaker 2: the former chair of the House Financial Services Committee, someone 17 00:00:56,800 --> 00:01:00,000 Speaker 2: who once held the Speaker's gavel for a brief period 18 00:01:00,280 --> 00:01:02,280 Speaker 2: of time in twenty twenty three, is here with us now, 19 00:01:02,360 --> 00:01:05,200 Speaker 2: former Congress and Patrick mcchenery of North Carolina here in 20 00:01:05,280 --> 00:01:07,480 Speaker 2: our Washington, d C. Studios. So nice to see you 21 00:01:08,400 --> 00:01:09,000 Speaker 2: on the other. 22 00:01:08,920 --> 00:01:10,959 Speaker 3: Side, Yes, and nice to be in studio as well. 23 00:01:11,480 --> 00:01:13,640 Speaker 2: It's lovely to have you as you are now on 24 00:01:13,720 --> 00:01:17,160 Speaker 2: the outside looking in, anticipating what is about to happen. 25 00:01:17,200 --> 00:01:21,319 Speaker 2: Now that Republicans do have entire control of Washington, how 26 00:01:21,319 --> 00:01:24,280 Speaker 2: easy is it actually going to be to be able 27 00:01:24,280 --> 00:01:26,440 Speaker 2: to exercise that control when it comes to some of 28 00:01:26,520 --> 00:01:31,160 Speaker 2: these big ticket items we're talking about, tax reform, immigration reform, 29 00:01:31,319 --> 00:01:32,640 Speaker 2: energy policy. 30 00:01:33,200 --> 00:01:38,080 Speaker 3: Big ticket items, major consequences, high stakes, narrow majorities. This 31 00:01:38,120 --> 00:01:40,000 Speaker 3: is going to be a hell of a grind. That 32 00:01:40,120 --> 00:01:42,760 Speaker 3: is the only way to describe it. We saw an 33 00:01:42,800 --> 00:01:46,919 Speaker 3: opening day with a speaker's vote. We had fifteen votes 34 00:01:47,520 --> 00:01:51,320 Speaker 3: for Speaker McCarthy's election. He got through it without help. 35 00:01:52,960 --> 00:01:55,360 Speaker 3: That yet a faction within the House think that they 36 00:01:55,440 --> 00:01:58,280 Speaker 3: were playing with the same dynamics as two years ago, 37 00:01:58,520 --> 00:02:01,880 Speaker 3: and Speaker Johnson had his cart, which was the President 38 00:02:01,880 --> 00:02:05,040 Speaker 3: elect Donald Trump, saying that this is an imperative to 39 00:02:05,040 --> 00:02:07,840 Speaker 3: elect the speaker. So we saw the dynamic shift and 40 00:02:07,880 --> 00:02:11,440 Speaker 3: the power shift here in a significant way. That President 41 00:02:11,440 --> 00:02:16,359 Speaker 3: Trump's power and popularity and the mechanics of good leadership 42 00:02:16,360 --> 00:02:19,800 Speaker 3: in the House can lead to results. And so I 43 00:02:19,800 --> 00:02:21,400 Speaker 3: think we're going to have a I think you're going 44 00:02:21,440 --> 00:02:23,520 Speaker 3: to get the big ticket items done. It's going to 45 00:02:23,520 --> 00:02:25,440 Speaker 3: be the secondary issues that are going to be much 46 00:02:25,520 --> 00:02:28,600 Speaker 3: much harder, and we need to lower I think Republicans 47 00:02:28,600 --> 00:02:30,680 Speaker 3: need to lower their expectations on being able to achieve 48 00:02:30,720 --> 00:02:32,120 Speaker 3: that in a timely manner. 49 00:02:32,160 --> 00:02:35,840 Speaker 4: I'm struck by the singular experience that Mike Johnson is 50 00:02:35,880 --> 00:02:37,680 Speaker 4: having right now. You're one of the only people in 51 00:02:37,680 --> 00:02:39,400 Speaker 4: the world and that is what it's like to stand 52 00:02:39,560 --> 00:02:42,440 Speaker 4: in that rostrum look across the floor of the House 53 00:02:42,480 --> 00:02:45,360 Speaker 4: of Representatives. We know that he's going to have an 54 00:02:45,400 --> 00:02:49,079 Speaker 4: even smaller majority in this new Congress than he had before. 55 00:02:49,480 --> 00:02:51,520 Speaker 4: But bring us back to that view. When you're in 56 00:02:51,560 --> 00:02:54,400 Speaker 4: the rosterum and you're looking at that room in front 57 00:02:54,400 --> 00:02:56,680 Speaker 4: of you and the Republican conference. We hear a lot 58 00:02:56,680 --> 00:02:59,560 Speaker 4: about the five families. What did it look like to you? 59 00:02:59,600 --> 00:03:01,880 Speaker 4: Did you see these factions spread out in front of 60 00:03:01,880 --> 00:03:02,480 Speaker 4: you as you were. 61 00:03:04,480 --> 00:03:07,920 Speaker 3: I spent most of my career in the House focusing 62 00:03:07,960 --> 00:03:11,799 Speaker 3: on the mechanics the COO role, not the CEO role, 63 00:03:11,880 --> 00:03:14,920 Speaker 3: not the chairman role, but the mechanics of the day 64 00:03:14,960 --> 00:03:17,200 Speaker 3: to day and how to deliver on this So when 65 00:03:17,240 --> 00:03:19,760 Speaker 3: I look out, I see the groups of people, how 66 00:03:19,760 --> 00:03:22,880 Speaker 3: they're sitting, where they're sitting, their disposition, who are they 67 00:03:22,919 --> 00:03:25,280 Speaker 3: talking to. Who is the person who's not supposed to 68 00:03:25,280 --> 00:03:27,959 Speaker 3: be in that row talking to somebody in that row? 69 00:03:28,400 --> 00:03:30,920 Speaker 3: Why are these two people that I know hate each other, 70 00:03:31,280 --> 00:03:34,000 Speaker 3: have personally told me they cannot stand each other, but 71 00:03:34,080 --> 00:03:38,119 Speaker 3: they're laughing and hugging about something that's probably not good, right, 72 00:03:38,680 --> 00:03:41,200 Speaker 3: It's a dangerous thing. So when you look out at 73 00:03:41,240 --> 00:03:43,760 Speaker 3: the mechanics of this and what you saw from a 74 00:03:43,800 --> 00:03:47,200 Speaker 3: Speaker Bayner and a Speaker McCarthy in particular, is they 75 00:03:47,280 --> 00:03:51,440 Speaker 3: knew the granular details of this stuff, and Speaker Ryan 76 00:03:51,560 --> 00:03:53,360 Speaker 3: came in with a different view, and I would say 77 00:03:53,360 --> 00:03:56,120 Speaker 3: that Speaker Johnson comes in with a different view. They're 78 00:03:56,560 --> 00:03:59,840 Speaker 3: at the higher level of policy, the mechanics. They have 79 00:03:59,880 --> 00:04:03,720 Speaker 3: not been steeped in. That's not their first order capacity. 80 00:04:05,120 --> 00:04:07,600 Speaker 3: So they lead in a different way than those that 81 00:04:07,760 --> 00:04:10,640 Speaker 3: understand the tactical day to day. And we're in an 82 00:04:10,720 --> 00:04:14,960 Speaker 3: environment now where President Trump has this overarching has this 83 00:04:15,120 --> 00:04:20,200 Speaker 3: umbrella that enables policy to be made within those powers 84 00:04:20,320 --> 00:04:23,560 Speaker 3: and within those contours. If he is definitive and certain, 85 00:04:24,880 --> 00:04:29,640 Speaker 3: we're in this situation now where it just as a 86 00:04:29,720 --> 00:04:32,400 Speaker 3: primary example, where if the president says he wants one 87 00:04:32,480 --> 00:04:37,080 Speaker 3: reconciliation package, there'll be one reconciliation package. And if he 88 00:04:37,160 --> 00:04:39,760 Speaker 3: says there are two, there will be two. And if 89 00:04:39,760 --> 00:04:43,640 Speaker 3: he says maybe one, maybe two, you may get none. 90 00:04:43,800 --> 00:04:46,520 Speaker 3: And so he has to be definitive in what he wants, 91 00:04:46,600 --> 00:04:51,400 Speaker 3: in his expectations and then demand that congressional leaders perform 92 00:04:51,480 --> 00:04:54,760 Speaker 3: to that. An uncertainty means nothing happens. 93 00:04:55,160 --> 00:04:57,360 Speaker 2: Okay. So when we look at as Joe is alluding 94 00:04:57,400 --> 00:04:59,280 Speaker 2: to the many different factions here, the people you might 95 00:04:59,320 --> 00:05:02,640 Speaker 2: find suspicious if they were sitting together the Freedom Caucus, 96 00:05:02,680 --> 00:05:05,680 Speaker 2: for example, which caused a lot of trouble for Speaker McCarthy. 97 00:05:05,720 --> 00:05:07,280 Speaker 2: That's why you had to step in for a few 98 00:05:07,320 --> 00:05:09,960 Speaker 2: weeks there to hold the gavel yourself. Are those the 99 00:05:09,960 --> 00:05:12,400 Speaker 2: same people that you see as most likely to ultimately 100 00:05:12,440 --> 00:05:15,479 Speaker 2: bow to what the former president and president elect is 101 00:05:15,520 --> 00:05:17,320 Speaker 2: going to want, because they're the ones who are likely 102 00:05:17,360 --> 00:05:19,760 Speaker 2: to push back on a debt sealing increase, on the 103 00:05:19,760 --> 00:05:25,560 Speaker 2: idea of tax cuts without at least somewhat offsetting spending cuts. 104 00:05:26,720 --> 00:05:29,039 Speaker 3: Well, they're the ones that are most outspoken, and they're 105 00:05:29,080 --> 00:05:31,880 Speaker 3: currently getting the most attention, but you have those that 106 00:05:31,920 --> 00:05:35,320 Speaker 3: are on the moderate end of the Republican Party that 107 00:05:35,360 --> 00:05:38,440 Speaker 3: are not getting attention, and they're the ones that will 108 00:05:38,520 --> 00:05:42,000 Speaker 3: have significance sway over the contours of legislation as well. 109 00:05:42,320 --> 00:05:46,320 Speaker 3: It is not just you know, you mentioned the five families, 110 00:05:46,360 --> 00:05:49,880 Speaker 3: and it is to say that you can neatly divide 111 00:05:49,920 --> 00:05:55,280 Speaker 3: this Republican Conference into five factions. They're more than that. 112 00:05:55,520 --> 00:05:59,320 Speaker 3: I mean, it's a myriad of challenges the speaker faces 113 00:05:59,520 --> 00:06:04,440 Speaker 3: and you have one off challenging individuals that because of personality, 114 00:06:04,880 --> 00:06:07,320 Speaker 3: because of their lack of understanding how the place works, 115 00:06:07,720 --> 00:06:11,400 Speaker 3: may be problems on a weekly basis here. So it 116 00:06:11,480 --> 00:06:14,680 Speaker 3: is far more complicated, complicated than the Freedom Caucus. Though 117 00:06:14,680 --> 00:06:18,560 Speaker 3: the Freedom Caucus is currently shown with the nine votes 118 00:06:18,720 --> 00:06:22,440 Speaker 3: that they withheld to Speaker Johnson that they have the 119 00:06:22,480 --> 00:06:25,640 Speaker 3: power to throw him out of the speakership. What they 120 00:06:25,720 --> 00:06:29,960 Speaker 3: also submitted to is is an understanding that President Trump 121 00:06:30,279 --> 00:06:33,120 Speaker 3: would force them to submit, and so they gave that 122 00:06:33,240 --> 00:06:35,800 Speaker 3: up on the first vote. They made their show, but 123 00:06:35,880 --> 00:06:39,200 Speaker 3: they did not extract any additional pain or get anything 124 00:06:39,240 --> 00:06:42,200 Speaker 3: in result for that, other than to show they do 125 00:06:42,240 --> 00:06:45,120 Speaker 3: have the capacity to take the speaker out. So it's 126 00:06:45,120 --> 00:06:47,760 Speaker 3: a complicated thing, complicated beast. But this is why we 127 00:06:48,080 --> 00:06:50,000 Speaker 3: like this, why I love following this stuff. This is 128 00:06:50,000 --> 00:06:52,080 Speaker 3: why you know, this is far more interesting than any 129 00:06:52,080 --> 00:06:57,040 Speaker 3: other sporting competition. You know, there's a little fomo, but 130 00:06:57,200 --> 00:07:00,240 Speaker 3: it also is a little more liberating because I don't 131 00:07:00,240 --> 00:07:04,640 Speaker 3: feel that weight in the pressure of that moment to perform. 132 00:07:05,040 --> 00:07:06,839 Speaker 3: But it is absolutely fascinating. It's going to be a 133 00:07:06,839 --> 00:07:08,239 Speaker 3: fascinating Congress to watch. 134 00:07:08,400 --> 00:07:10,600 Speaker 4: I can't imagine how you remember that period of time 135 00:07:11,160 --> 00:07:13,640 Speaker 4: when you were holding the gavel. But I think the 136 00:07:13,680 --> 00:07:15,960 Speaker 4: point that you're making here is that even after Mago 137 00:07:16,040 --> 00:07:20,480 Speaker 4: wins the election, House, Senate, White House, the power may 138 00:07:20,520 --> 00:07:21,680 Speaker 4: in fact lie in the middle. 139 00:07:22,040 --> 00:07:27,080 Speaker 3: It does, and inevitably outside of a reconciliation package, you 140 00:07:27,200 --> 00:07:30,600 Speaker 3: need to have almost with a reconciliation package, you'd have 141 00:07:30,640 --> 00:07:34,760 Speaker 3: to have near unanimous Republican support that is competent. 142 00:07:34,840 --> 00:07:37,440 Speaker 4: Why won't he say what he wants like Johnson's begging 143 00:07:37,480 --> 00:07:39,320 Speaker 4: for it? Just give us direction to your point. 144 00:07:39,640 --> 00:07:42,440 Speaker 3: That has always been the bag of President Trump from 145 00:07:42,520 --> 00:07:46,320 Speaker 3: legislative leaders that is the first term and is now 146 00:07:46,480 --> 00:07:49,040 Speaker 3: in his second term. This is part of how he 147 00:07:49,280 --> 00:07:54,560 Speaker 3: operates and when people seek clarity. He may withhold that 148 00:07:54,560 --> 00:07:56,920 Speaker 3: that may be a purposeful act, and I think on 149 00:07:56,960 --> 00:08:02,200 Speaker 3: the most part it is. In other regards, it may 150 00:08:02,240 --> 00:08:05,920 Speaker 3: be the fact that it doesn't see or his advisors 151 00:08:05,920 --> 00:08:07,840 Speaker 3: don't see the need for him to step in. 152 00:08:08,080 --> 00:08:08,320 Speaker 4: Yet. 153 00:08:09,200 --> 00:08:11,440 Speaker 2: He has obviously a long list of things he would 154 00:08:11,480 --> 00:08:13,360 Speaker 2: like to see accomplished that he would like to see 155 00:08:13,360 --> 00:08:16,440 Speaker 2: the US turn into, including something you're very familiar with 156 00:08:16,480 --> 00:08:18,240 Speaker 2: as it pertains to crypto. He wants the US to 157 00:08:18,280 --> 00:08:21,560 Speaker 2: be now the bitcoin capital of the world. You obviously 158 00:08:21,600 --> 00:08:23,960 Speaker 2: worked very hard on crypto legislation when you were Chair 159 00:08:23,960 --> 00:08:26,200 Speaker 2: of House Financial Services. You had to do so through 160 00:08:26,480 --> 00:08:31,480 Speaker 2: bipartisan negotiations that may be less mandatory now if you 161 00:08:31,520 --> 00:08:33,800 Speaker 2: will now that it will be full Republican control. How 162 00:08:33,800 --> 00:08:35,959 Speaker 2: do you see the nature of any kind of market 163 00:08:35,960 --> 00:08:38,600 Speaker 2: structure legislation, for example, that's going to move forward from 164 00:08:38,640 --> 00:08:42,480 Speaker 2: here changing and how will it affect not just the 165 00:08:42,520 --> 00:08:45,880 Speaker 2: incoming SEC chair Paul Atkins, but whoever takes Dars Benham's 166 00:08:46,160 --> 00:08:47,200 Speaker 2: spot at the CFTC. 167 00:08:47,520 --> 00:08:50,880 Speaker 3: Well, so let's step back what we got with our 168 00:08:50,920 --> 00:08:55,120 Speaker 3: market structure legislation called FIT twenty one, which was first 169 00:08:55,120 --> 00:08:59,760 Speaker 3: of his kind on crypto giving it a regulatory definition 170 00:08:59,840 --> 00:09:02,800 Speaker 3: of what is a digital asset and a regular tour 171 00:09:03,200 --> 00:09:06,720 Speaker 3: and actually two regulators because we're America and we do 172 00:09:06,760 --> 00:09:10,080 Speaker 3: things in a more complicated what But Fit twenty one 173 00:09:10,760 --> 00:09:13,480 Speaker 3: was the result of biparson negotiations and the House of 174 00:09:13,480 --> 00:09:16,559 Speaker 3: Representatives without the help of a Senate banking chair. Now 175 00:09:16,600 --> 00:09:18,880 Speaker 3: we have Tim Scott, a Senate banking chair. That is 176 00:09:18,920 --> 00:09:24,280 Speaker 3: a world of difference from Democratic Senator cher Brown and 177 00:09:24,559 --> 00:09:29,480 Speaker 3: a pro administration. And I was working in an adversarial administration, 178 00:09:29,600 --> 00:09:33,120 Speaker 3: highly adversarial administration, and yet I had one third of 179 00:09:33,120 --> 00:09:37,079 Speaker 3: the Democratic Party joined me, including the number two and 180 00:09:37,200 --> 00:09:44,880 Speaker 3: number three House Democrat, former Speaker Pelosi, significant members Jim 181 00:09:44,960 --> 00:09:51,400 Speaker 3: Himes of Connecticut, serious legislators across the left of center 182 00:09:51,760 --> 00:09:56,800 Speaker 3: ideology joined with House Republicans with an administration that did 183 00:09:56,840 --> 00:09:59,400 Speaker 3: not want them to do that. So I think the 184 00:09:59,440 --> 00:10:03,280 Speaker 3: opportunity for Crypto legislating it goes way up because the 185 00:10:03,400 --> 00:10:06,160 Speaker 3: environment is shifted, and Crypto has shown that they have 186 00:10:06,240 --> 00:10:10,560 Speaker 3: capacity at the ballot box and they're willing to help 187 00:10:10,600 --> 00:10:14,280 Speaker 3: their friends and go after their enemies. That is real 188 00:10:14,360 --> 00:10:17,640 Speaker 3: power in Washington. They've expressed it. And if they're here 189 00:10:17,679 --> 00:10:20,040 Speaker 3: to stay and here to play. They can have massive 190 00:10:20,080 --> 00:10:23,839 Speaker 3: results over this Congress in future congresses. 191 00:10:23,440 --> 00:10:25,520 Speaker 4: A big change coming to the FED. Are you going 192 00:10:25,520 --> 00:10:28,760 Speaker 4: to get dinner with Michael Barr no time? 193 00:10:29,200 --> 00:10:33,280 Speaker 3: Well I have that. I think Michael Barr resigning his 194 00:10:33,440 --> 00:10:36,520 Speaker 3: vice chair to the FED is very good for a 195 00:10:36,640 --> 00:10:39,640 Speaker 3: system of independent monetary policy and very good for the 196 00:10:39,640 --> 00:10:43,400 Speaker 3: Federal Reserve. I think the likelihood that incoming President Trump 197 00:10:43,400 --> 00:10:48,560 Speaker 3: would fire the head of regulation at the FED is 198 00:10:48,760 --> 00:10:52,719 Speaker 3: number one warranted and number two likely to succeed in 199 00:10:53,640 --> 00:10:56,800 Speaker 3: the courts. And so for Michael Barr to step aside 200 00:10:57,559 --> 00:11:01,320 Speaker 3: is actually as a direct result of this election number one, 201 00:11:01,360 --> 00:11:04,640 Speaker 3: and number two the direct result of his mismanagement of 202 00:11:04,679 --> 00:11:08,000 Speaker 3: the new set of regulations in bank capital standards that 203 00:11:08,040 --> 00:11:11,840 Speaker 3: he couldn't even see through before the election. So I 204 00:11:11,840 --> 00:11:14,320 Speaker 3: think this is a welcome and good thing for the 205 00:11:14,320 --> 00:11:17,679 Speaker 3: American economy, a welcome and good thing for financial stability 206 00:11:17,679 --> 00:11:21,960 Speaker 3: and banking in the United States, and very good for 207 00:11:22,000 --> 00:11:25,120 Speaker 3: our global leadership as well. I think the Federal Reserve 208 00:11:25,160 --> 00:11:29,520 Speaker 3: Board does a fine job of overseeing their full powers 209 00:11:29,600 --> 00:11:32,320 Speaker 3: when the board is in charge, and when they silo 210 00:11:32,440 --> 00:11:34,640 Speaker 3: this off and hand it off to one individual on 211 00:11:34,679 --> 00:11:37,839 Speaker 3: the board, they make mistakes, or that person keeps their 212 00:11:37,920 --> 00:11:40,080 Speaker 3: does not keep their eye on the ball, like Michael 213 00:11:40,080 --> 00:11:41,920 Speaker 3: Barr did not keep his eye on the ball in 214 00:11:42,040 --> 00:11:45,720 Speaker 3: March with the March of twenty twenty three with the 215 00:11:45,760 --> 00:11:48,960 Speaker 3: regional banking crisis. So I think it's a welcome and 216 00:11:49,000 --> 00:11:53,040 Speaker 3: good thing, and I wish him well as a member 217 00:11:53,040 --> 00:11:55,240 Speaker 3: of the Board of Governors, and I'm grateful that he 218 00:11:55,280 --> 00:11:59,680 Speaker 3: has gone with those additional powers of being vice chair. 219 00:12:00,120 --> 00:12:02,880 Speaker 2: Talking about the supervisory role of the FED here specifically, 220 00:12:02,920 --> 00:12:05,920 Speaker 2: but you in that answer talked about the independent monetary 221 00:12:05,920 --> 00:12:08,560 Speaker 2: policy setting role as well, and I wonder if you're 222 00:12:08,720 --> 00:12:11,920 Speaker 2: confident about that independence in this incoming administration when just 223 00:12:12,040 --> 00:12:14,600 Speaker 2: yesterday Donald Trump was at mar A Lago saying interest 224 00:12:14,679 --> 00:12:16,480 Speaker 2: rates are far too high. Do you not think he's 225 00:12:16,520 --> 00:12:18,640 Speaker 2: going to try to put some pressure here? 226 00:12:19,000 --> 00:12:21,880 Speaker 3: He always does, and he always will every president, well, 227 00:12:21,920 --> 00:12:27,640 Speaker 3: every president has, every president has FDR tinkered with the 228 00:12:27,679 --> 00:12:32,920 Speaker 3: gold supply during the Great Depression. LBJ physically assaulted the 229 00:12:33,000 --> 00:12:37,160 Speaker 3: chair of the Federal Reserve, right, So he's not doing that. 230 00:12:37,559 --> 00:12:42,000 Speaker 3: It mean tweets that does not make monetary policy, and 231 00:12:42,080 --> 00:12:45,559 Speaker 3: the Board of Governors at the Federal Reserve have long 232 00:12:45,760 --> 00:12:49,800 Speaker 3: terms as Congress designed so they can have this longer 233 00:12:49,920 --> 00:12:52,040 Speaker 3: term view. And I think Jay pal has done a 234 00:12:52,040 --> 00:12:55,079 Speaker 3: fabulous job. Is share the FED. I think he's done 235 00:12:55,080 --> 00:12:58,600 Speaker 3: a fabulous job. He's reining in what got out of 236 00:12:58,640 --> 00:13:02,679 Speaker 3: control and inflation, and they're hitting their marks. But this 237 00:13:02,760 --> 00:13:08,880 Speaker 3: president will speak his mind publicly where other presidents privately complained. 238 00:13:09,320 --> 00:13:12,240 Speaker 3: And that is a big distinction between now and what 239 00:13:12,400 --> 00:13:12,559 Speaker 3: was that. 240 00:13:12,920 --> 00:13:15,000 Speaker 4: We spent a lot of time in our conversation. You've 241 00:13:15,000 --> 00:13:18,840 Speaker 4: been very generous with your time talking about pretty recent history. 242 00:13:18,960 --> 00:13:21,680 Speaker 4: You spent twenty years doing this. I'm glad to see 243 00:13:21,679 --> 00:13:23,880 Speaker 4: the bow tie is still here. So what's next for 244 00:13:23,960 --> 00:13:26,320 Speaker 4: Patrick McHenry? This is going to be a massive life 245 00:13:26,360 --> 00:13:26,840 Speaker 4: change for you. 246 00:13:27,360 --> 00:13:30,720 Speaker 3: It is it is this would've done my whole adult life, 247 00:13:31,240 --> 00:13:35,280 Speaker 3: public policy campaigns and elections. I still want to remain 248 00:13:35,320 --> 00:13:41,000 Speaker 3: involved in these big debates on financial policy. I think 249 00:13:41,000 --> 00:13:43,520 Speaker 3: it's important that Americas stay at the fore front of 250 00:13:43,520 --> 00:13:46,400 Speaker 3: the world of finance and we remain competitive. I have 251 00:13:46,480 --> 00:13:50,400 Speaker 3: a deep interest in digital asset and cryptocurrency policy and 252 00:13:50,440 --> 00:13:54,400 Speaker 3: affecting outcomes, but financial inclusion in fintech are these other 253 00:13:55,000 --> 00:13:57,600 Speaker 3: areas of opportunity that I think we need to expand on. 254 00:13:57,720 --> 00:14:00,760 Speaker 3: So like to stay involved in the public policy debate, 255 00:14:00,840 --> 00:14:04,439 Speaker 3: but more meaningfully in the economic consequences of our economy 256 00:14:04,480 --> 00:14:06,840 Speaker 3: and participating in that in a real way. 257 00:14:06,720 --> 00:14:07,880 Speaker 4: Now, and you'll stay in touch with us. 258 00:14:07,880 --> 00:14:09,840 Speaker 3: Absolutely. This is the best place. 259 00:14:09,920 --> 00:14:10,920 Speaker 4: It is important to us. 260 00:14:10,880 --> 00:14:12,640 Speaker 3: Well, this is the best place to know what is 261 00:14:12,679 --> 00:14:14,840 Speaker 3: happening day to day, moment to moment with the markets 262 00:14:14,920 --> 00:14:17,439 Speaker 3: and here in Washington. So thank you all. Thanks for 263 00:14:17,440 --> 00:14:18,880 Speaker 3: having me Hi Pray sir, thanks. 264 00:14:18,720 --> 00:14:22,080 Speaker 4: For being absolutely patchick. You Henry, former Congressman Republican with 265 00:14:22,160 --> 00:14:23,760 Speaker 4: us at the table here in Washington. 266 00:14:25,920 --> 00:14:29,400 Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch 267 00:14:29,480 --> 00:14:32,320 Speaker 1: us live weekdays at noon and five pm E's durn 268 00:14:32,480 --> 00:14:35,880 Speaker 1: on Apple Cockley and Android Auto with the Bloomberg Business App. 269 00:14:35,920 --> 00:14:38,960 Speaker 1: You can also listen live on Amazon Alexa from our 270 00:14:38,960 --> 00:14:44,240 Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 271 00:14:45,040 --> 00:14:47,160 Speaker 2: A great conversation with the former Chair of the House 272 00:14:47,200 --> 00:14:50,280 Speaker 2: Financial Services Committee, Patrick McHenry, who was discussing something that 273 00:14:50,400 --> 00:14:53,840 Speaker 2: is very relevant today and that is the path forward 274 00:14:54,360 --> 00:14:57,320 Speaker 2: on budget reconciliation. This is something Donald Trump is going 275 00:14:57,320 --> 00:15:01,240 Speaker 2: to be talking about with Senate Republicans in Washington this evening, 276 00:15:01,280 --> 00:15:04,720 Speaker 2: and I believe what former Congressman mckenry told us Joe 277 00:15:04,800 --> 00:15:07,480 Speaker 2: was essentially, as long as Trump is clear, that is 278 00:15:07,520 --> 00:15:10,120 Speaker 2: what will happen. As long as Donald Trump, which is 279 00:15:10,240 --> 00:15:12,960 Speaker 2: kind of where he is now, is suggesting one bill 280 00:15:13,000 --> 00:15:16,200 Speaker 2: to bills, I'm down for anything he said. If he 281 00:15:16,200 --> 00:15:18,280 Speaker 2: doesn't decide, that may be the one thing that makes 282 00:15:18,280 --> 00:15:19,840 Speaker 2: sure nothing nothing happens. 283 00:15:20,200 --> 00:15:23,080 Speaker 4: That's why Mike Johnson and John Thune want an answer, 284 00:15:23,400 --> 00:15:25,520 Speaker 4: and we're wondering if they get one today. Let's assemble 285 00:15:25,520 --> 00:15:27,600 Speaker 4: our panel because they have feelings about this too. Rick 286 00:15:27,680 --> 00:15:30,680 Speaker 4: Davis is with US Republican strategist and partner at Stone 287 00:15:30,720 --> 00:15:35,760 Speaker 4: Court Capital, Bloomberg Politics contributor, joined by Democratic strategist Christy Setzer, 288 00:15:36,240 --> 00:15:39,000 Speaker 4: founder New Heights Communications. Great to have you both with 289 00:15:39,120 --> 00:15:41,920 Speaker 4: us here, Rick, How important is it for Donald Trump 290 00:15:42,040 --> 00:15:45,640 Speaker 4: to be clear with John Thune with Senate Republicans when 291 00:15:45,640 --> 00:15:47,760 Speaker 4: they meet later on today? The clock is ticking here. 292 00:15:47,800 --> 00:15:49,320 Speaker 4: If they want something out of the gate, they need 293 00:15:49,360 --> 00:15:50,480 Speaker 4: to start writing legislation. 294 00:15:51,480 --> 00:15:54,520 Speaker 5: Yeah, It's obviously been in Donald Trump's interest to try 295 00:15:54,560 --> 00:15:57,960 Speaker 5: and push the envelope on timing. You know, we just 296 00:15:58,040 --> 00:16:03,640 Speaker 5: talked about getting some of his confirmed Senate confirmed secretaries 297 00:16:03,680 --> 00:16:06,280 Speaker 5: in day one. Well, he wants to have the same 298 00:16:06,440 --> 00:16:09,800 Speaker 5: kind of impact legislatively. He wants day one that the 299 00:16:09,800 --> 00:16:12,200 Speaker 5: Senate and the House has stepping off on his agenda. 300 00:16:12,200 --> 00:16:15,760 Speaker 5: And what's really interesting to me is the fact that 301 00:16:16,840 --> 00:16:21,960 Speaker 5: the president elects White House selection for immigration, Stephen Miller, 302 00:16:22,120 --> 00:16:24,680 Speaker 5: has come out publicly saying he sided with Thune and 303 00:16:24,720 --> 00:16:27,160 Speaker 5: we ought to do immigration first and get the rest 304 00:16:27,160 --> 00:16:29,640 Speaker 5: of this stuff done in a second reconciliation package later. 305 00:16:30,040 --> 00:16:33,360 Speaker 5: So when you start seeing people around Donald Trump articulating 306 00:16:33,400 --> 00:16:35,960 Speaker 5: a clear strategy on what they think ought to get 307 00:16:36,000 --> 00:16:38,600 Speaker 5: done and they're the ones advising Donald Trump, I think 308 00:16:38,640 --> 00:16:41,560 Speaker 5: it leads you to a path that could likely be 309 00:16:41,600 --> 00:16:44,360 Speaker 5: an outcome today, which is Donald Trump puts his hand 310 00:16:44,400 --> 00:16:48,800 Speaker 5: on Majority Leader Thun's shoulder and says, you've got the ball, 311 00:16:49,040 --> 00:16:52,000 Speaker 5: get this thing rolling. I want immigration, energy, and a 312 00:16:52,000 --> 00:16:56,520 Speaker 5: few other things first and and and will handle tax 313 00:16:56,600 --> 00:17:00,240 Speaker 5: cuts and other fiscal issues later. If that happens, then 314 00:17:00,480 --> 00:17:02,880 Speaker 5: everyone salutes and steps off. There'll be no more debate. 315 00:17:04,840 --> 00:17:06,960 Speaker 2: Okay, Well, I'm guessing the only people saluting, really though, 316 00:17:07,000 --> 00:17:10,000 Speaker 2: will be Republicans Christy, not Democrats. And I do wonder 317 00:17:10,040 --> 00:17:12,080 Speaker 2: the role, if any, you see them playing in here. 318 00:17:12,160 --> 00:17:15,520 Speaker 2: By nature, reconciliation means that just the majorities can get 319 00:17:15,520 --> 00:17:17,720 Speaker 2: this thing through. You don't need sixty votes in the Senate, 320 00:17:18,080 --> 00:17:22,560 Speaker 2: for example. So do they have any leverage in this 321 00:17:22,640 --> 00:17:26,800 Speaker 2: conversation as Chuck Schumer relevant to how John Thune pursues this. 322 00:17:29,320 --> 00:17:29,679 Speaker 1: Yeah. 323 00:17:29,720 --> 00:17:30,080 Speaker 4: Sure. 324 00:17:30,800 --> 00:17:33,560 Speaker 6: We talked in the last segment about how Democrats right 325 00:17:33,560 --> 00:17:35,240 Speaker 6: now are just going to try to control the things 326 00:17:35,240 --> 00:17:39,320 Speaker 6: that they can, which include one sort of the controlling 327 00:17:39,320 --> 00:17:42,680 Speaker 6: the media narrative a little bit. Obviously, as this process 328 00:17:42,760 --> 00:17:45,760 Speaker 6: is going on, you're certainly going to see members of Congress, 329 00:17:45,880 --> 00:17:49,680 Speaker 6: members of the Senate headed to cable networks to talk 330 00:17:49,720 --> 00:17:52,400 Speaker 6: about what they would like to see in this process. 331 00:17:53,200 --> 00:17:55,640 Speaker 6: And then they're also going to have some control, some 332 00:17:55,760 --> 00:17:59,480 Speaker 6: leverage about you know, small process things. What can they delay, 333 00:17:59,600 --> 00:18:03,640 Speaker 6: what can they emphasize, that sort of thing. So it's 334 00:18:03,680 --> 00:18:07,880 Speaker 6: not that I necessarily think that Democrats have too much 335 00:18:07,880 --> 00:18:11,000 Speaker 6: of a preference of what gets addressed first, whether it's 336 00:18:11,520 --> 00:18:14,760 Speaker 6: immigration in the border or you know, tax cuts for example. 337 00:18:15,560 --> 00:18:19,119 Speaker 6: But I do think to the extent that you know, 338 00:18:19,200 --> 00:18:23,320 Speaker 6: Rick was emphasizing how Donald Trump has been quick out 339 00:18:23,320 --> 00:18:26,600 Speaker 6: of the gate with you know, naming potential cabinet nominees, 340 00:18:26,760 --> 00:18:31,840 Speaker 6: with legislation, wanting a big, beautiful bill, et cetera. Sure 341 00:18:32,080 --> 00:18:36,120 Speaker 6: that shows that he is active, but it also shows 342 00:18:36,160 --> 00:18:39,040 Speaker 6: not just your priorities, but your values. And I think 343 00:18:39,040 --> 00:18:41,280 Speaker 6: that there is a lot of opportunity for Democrats right 344 00:18:41,320 --> 00:18:45,240 Speaker 6: now to control the conversation about what are Donald Trump's values. 345 00:18:45,320 --> 00:18:47,840 Speaker 6: We're going to talk about tax cuts. It's giving a 346 00:18:47,960 --> 00:18:50,800 Speaker 6: huge benefit to people like Elon Musk and Jeff Bezos 347 00:18:50,800 --> 00:18:53,399 Speaker 6: and Mark Zuckerberg and not you, right, So that is 348 00:18:53,400 --> 00:18:55,080 Speaker 6: the leverage that Democrats bring right now. 349 00:18:56,119 --> 00:18:59,600 Speaker 4: Boy, I can't imagine, guys, would people think, listening to 350 00:18:59,600 --> 00:19:02,320 Speaker 4: this common every day, who's going to go first? Or 351 00:19:02,320 --> 00:19:04,120 Speaker 4: they could be one or two bills? My goodness, we've 352 00:19:04,160 --> 00:19:06,919 Speaker 4: been talking about this for days and you start wondering 353 00:19:06,960 --> 00:19:13,040 Speaker 4: exactly why it matters. Rick. But with regard to the border, 354 00:19:13,240 --> 00:19:15,720 Speaker 4: if this in fact did come down to two different 355 00:19:16,080 --> 00:19:18,280 Speaker 4: swings at reconciliation and they want to get to the 356 00:19:18,280 --> 00:19:22,000 Speaker 4: border first, could they not get some help from Democrats 357 00:19:22,040 --> 00:19:25,719 Speaker 4: on that? Aren't there Democratic members in both chambers, frankly, 358 00:19:25,760 --> 00:19:28,080 Speaker 4: but more so in the House who would like to 359 00:19:28,080 --> 00:19:30,080 Speaker 4: be associated with border security. 360 00:19:31,600 --> 00:19:37,879 Speaker 5: Sure, you saw a virtual stampede toward being more assertive 361 00:19:37,920 --> 00:19:41,000 Speaker 5: on border security before the last election, because I think 362 00:19:42,119 --> 00:19:44,480 Speaker 5: members of the Democratic Party started reading the surveys and 363 00:19:44,520 --> 00:19:49,240 Speaker 5: realizing this itself is much more than just border security. 364 00:19:49,400 --> 00:19:52,560 Speaker 5: And Donald Trump has said openly he'd be willing to 365 00:19:52,600 --> 00:19:55,920 Speaker 5: engage with Democrats on what to do about Dreamers and 366 00:19:56,960 --> 00:20:00,919 Speaker 5: work requirements and expanding H one B visa. And I mean, 367 00:20:00,960 --> 00:20:04,280 Speaker 5: there's a lot to talk about on a bipartisan example, 368 00:20:04,359 --> 00:20:07,040 Speaker 5: And we just saw a bipartisan bill come out of 369 00:20:07,080 --> 00:20:10,760 Speaker 5: the United States Senate right before the election, parenthetically that 370 00:20:10,800 --> 00:20:14,680 Speaker 5: Donald Trump had killed. But there is appetite for a 371 00:20:14,720 --> 00:20:18,280 Speaker 5: bipartisan deal. I would say the one thing that is 372 00:20:18,280 --> 00:20:20,840 Speaker 5: probably going to get in the way of anything significant 373 00:20:20,880 --> 00:20:26,040 Speaker 5: like that is deportations. There'll be things in this bill 374 00:20:26,480 --> 00:20:28,400 Speaker 5: that Donald Trump's going to want to have to make 375 00:20:28,560 --> 00:20:32,639 Speaker 5: and ease his path to massive deportations. And I can't 376 00:20:32,760 --> 00:20:35,400 Speaker 5: imagine a scenario where Democrats would sign on to any 377 00:20:35,440 --> 00:20:40,960 Speaker 5: bill that has that kind of punitive provisions in it. So, yeah, 378 00:20:41,000 --> 00:20:43,080 Speaker 5: there are lots of good things to do on a 379 00:20:43,119 --> 00:20:45,520 Speaker 5: bipartisan basis. Things have been done in that way in 380 00:20:45,520 --> 00:20:48,560 Speaker 5: the Senate kudos to them. We'll see if Donald Trump 381 00:20:48,600 --> 00:20:50,520 Speaker 5: picks up where that left off and takes it one 382 00:20:50,520 --> 00:20:51,119 Speaker 5: step further. 383 00:20:52,640 --> 00:20:58,520 Speaker 2: So there may be some area for bipartisan cooperation on immigration, perhaps, Christy. 384 00:20:58,600 --> 00:21:01,520 Speaker 2: But I also wonder about tax policy, because obviously there's 385 00:21:01,560 --> 00:21:03,960 Speaker 2: going to be a massive tax reform debate, whether that 386 00:21:04,040 --> 00:21:07,119 Speaker 2: is encompassing on this wider package or is indeed a 387 00:21:07,200 --> 00:21:10,520 Speaker 2: separate reconciliation bill. When you think about issues that are 388 00:21:10,560 --> 00:21:13,040 Speaker 2: likely to come up, like the salt cap, for example, 389 00:21:13,080 --> 00:21:16,280 Speaker 2: something Donald Trump will be discussing with salt relevant Republicans 390 00:21:16,280 --> 00:21:19,240 Speaker 2: at mar A Lago this week. That is something that Democrats, 391 00:21:19,320 --> 00:21:21,840 Speaker 2: Chuck Schumer included, have long been pushing for. Is it's 392 00:21:21,880 --> 00:21:24,879 Speaker 2: typically blue states that are most affected by that. Are 393 00:21:24,920 --> 00:21:26,879 Speaker 2: there going to be Democratic votes showing up for a 394 00:21:26,920 --> 00:21:30,680 Speaker 2: tax package that includes that or is able to maintain 395 00:21:30,760 --> 00:21:34,000 Speaker 2: the tax cuts that were put into place for inclusive 396 00:21:34,040 --> 00:21:36,320 Speaker 2: of middle income families in twenty seventeen. 397 00:21:37,800 --> 00:21:40,000 Speaker 6: I do think that, I do think that is an 398 00:21:40,040 --> 00:21:43,040 Speaker 6: area on the salt tax where they can peel off 399 00:21:43,119 --> 00:21:50,800 Speaker 6: some Democrats, including yes, including Schumer and others in general, 400 00:21:50,880 --> 00:21:57,040 Speaker 6: though that one provision does complicate an issue on which 401 00:21:57,520 --> 00:22:02,320 Speaker 6: generally speaking there's unity for Democrats, and it is a 402 00:22:02,359 --> 00:22:05,359 Speaker 6: really good issue for us in that, you know, in 403 00:22:05,440 --> 00:22:08,639 Speaker 6: terms of messaging. I mean, obviously I mentioned earlier that 404 00:22:09,280 --> 00:22:12,560 Speaker 6: just generally speaking, I don't believe that people voted to 405 00:22:12,680 --> 00:22:15,719 Speaker 6: give a huge tax cut to you know, millionaires and millionaires. 406 00:22:16,000 --> 00:22:19,480 Speaker 6: They voted because they thought that they themselves would benefit 407 00:22:19,560 --> 00:22:22,040 Speaker 6: from those tax cuts. So there's certainly kind of opportunity 408 00:22:22,040 --> 00:22:26,280 Speaker 6: for Democrats to explain what's going on with that and 409 00:22:26,320 --> 00:22:28,080 Speaker 6: how it's going to play out. There's also a bit 410 00:22:28,080 --> 00:22:31,760 Speaker 6: of an opportunity for an education campaign on you know, 411 00:22:31,800 --> 00:22:33,600 Speaker 6: on how much this is all going to cost. It's 412 00:22:33,640 --> 00:22:37,320 Speaker 6: going to add four trillion at least to the you know, 413 00:22:37,400 --> 00:22:39,880 Speaker 6: to the budget, to the deficit over the next ten years. 414 00:22:40,320 --> 00:22:42,560 Speaker 6: That's a problem, and how do we want to pay 415 00:22:42,600 --> 00:22:44,400 Speaker 6: for it? Right, So that's actually where we get into 416 00:22:44,400 --> 00:22:47,080 Speaker 6: the meat of the conversation. We're going to see huge 417 00:22:47,119 --> 00:22:51,040 Speaker 6: Republican divisions on how to pay for it and where 418 00:22:51,520 --> 00:22:54,400 Speaker 6: the kinds of ways that for example, the House Freedom Caucus, 419 00:22:55,560 --> 00:22:57,920 Speaker 6: those issues that they would like to entertain about how 420 00:22:57,960 --> 00:23:01,640 Speaker 6: to you know, uh, how to pay for it include 421 00:23:01,760 --> 00:23:06,040 Speaker 6: cuts to programs that are deeply popular, Medicaid, Medicare, and 422 00:23:06,080 --> 00:23:09,439 Speaker 6: again there's going to be real consequences to groups that 423 00:23:09,560 --> 00:23:12,960 Speaker 6: actually just put Donald Trump back into office, among seniors, 424 00:23:12,960 --> 00:23:17,560 Speaker 6: poor people, veterans, etc. So I do believe that they 425 00:23:17,560 --> 00:23:19,320 Speaker 6: will be able to kind of pick off a few 426 00:23:19,359 --> 00:23:22,800 Speaker 6: through issues like the salt tax. But for the most part, 427 00:23:22,960 --> 00:23:24,359 Speaker 6: this is one where I think you're actually going to 428 00:23:24,400 --> 00:23:26,359 Speaker 6: see a lot of democratic unity. 429 00:23:27,480 --> 00:23:28,080 Speaker 2: It's going to be. 430 00:23:28,040 --> 00:23:30,360 Speaker 4: Quite the patio of mar A Lago this weekend, Rick, 431 00:23:30,400 --> 00:23:33,720 Speaker 4: there are large groups of Republican lawmakers who are headed 432 00:23:33,760 --> 00:23:37,520 Speaker 4: to Florida for a confab. Governors will be there Thursday 433 00:23:37,600 --> 00:23:42,440 Speaker 4: night Saturday. The Salty Republicans as we're calling them, will 434 00:23:42,440 --> 00:23:44,600 Speaker 4: be there, The Freedom Caucus will be there. They all 435 00:23:44,640 --> 00:23:48,400 Speaker 4: have their own interests, in their own ideas. What will 436 00:23:48,440 --> 00:23:52,240 Speaker 4: come from these meetings at mar A Lago if nothing 437 00:23:52,280 --> 00:23:55,280 Speaker 4: less than a congressional agenda. 438 00:23:55,520 --> 00:23:57,920 Speaker 5: Yeah, my guess is it's more here's what we think 439 00:23:57,960 --> 00:24:00,399 Speaker 5: we can accomplish, rather than give us your ideas on 440 00:24:00,480 --> 00:24:03,240 Speaker 5: what you want to do as members. It's usually the 441 00:24:03,240 --> 00:24:06,119 Speaker 5: way it works with the White House. But I guess 442 00:24:06,240 --> 00:24:09,399 Speaker 5: this is mar Lago, the winter White House, you know, 443 00:24:09,480 --> 00:24:13,720 Speaker 5: in about two weeks. So the reality is that I've 444 00:24:13,760 --> 00:24:19,840 Speaker 5: been hearing Republicans, the salty Republicans, really minimizing the exposure 445 00:24:20,000 --> 00:24:22,600 Speaker 5: on the salt tax. Many of them have taken up 446 00:24:22,640 --> 00:24:24,560 Speaker 5: this queue that, wow, if we could just get a 447 00:24:24,560 --> 00:24:28,639 Speaker 5: marriage penalty provision in there that gets rid of that, 448 00:24:28,640 --> 00:24:31,760 Speaker 5: that would be great. It's not very expensive. It gives 449 00:24:31,800 --> 00:24:34,800 Speaker 5: us something to say that we won I think if 450 00:24:34,800 --> 00:24:37,119 Speaker 5: you have these kinds of attitudes going in, you're going 451 00:24:37,160 --> 00:24:39,800 Speaker 5: to come out with some agreements that are going to 452 00:24:39,800 --> 00:24:44,400 Speaker 5: put salt revisions on the tax code. So the reality is, 453 00:24:44,840 --> 00:24:47,480 Speaker 5: if they don't do all these things and the tax 454 00:24:47,520 --> 00:24:51,399 Speaker 5: code doesn't get passed for some reason, then the salty 455 00:24:51,440 --> 00:24:54,560 Speaker 5: Republicans have a huge victory. All those provisions that took 456 00:24:54,600 --> 00:24:58,440 Speaker 5: away theirsult tax go back into effect. So the reality 457 00:24:58,520 --> 00:25:01,159 Speaker 5: is they do have some leverage. But I get My 458 00:25:01,240 --> 00:25:03,119 Speaker 5: guess is they will come out of mar A Lago 459 00:25:03,320 --> 00:25:06,360 Speaker 5: charged up. They'll be happy with what they hear from 460 00:25:06,400 --> 00:25:10,600 Speaker 5: the incoming White House team, and that will start some 461 00:25:10,680 --> 00:25:13,480 Speaker 5: of this momentum. As you can see, he's building momentum 462 00:25:13,840 --> 00:25:17,680 Speaker 5: for early legislative successes, and I think it's a really 463 00:25:17,760 --> 00:25:21,040 Speaker 5: good use of what has otherwise been really pretty dead 464 00:25:21,119 --> 00:25:23,600 Speaker 5: time in a presidential transition. 465 00:25:25,160 --> 00:25:28,560 Speaker 2: How early though, is early RACA Ultimately he does tell 466 00:25:28,640 --> 00:25:31,199 Speaker 2: John Thune, look, get me that first earliest win and 467 00:25:31,240 --> 00:25:33,679 Speaker 2: wait for taxes later. How late in the year do 468 00:25:33,720 --> 00:25:36,200 Speaker 2: you anticipate that would be that the tax package actually 469 00:25:36,200 --> 00:25:38,600 Speaker 2: gets through in a second budget reconciliation bill. 470 00:25:39,600 --> 00:25:43,480 Speaker 5: Yeah, well, it depends upon obviously what else is coming 471 00:25:43,560 --> 00:25:48,000 Speaker 5: up that needs funding. So you know, typically these reconciliation 472 00:25:48,119 --> 00:25:50,640 Speaker 5: bills take on a life of their own when they're 473 00:25:50,640 --> 00:25:55,640 Speaker 5: attached to fiscal measures. Right, so budget funding for the government. 474 00:25:55,920 --> 00:25:59,320 Speaker 5: September is always a dicey month. It will be shocking 475 00:25:59,359 --> 00:26:02,720 Speaker 5: to me that we have regular order this year and 476 00:26:02,760 --> 00:26:05,600 Speaker 5: that we will have all the appropriations bills done before 477 00:26:05,720 --> 00:26:07,440 Speaker 5: the end of September and we can fully fund the 478 00:26:07,440 --> 00:26:10,119 Speaker 5: government for the first time in a few decades. So 479 00:26:10,240 --> 00:26:13,720 Speaker 5: that will be actually one moment in time where you're 480 00:26:13,760 --> 00:26:15,920 Speaker 5: going to have to fund the government. It's a must 481 00:26:15,960 --> 00:26:19,800 Speaker 5: pass bill. You slap what reconciliation in there, and you 482 00:26:19,880 --> 00:26:22,800 Speaker 5: got a big fat tax cut, and you know, you'll 483 00:26:22,840 --> 00:26:25,159 Speaker 5: see a lot of Republicans cheering for that kind of 484 00:26:25,720 --> 00:26:30,440 Speaker 5: effort and a lot of Democrats really angry that they're 485 00:26:30,480 --> 00:26:34,320 Speaker 5: going to miss an opportunity to vote on some good 486 00:26:34,359 --> 00:26:37,400 Speaker 5: things in the budget because they've attached to tax cuts. 487 00:26:37,400 --> 00:26:39,440 Speaker 5: So I always think that that would be one of 488 00:26:39,520 --> 00:26:43,000 Speaker 5: the first opportunities on a must pass legislation that you'd 489 00:26:43,000 --> 00:26:44,600 Speaker 5: see reconciliation number two. 490 00:26:46,359 --> 00:26:48,920 Speaker 2: All right, Rick Davis, stone Court, Capital partner and Bloomberg 491 00:26:48,960 --> 00:26:52,000 Speaker 2: Politics contributor together today with Christy Setzer, founder of New 492 00:26:52,000 --> 00:26:54,560 Speaker 2: Heights Communications and Democratic Strategists. Thank you both. 493 00:26:56,720 --> 00:27:00,439 Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catchs 494 00:27:00,480 --> 00:27:03,359 Speaker 1: live weekdays at noon and five pm. E's durn on 495 00:27:03,480 --> 00:27:06,720 Speaker 1: Apple Cockley and Android Auto with the Bloomberg Business App. 496 00:27:06,760 --> 00:27:09,760 Speaker 1: You can also listen live on Amazon Alexa from our 497 00:27:09,800 --> 00:27:15,040 Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty. 498 00:27:15,760 --> 00:27:17,679 Speaker 4: We turn our attention to what's happening right now in 499 00:27:17,720 --> 00:27:21,440 Speaker 4: southern California, Kaylee. The images have been just remarkable. We 500 00:27:21,440 --> 00:27:23,760 Speaker 4: were just looking at some of the tape from last 501 00:27:23,800 --> 00:27:26,560 Speaker 4: evening when the Getty Villa was just surrounded, it was engulfed, 502 00:27:27,119 --> 00:27:31,480 Speaker 4: and we're seeing these wildfires get incredibly close to downtown 503 00:27:31,520 --> 00:27:34,399 Speaker 4: Los Angeles. If you're with us on Bloomberg TV or 504 00:27:34,440 --> 00:27:38,280 Speaker 4: on YouTube right now, this is the Palisades that's adjacent 505 00:27:38,320 --> 00:27:42,480 Speaker 4: to Santa Monica. Some incredibly beautiful homes and some rather 506 00:27:42,520 --> 00:27:45,800 Speaker 4: famous and wealthy people live there, Kayley, and it's getting 507 00:27:45,800 --> 00:27:49,320 Speaker 4: ever closer to some very concentrated population centers. 508 00:27:49,520 --> 00:27:52,480 Speaker 2: Yeah, we know that the fires already have killed two people. 509 00:27:52,800 --> 00:27:56,199 Speaker 2: More than eleven hundred structures have been destroyed, many homes 510 00:27:56,240 --> 00:27:59,000 Speaker 2: just simply burned to the ground as people have, of 511 00:27:59,040 --> 00:28:02,640 Speaker 2: course rushed to evacuate to safety. All of this being 512 00:28:02,680 --> 00:28:06,359 Speaker 2: intensified and spread by really powerful winds that are making 513 00:28:06,359 --> 00:28:10,520 Speaker 2: it very difficult for firefighters to get this thing under control. 514 00:28:10,560 --> 00:28:12,000 Speaker 2: So we wanted to get an update now and turn 515 00:28:12,040 --> 00:28:15,320 Speaker 2: to David Baker, who's Bloomberg Climate and Energy reporter coming 516 00:28:15,320 --> 00:28:18,960 Speaker 2: to us from San Francisco today as we look down 517 00:28:19,040 --> 00:28:22,000 Speaker 2: south in your state, David, is there any indication that 518 00:28:22,040 --> 00:28:24,800 Speaker 2: these are going to be able to be controlled anytime soon? 519 00:28:24,840 --> 00:28:27,080 Speaker 2: With winds like this, it's. 520 00:28:26,960 --> 00:28:29,800 Speaker 7: Going to be very difficult for firefighters to get a 521 00:28:29,800 --> 00:28:32,400 Speaker 7: handle on these fires until the winds abate, and they 522 00:28:32,400 --> 00:28:36,040 Speaker 7: have not really abated. The worst of them may be 523 00:28:36,080 --> 00:28:38,800 Speaker 7: past us, but that is not one hundred percent sure. 524 00:28:38,960 --> 00:28:43,200 Speaker 7: This windstorm event is supposed to last into Thursday, maybe 525 00:28:43,200 --> 00:28:47,080 Speaker 7: into Friday, and there's the possibility of another windstorm coming 526 00:28:47,080 --> 00:28:50,040 Speaker 7: in early next week with no rain in between. 527 00:28:50,720 --> 00:28:53,960 Speaker 4: Give us a sense geographically, David, of where this is 528 00:28:54,000 --> 00:28:56,080 Speaker 4: happening and how close it's getting to areas of La 529 00:28:56,200 --> 00:28:58,560 Speaker 4: the lot of people know, I mean, the Palisades are 530 00:28:58,960 --> 00:29:00,720 Speaker 4: It's an area on a lot of on a lot 531 00:29:00,720 --> 00:29:03,160 Speaker 4: of tours people know. Obviously the peer in Santa Monica. 532 00:29:03,520 --> 00:29:04,960 Speaker 4: Where are you most concerned about? 533 00:29:05,320 --> 00:29:10,640 Speaker 7: Most concerned about the Palisades Malibu, which is downwind of 534 00:29:10,680 --> 00:29:13,320 Speaker 7: the Palisades, and the fire is burning right towards there. 535 00:29:13,440 --> 00:29:16,560 Speaker 7: They had a bad fire back in December that sort 536 00:29:16,600 --> 00:29:20,360 Speaker 7: of presaged all of this. But I'm also very, very 537 00:29:20,360 --> 00:29:23,560 Speaker 7: concerned about Pasadena. When you look to sort of the 538 00:29:23,600 --> 00:29:27,840 Speaker 7: northeast of downtown La Pasadena has a major fire on 539 00:29:27,920 --> 00:29:30,360 Speaker 7: its hands. We just got an update from CalFire on 540 00:29:30,400 --> 00:29:32,640 Speaker 7: the size of that one. It is now past ten 541 00:29:32,680 --> 00:29:36,840 Speaker 7: thousand acres and it is burning right into the edge 542 00:29:36,840 --> 00:29:39,520 Speaker 7: of that city. It's a beautiful place if you've been there. 543 00:29:39,560 --> 00:29:42,880 Speaker 7: It's nestled right up against the San Gabriel Mountains. But 544 00:29:43,000 --> 00:29:45,720 Speaker 7: that's part of the problem here. These winds are racing 545 00:29:45,800 --> 00:29:49,000 Speaker 7: down the mountains and just tearing through that area. We 546 00:29:49,200 --> 00:29:51,680 Speaker 7: don't know what sparked that fire, but now that it 547 00:29:51,880 --> 00:29:54,320 Speaker 7: is going, it is raging there, and I am very 548 00:29:54,320 --> 00:29:55,840 Speaker 7: concerned about that spot. 549 00:29:56,840 --> 00:29:59,840 Speaker 2: Well, very concerning indeed, and obviously our thoughts are with 550 00:30:00,000 --> 00:30:02,240 Speaker 2: everyone who are in these areas in which they may 551 00:30:02,240 --> 00:30:05,600 Speaker 2: find themselves in danger as we think about how ultimately 552 00:30:05,600 --> 00:30:07,680 Speaker 2: these fires will be brought under control. It's not just 553 00:30:07,720 --> 00:30:09,560 Speaker 2: whether or not the winds calm down, but of course 554 00:30:09,960 --> 00:30:13,400 Speaker 2: water and other things that it will take to actually 555 00:30:13,440 --> 00:30:15,880 Speaker 2: fight the flames. There has been a lot of criticism 556 00:30:16,720 --> 00:30:19,600 Speaker 2: thrown out today David by the President elect Donald Trump, 557 00:30:19,760 --> 00:30:23,240 Speaker 2: by Elon Musk, for example, about decisions Gavin Newsom has 558 00:30:23,240 --> 00:30:26,720 Speaker 2: made when it comes to water, Trump specifically saying that 559 00:30:26,760 --> 00:30:30,080 Speaker 2: he refused to sign a water restoration declaration that would 560 00:30:30,080 --> 00:30:33,040 Speaker 2: have allowed access to millions of gallons of water. Can 561 00:30:33,080 --> 00:30:35,080 Speaker 2: you just walk us through the extent to which that 562 00:30:35,200 --> 00:30:37,920 Speaker 2: is true or if it's playing any real role in 563 00:30:37,960 --> 00:30:39,320 Speaker 2: the attempts to fight these fires. 564 00:30:40,520 --> 00:30:45,000 Speaker 7: With these fires when they are erupt the state throws 565 00:30:45,000 --> 00:30:47,880 Speaker 7: pretty much everywhere resource it has at them in terms 566 00:30:47,880 --> 00:30:50,800 Speaker 7: of access to water. I have not heard any on 567 00:30:50,840 --> 00:30:54,840 Speaker 7: the ground reports about problems with getting access to water. Plus, 568 00:30:54,880 --> 00:30:58,520 Speaker 7: the state does actually have and is using tankers that 569 00:30:58,640 --> 00:31:00,880 Speaker 7: fly out over the ocean's skin, oop up water and 570 00:31:00,920 --> 00:31:03,400 Speaker 7: just dump it where it's needed. We know they were 571 00:31:03,400 --> 00:31:06,240 Speaker 7: in use yesterday. We saw them flying off the coast 572 00:31:06,240 --> 00:31:09,200 Speaker 7: of Santa Monica, so we know those are out there, 573 00:31:09,720 --> 00:31:13,680 Speaker 7: and with fires like this once they get going, the 574 00:31:13,720 --> 00:31:16,000 Speaker 7: big issue is how much water actually fell from the 575 00:31:16,040 --> 00:31:18,360 Speaker 7: sky in the last six months before the fire started. 576 00:31:18,880 --> 00:31:23,760 Speaker 7: Here in southern California, you're seeing virtually no rain since 577 00:31:23,880 --> 00:31:27,960 Speaker 7: early last spring, whereas in northern California where I am, 578 00:31:28,000 --> 00:31:30,480 Speaker 7: we've had atmospheric rivers and even a little bit of flooding. 579 00:31:30,840 --> 00:31:33,240 Speaker 7: They've had nothing down there, and that's the big issue here. 580 00:31:35,320 --> 00:31:37,760 Speaker 4: Well, it's great to spend some time with you, David, 581 00:31:37,840 --> 00:31:40,840 Speaker 4: appreciate your joining us. Bloomberg Climate and Energy reporter David 582 00:31:40,840 --> 00:31:49,640 Speaker 4: Baker with us from San Francisco. Thanks for listening to 583 00:31:49,680 --> 00:31:53,080 Speaker 4: the Balance of Power podcast. Make sure to subscribe if 584 00:31:53,080 --> 00:31:55,840 Speaker 4: you haven't already an Apple, Spotify, or wherever you get 585 00:31:55,840 --> 00:31:58,880 Speaker 4: your podcasts, and you can find us live every weekday 586 00:31:58,880 --> 00:32:02,640 Speaker 4: from Washington, d C at noontime Eastern at Bloomberg dot com.