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Speaker 1: This is Wall Street Week. I'm Michael McKee in for

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Speaker 1: David Weston, who's out on assignment.

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Speaker 2: This week.

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Speaker 1: The news all Wall Street has been waiting for President

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Speaker 1: Donald Trump announcing his pick for the next chair of

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Speaker 1: the Federal Reserve. Kevin Worsh, a former bank executive and

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Speaker 1: FED governor during George W. Bush's presidency, is set to

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Speaker 1: take over from J. Paul when he leaves the seat

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Speaker 1: in May, pending confirmation in the Senate. On the heels

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Speaker 1: of Trump's announcement, I spoke with FED Governor Stephen Myron,

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Speaker 1: who might find a like minded colleague in the new

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Speaker 1: FED chair.

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Speaker 3: Chairman, doesn't it.

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Speaker 4: Worsh has a long and illustrious career in history as

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Speaker 4: a very insightful thinker on Montary policy. I think he's

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Speaker 4: a fantastic pick from the President. I think he's got

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Speaker 4: enormous credibility. I think he's got enormous gravitas. I think

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Speaker 4: he's got enormous enormous respect from financial markets, from economists,

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Speaker 4: from everyone.

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Speaker 2: I think he's going to do just a knockout job.

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Speaker 1: We'll talk about your experience. You came to the Fed

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Speaker 1: from the White House, and I'm sure you know people

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Speaker 1: said he was just put there to do what Donald

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Speaker 1: Trump told him to do. Did Donald Trump tell you

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Speaker 1: to do anything in particular? And do you think he

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Speaker 1: told Kevin Warshed that Even if he didn't, how did

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Speaker 1: you and how would Kevin fight the perception that he's

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Speaker 1: the President's man inside the FED?

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Speaker 4: Look, the President has never ever asked me to do

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Speaker 4: anything on monterary policy. He has never asked me to

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Speaker 4: do any specific action on Montera policy. He's told me

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Speaker 4: his views on Montera policy, but he tells the whole

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Speaker 4: world his views on Montera policy. You know them as

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Speaker 4: well as I do. Right, that's not a secret. He's

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Speaker 4: never asked me to do anything. And I wasn't in

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Speaker 4: the room with any of you, Chairman Designant Warshes conversations

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Speaker 4: with the President or anybody else involved in this selection process.

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Speaker 4: So I don't know what those conversations were like. But

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Speaker 4: if they were anything like the conversations I had with

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Speaker 4: the President about montary policy, then he wouldn't have asked

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Speaker 4: him to take any specific actions.

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Speaker 1: Well, how do you get the public to realize that?

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Speaker 4: You do that by taking policy actions that are consistent

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Speaker 4: with the data. And I think that I've laid out

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Speaker 4: a case where the inflation measures that are consistent with

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Speaker 4: supplied demand and balances in the economy, the inflation measures

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Speaker 4: that are relevant for monetary policy are indicating that there's

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Speaker 4: no material overheating, that there's no material inflation issues in

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Speaker 4: this country right now. So by taking policy steps that

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Speaker 4: are consistent with the economic data that are justified by

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Speaker 4: the state of the economy, I think you're delivering the

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Speaker 4: right policy.

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Speaker 1: Earlier this week, David Weston spoke with Jason Furman after

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Speaker 1: the fed's decision to keep Right Steady. Furman is a

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Speaker 1: professor of economics at Harvard and served as chair of

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Speaker 1: the Council of Economic Advisors under President Obama.

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Speaker 5: So, Jason, we heard from the FED this week, and

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Speaker 5: I guess i'd say, like the kid in the back

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Speaker 5: of the car, are we there yet?

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Speaker 6: We're looking pretty close. And they just sounded happier than

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Speaker 6: they've sounded in a while.

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Speaker 5: It's interesting they didn't even talk about balance of risks.

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Speaker 5: They said, we're where are both the risks? But they

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Speaker 5: both have diminished. What's happened, It's given them more confidence

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Speaker 5: apparently than before.

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Speaker 6: Well, the unemployment rate tick back down and a lot

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Speaker 6: of people are expecting maybe it'll be stable this year

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Speaker 6: and a couple of year rise we've seen will come

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Speaker 6: to an end. On inflation, the numbers haven't gotten much better,

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Speaker 6: but there's a real softness in them, a little bit

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Speaker 6: of softness in the labor market. There's some quirks that

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Speaker 6: have been elevating the numbers, and so I think it's

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Speaker 6: reasonable to think inflation's going down, not up as well.

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Speaker 5: The FED will remain data dependent, that is to say,

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Speaker 5: things could change, and so things could change for the

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Speaker 5: rest of the year. Here if it changed, for example,

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Speaker 5: on inflation, where do you think it would come from?

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Speaker 5: On inflation?

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Speaker 6: It would be, first of all, inflation expectations, and different

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Speaker 6: measures are saying different things. Some of them, for example,

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Speaker 6: the conference board this week had scarily high inflation expectations.

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Speaker 6: I think that was probably, you know, people reflecting the

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Speaker 6: political situation and their general figures about the world, not

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Speaker 6: a specific forecast for inflation. That's one place that could

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Speaker 6: come from. Another place is if we do see a

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Speaker 6: lot more teriff passed through going forward than we've seen

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Speaker 6: to date. I think we're through most of the worst

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Speaker 6: of it, maybe another quarter or two, but you know,

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Speaker 6: this is an unprecedented situation in terms of the way

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Speaker 6: we've raised terror, so we can't be totally confident about

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Speaker 6: how it plays out. And then the very last thing

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Speaker 6: is there's a lot of tailwinds in the economy right now.

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Speaker 6: There's a fiscal expansion, there's a data center expansion, there's

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Speaker 6: a week dollar. All of that will put upward pressure

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Speaker 6: on the economy, will show up in real growth, will

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Speaker 6: show up in inflation. No one can be totally confident

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Speaker 6: of the answer to that.

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Speaker 5: Do you have a theory about why we haven't seen

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Speaker 5: more inflation because of tariffs so far? I mean, if

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Speaker 5: we went back a couple of years, a lot of

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Speaker 5: people would have predicted we've seen more than we have.

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Speaker 5: Why haven't we?

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Speaker 6: Businesses have absorbed a lot more of it than we

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Speaker 6: were expecting. Some of that maybe just temporary, and eventually

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Speaker 6: they'll pass it through. You look at the auto companies

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Speaker 6: and they're selling cars at a loss. They're not going

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Speaker 6: to sell cars at a loss forever. So if the

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Speaker 6: tariffs stayed there, they're going to raise their prices. The

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Speaker 6: tariffs have also just keep getting dial back. So originally

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Speaker 6: the announcement was for an average tariff right above twenty percent.

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Speaker 6: Now we're tracking around eleven or twelve percent, so it's

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Speaker 6: maybe half as many tariffs as we were originally announced.

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Speaker 5: So unemployment has also stabilized, actually went down a little bit.

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Speaker 5: What is the cause for that? Because on the one hand,

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Speaker 5: we hear businesses don't have the same certainty, they're a

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Speaker 5: little more reluctant to hire. I think there's a consensus

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Speaker 5: they're not hiring as robustly. At the same time, we

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Speaker 5: don't have more unemployment. How much of that's because we

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Speaker 5: just limited the supply because of immigration.

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Speaker 6: Most of it is because we limited the supply because

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Speaker 6: of immigration, and we just don't need that many jobs

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Speaker 6: to keep the unemployment rate constant. We haven't been adding

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Speaker 6: that many jobs lately, but in an economy with an

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Speaker 6: aging workforce, with low fertility rates, absent immigrants, we wouldn't

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Speaker 6: necessarily need any jobs to keep the unemployment rate constant.

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Speaker 5: The FED decision in the convers is not the only

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Speaker 5: news of interest to Bloomberg viewers, listeners, watchers, readers. This week.

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Speaker 5: We also had a lot of talk about the US dollar.

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Speaker 5: The dollar has weakened rather significantly, and we had President

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Speaker 5: Trump say, yeah, sure, it'll seek its own level, which

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Speaker 5: is not normally what I expect to hear out of

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Speaker 5: the President United States. Yeah.

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Speaker 6: You know, whenever I hear a Treasury secretary say we

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Speaker 6: believe in a strong dollar, there's a part of me

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Speaker 6: that's sort of bothered by that. First of all, it's

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Speaker 6: not like up is always good and down is always bad.

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Speaker 6: It depends what you want the dollar to be. Moreover,

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Speaker 6: it's not clear why markets should care when a Treasury

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Speaker 6: secretary says that. So in a way I found it

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Speaker 6: actually quite refreshing. The President Trump, first of all, is

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Speaker 6: open to a weeker dollar, and second of all, actually

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Speaker 6: said the correct thing, which is the market's going to decide.

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Speaker 6: It's not going to be words from him, Scott Bessent,

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Speaker 6: or anyone else that's going to decide where the dollar goes.

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Speaker 6: Sort of found that statement slightly charming.

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Speaker 5: At the same time, the President explained why in part

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Speaker 5: he liked that because he said, we get to sell

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Speaker 5: more it really helps our exports, which I think is true.

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Speaker 5: It was lower price essentially to the rest of the world,

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Speaker 5: but he didn't capture the other part of it. We

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Speaker 5: could be having higher prices for what we have here.

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Speaker 5: Could it not exacerbate inflation?

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Speaker 6: Absolutely, And I think it might be the right thing

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Speaker 6: for the US economically. We have too large a trade deficit.

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Speaker 6: We still do, and a weaker dollar would help redress

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Speaker 6: some of that imbalance in the United States some of

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Speaker 6: those global imbalances, but it would do it at the

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Speaker 6: expense of American consumers. Higher prices would drive consumption down. Historically,

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Speaker 6: it's actually quite unpopular to have weaker currencies. In fact,

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Speaker 6: in countries around the world you've seen governments toppled when

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Speaker 6: the currencies weaken precipitously. I don't think it's going to

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Speaker 6: be as dramatic in the United States because we don't

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Speaker 6: trade as much as many other countries do. But on balance,

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Speaker 6: my guess is this might be good economically, but bad

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Speaker 6: for him politically.

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Speaker 5: We also this week had a turmoil volatility. I guess

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Speaker 5: we'll say in the Japanese government bond market, what is

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Speaker 5: going on there? Is that simply an adjustment of the

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Speaker 5: economy coming off of a zero inflation based, zero rate

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Speaker 5: based or it might be something more profound.

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Speaker 6: Look for a long time, there were the laws of

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Speaker 6: macroeconomics that applied to every country on Earth except Japan,

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Speaker 6: and then there were a separate set of rules for Japan,

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Speaker 6: and this week looked to me like the normal rules

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Speaker 6: of macroeconomics applying in Japan too. So the only thing

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Speaker 6: that was unusual about it was that it was normal,

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Speaker 6: and we've gotten just so used to Japan being anything

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Speaker 6: but normal.

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Speaker 5: At the same time, Japan has a fairly high ratio

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Speaker 5: borrowing to the GDP, certainly I think the highest of

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Speaker 5: the G ten. They don't have as much fiscal headroom

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Speaker 5: to deal with things. And part I think of what

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Speaker 5: happened with the JGPS was when Prime Minister Takichi said,

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Speaker 5: you know, we're going to suspend some of these taxes

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Speaker 5: and they explain how she's going to pay for it.

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Speaker 5: How much flexibily do they have? Could it be an

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Speaker 5: early example of sort of the pressures on governments, including

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Speaker 5: the United States government, of having such high debt to

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Speaker 5: GDP issues.

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Speaker 6: Yeah, I mean you think about when Liz Trust made

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Speaker 6: her announcement and the huge blowback against the pound. This

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Speaker 6: was a bit smaller than that, which makes sense. Japan

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Speaker 6: is a bigger economy and has a larger base of

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Speaker 6: domestic saving relative to the UK. But it's not quite

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Speaker 6: a US level of exorbitant privilege, and even if it were,

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Speaker 6: it's way above US levels of debt and way above

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Speaker 6: US levels of borrowing. Now that you also have inflation

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Speaker 6: there for the first time in a while, there's I

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Speaker 6: think good reason for investors to want to be compensated

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Speaker 6: more for lending to Japan than historically they had demanded.

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Speaker 5: You, of course, are an economist, but geopolitics could hit economics.

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Speaker 5: At the same time, we are seeing back and forth

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Speaker 5: of the United States and its traditional allies about exactly

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Speaker 5: who's on whose side? Are we together or not? What

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Speaker 5: could effect could that have? As apparently some maybe some

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Speaker 5: boundaries start getting built. Yeah, so so far.

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Speaker 6: One of the surprises to me last year was that

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Speaker 6: most countries in the world did not retaliate to US tariffs.

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Speaker 6: Canada did, China did, most everyone else prepared plans, put

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Speaker 6: them on the shelf, and they're still sitting there on

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Speaker 6: the shelf. The question is what happens this year With Greenland.

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Speaker 6: It seemed like there was a more credible threat of retaliation,

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Speaker 6: and that was part of why the President may have

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Speaker 6: backed down on that. Are you going to see more

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Speaker 6: of that and I think to some degree it'll depend

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Speaker 6: on the direction of travel for our tariffs. If we

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Speaker 6: start peeling them back, making exceptions and reducing them, then

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Speaker 6: maybe other countries will stay quiet. But we try to

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Speaker 6: do another round on top of what we've already done,

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Speaker 6: and I think we'd see a lot of retaliation. But

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Speaker 6: then again, I thought we'd see retaliation last year, and

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Speaker 6: I was wrong.

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Speaker 1: That coming up, David west And brings us the stories

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Speaker 1: of Trump style state capitalism. How changes to the food

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Speaker 1: stamp program work through the US supply chain, the US

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Speaker 1: sports business that's even bigger than the NFL, all that's

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Speaker 1: still ahead.

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Speaker 5: This is a story about what happens when the referee

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Speaker 5: decides to play in the game. The Trump administration has

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Speaker 5: not been shy about taking ownership interests and otherwise participating

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Speaker 5: directly in businesses that we otherwise thought were in the

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Speaker 5: private sector. Our colleague Michael McKee brings us up to

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Speaker 5: speed on what's been done so far.

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Speaker 7: My administration will offer GM and Chrysler a limited additional

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Speaker 7: period of time.

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Speaker 1: It isn't a new practice. The government took stakes in

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Speaker 1: auto and insurance companies during the Great Financial Crisis, but

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Speaker 1: it is a shift. At that time, the idea was

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Speaker 1: to provide funding backstop to keep the companies alive. General

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Speaker 1: Motors and Chrysler were effectively insolvent, facing collapsing sales, frozen

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Speaker 1: credit markets, and imminent bankruptcy. The US ended up owning

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Speaker 1: about sixty one percent of GM and ten percent of

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Speaker 1: Chrysler when they returned to health. The government sold its

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Speaker 1: shares in both cases at a loss. Today, the Trump

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Speaker 1: administration is taking significant equity stakes in a number of

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Speaker 1: American companies. Ten percent in chip maker Intel, a fifteen

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Speaker 1: percent stake in Rare Earth's firm MP Materials that came

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Speaker 1: with a government guarantee on product prices and sales. Shares

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Speaker 1: in companies such as Lithium Americas and Trilogy Medals, a

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Speaker 1: so called golden share in Nippon Steel. This time, the

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Speaker 1: goal isn't to prevent bankruptcies, but to make a profit

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Speaker 1: and theoretically strengthen supply chains for American manufacturers. Administration officials

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Speaker 1: insist national security is at stake. China, Russia and other

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Speaker 1: malevolent competitors cannot be allowed to get US strategic advantage

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Speaker 1: in energy, defense, production, and AI.

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Speaker 2: The government backing can.

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Speaker 1: Certainly help MP material shares rose two hundred and twenty

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Speaker 1: four percent last year. Critics say the government should not

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Speaker 1: be picking winners and losers or influencing outcomes in the

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Speaker 1: private sector. The government's goals may not align with the

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Speaker 1: companies and lead to misallocation of capital. Ownership may reduce

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Speaker 1: competition and innovation. State capitalism is a slippery slope away

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Speaker 1: from free markets.

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Speaker 5: It's not as if the US government has never taken

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Speaker 5: ownership interest in private companies before, but this time is different.

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Speaker 3: I think a number of things are different.

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Speaker 7: First of all, is simply the number of situations he's done,

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Speaker 7: everything from a golden share in US Steel to Stock

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Speaker 7: and Intel, to what you might call an export tax

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Speaker 7: on chips to China. It's just all over the place.

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Speaker 7: That doesn't seem to be any particular rhyme or reason

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Speaker 7: to it.

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Speaker 5: I Ratner is chairman and CEO of will It Advisors,

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Speaker 5: which invests the personal and philanthropic assets of Bloomberg founder

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Speaker 5: and majority shareholder Michael Bloomberg. Ratner served as the point

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Speaker 5: person for President Obama for restructuring the US auto industry

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Speaker 5: during the Great Financial Crisis.

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Speaker 7: When I was in the government and we thought about

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Speaker 7: taking stock in Christler and General Motors. We went through

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Speaker 7: a whole process of what we called the USG a

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Speaker 7: share US government a shareholder, and how would this work

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Speaker 7: and what would we do and what were the guardrails,

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Speaker 7: and a lot of thought went into it. This seems

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Speaker 7: to be the opposite, and so it's a hodgepodge of things,

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Speaker 7: and it feels as much the President is doing this

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Speaker 7: because he can. He kind of keeps forgetting he's not

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Speaker 7: in the private sector anymore, and he sees money on

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Speaker 7: the table and he just goes and tries to get it.

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Speaker 7: We took the interest in the auto companies not because

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Speaker 7: we wanted to, but because we had to. I'll never

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Speaker 7: forget when we went to the White House and basically

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Speaker 7: said the only way we can save General Motors is

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Speaker 7: to an effect take nationalize. It takes sixty percent of

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Speaker 7: the equity. There was a lot of pushback, as you

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Speaker 7: would imagine, and eventually everyone really it was the only choice.

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Speaker 7: So it was a last resort, not a first resort.

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Speaker 5: Adding to the ad hoc nature of the administration's intervention

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Speaker 5: is its targeting individual companies rather than entire sectors. Sarah

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Speaker 5: Bauerley Dansman is Associate Professor of International Studies at Indiana

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Speaker 5: and a senior fellow at the Atlantic Council's Geoeconomics Center.

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Speaker 8: We're a market based economy, and the idea is that

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Speaker 8: we want markets to pick winners, not governments. And what

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Speaker 8: we're seeing in the current administration is much more willingness

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Speaker 8: to pick particular winners.

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Speaker 5: And the Trump administration has used the device of taking

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Speaker 5: interest in order to overcome political resistance to deals that

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Speaker 5: it believes will be good for the economy overall, like

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Speaker 5: when it took a so called golden share in US Steel.

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Speaker 7: I do think the case of USDL is little bit different.

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Speaker 7: It was a very controversial merger. I personally thought it

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Speaker 7: was perfectly fo and steel is not a national security commodity.

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Speaker 7: These days, you can buy steal anywhere in the world

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Speaker 7: that people would love to sell it to you. But

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Speaker 7: it was politically a very tough one and that one

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Speaker 7: I would actually give the White House some credit that

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Speaker 7: it was a clever way to get past the political opposition.

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Speaker 7: It does not involve any ownership. I doubt they will

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Speaker 7: ever exercise it, So yeah, I put that in a

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Speaker 7: different bucket than saying that Nvidia has to pay an

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Speaker 7: effect a tax on sending chips.

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Speaker 5: To China, whatever the justification. When the government becomes an owner,

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Speaker 5: even a partial owner, in private business, it necessarily changes

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Speaker 5: market dynamics, injecting factors beyond simply supply and demand and

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Speaker 5: economic performance.

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Speaker 8: The concern is that the more that the US kind

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Speaker 8: of pushes in this direction of picking specific winners and

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Speaker 8: therefore losers in industries so that it distorts markets. As

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Speaker 8: a market based economy, we have a long track record

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Speaker 8: of seeing when market actors are the ones that are

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Speaker 8: generating and evaluating information and then making capital allocation decisions

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Speaker 8: on the basis of commercial preferences and commercial interests that

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Speaker 8: we tend to see over the long run that that

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Speaker 8: leads to more innovation, more wealth, more economic development as

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Speaker 8: a whole. And the concern is that the more that

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Speaker 8: the government gets involved in individual business decisions, the more

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Speaker 8: we are kind of breaking that kind of market based

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Speaker 8: understanding of how information is generating in economy and how

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Speaker 8: companies and how investors make decisions. And that is an

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Speaker 8: important distinction because when the government is taking direct stakes

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Speaker 8: in companies, the concern is that now that company is

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Speaker 8: going to be pressured to not always make the best

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Speaker 8: businessusiness decisions on the basis of kind of commercial concerns,

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Speaker 8: but now also political concerns.

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Speaker 5: The free market purists would say that the government should

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Speaker 5: never get involved as an owner in American business, But

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Speaker 5: does the performance of China in advancing rapidly and important

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Speaker 5: sectors argue for some move away from purely private ownership.

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Speaker 7: If you talk to anybody in China, they would tell

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Speaker 7: you that the state owned enterprises are almost universally less

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Speaker 7: well run than the purely private companies. On the other hand,

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Speaker 7: when Jijinping says our strategic priority is to develop a

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Speaker 7: chip's business, everybody marchist who are developing a chip's business,

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Speaker 7: and lo and behold they make enormous progress. And so

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Speaker 7: it's a very tough balancing act. I think, on balanced,

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Speaker 7: my view would be better to do less than more,

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Speaker 7: or none rather than some, because I think the chances

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Speaker 7: of getting it right for a government are relatively low.

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Speaker 5: Does the experience with China so far actually almost are

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Speaker 5: the United States to revisit the balance between the government

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Speaker 5: and the private sector.

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Speaker 3: I think that.

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Speaker 8: China is a very different country with a different political culture.

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Speaker 8: It's organized in different ways. When you have so many

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Speaker 8: workers who are integrating into a formal economy and through

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Speaker 8: formal work and factory work with very long hours, it's

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Speaker 8: very hard to see how that translates into the type

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Speaker 8: of economy that would work in the US and that

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Speaker 8: citizens in the US would actually feel good about. So

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Speaker 8: I think that we want to be careful to not

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Speaker 8: become China in our kind of quest to ensure that

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Speaker 8: we're able to compete in the global economy in which

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Speaker 8: China is doing very well right now. That said, there

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Speaker 8: are specific areas of the economy that the Chinese model,

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Speaker 8: and in particular concerns over Chinese over supply. I need

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Speaker 8: more than just an uncoordinated market response.

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Speaker 5: To that, whether it's sem conductors or steel or rare

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Speaker 5: earth minerals. The Trump administration has justified its actions most

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Speaker 5: often on the ground of national security needs.

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Speaker 3: What role, if.

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Speaker 5: Any does national security plan this? Does that make it

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Speaker 5: a more persuasive of not compelling case for a government

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Speaker 5: to have an ownership interest?

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Speaker 8: Well, of course, it first of all makes the politics

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Speaker 8: of taking stakes like this more tenable, because national security

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Speaker 8: concerns have bipartisan support. Congress should be part of the

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Speaker 8: discussion around how much are we going to allocate in

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Speaker 8: terms of funding to support these kinds of interventions into

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Speaker 8: specific companies, How are we going to decide what are

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Speaker 8: the strategic priorities. How are we going to ensure that

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Speaker 8: the process through which companies are determined to be eligible

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Speaker 8: for these kinds of programs is done in a way

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Speaker 8: that is not about corruption and graft.

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Speaker 5: We've looked around the world over the years and said

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Speaker 5: a lot of countries are corrupt because of what the

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Speaker 5: relationships are between private interests and government interests in various industries.

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Speaker 5: What are the risks here even if the appearance of corruption,

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Speaker 5: as these investments are made in companies that often have

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Speaker 5: some connection to the Trump family.

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Speaker 7: I think we're past the point of appearance of corruption.

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Speaker 7: I think we're fully in corruption. I think this administration

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Speaker 7: and I don't mean to sound like a partisan, but

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Speaker 7: I've never seen anything like it in my entire life.

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Speaker 7: People have said, for example, that Lyndon Johnson sort of

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Speaker 7: tilted the board in favor of getting a bunch of

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Speaker 7: television licenses in Texas that made him wealthy. Okay, maybe

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Speaker 7: he did, maybe he didn't, but.

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Speaker 9: That was then.

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Speaker 7: This is Now that was one thing.

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Speaker 5: This is like everything.

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Speaker 7: Whether you want to talk about meme coins, whether you

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Speaker 7: want to talk about rarer earth minerals, whether you want

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Speaker 7: to talk about real estate developments in the Middle East,

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Speaker 7: whether you want to talk about Jared Kushner raising five

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Speaker 7: billion dollars of which virtually all of it, ninety nine

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Speaker 7: percent of it came from the Middle East. This administration

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Speaker 7: knows no bounds.

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Speaker 5: Setting aside the potential morality of it, what does it

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Speaker 5: do the economy? I mean, we've thought for a long

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Speaker 5: time that actually a free market economy served us well

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Speaker 5: in terms of growth, in terms of jobs, in terms

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Speaker 5: of standards of living. What are their threats potentially to

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Speaker 5: the very foundations of our economy.

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Speaker 7: Well, let's put it in a few different buckets. First

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Speaker 7: of all, I think the corruption that we just talked about,

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Speaker 7: as distasteful as it is, and I find it reprehensible,

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Speaker 7: it's small potatoes and the great scheme of an economy

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Speaker 7: that's twenty plus trillion dollars.

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Speaker 5: I mean, right, let's be serious.

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Speaker 7: I think the government taking some of these equity interests,

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Speaker 7: are putting these taxes, if you want to call them that,

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Speaker 7: on things. Also, relatively small potatoes in the great scheme

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Speaker 7: of things. I think the most worrisome thing, which may

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Speaker 7: not fall exactly into the corruption bucket, is the fact

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Speaker 7: that companies feel like this is an administration that will

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Speaker 7: reward its friends and punish its enemies. The CEO of

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Speaker 7: Exxon said the other day, for example, that Venezuela was uninvestable.

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Speaker 7: It seems like an obvious statement to me. The President

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Speaker 7: immediately said, well, I'm not going to pick Exxon to

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Speaker 7: be my partner of choice in Venezuela if we actually

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Speaker 7: get hold of any of this oil. And so companies,

441
00:23:26,520 --> 00:23:28,920
Speaker 7: and I hear this from CEOs all the time, are

442
00:23:29,000 --> 00:23:31,840
Speaker 7: terrified about what they say, what they do, and trying

443
00:23:31,840 --> 00:23:34,760
Speaker 7: to figure out how to avoid antagonizing a president who

444
00:23:34,760 --> 00:23:38,360
Speaker 7: has made retribution a ful from part of this administration.

445
00:23:38,520 --> 00:23:40,200
Speaker 7: So I think that's the real danger here.

446
00:23:42,200 --> 00:23:44,800
Speaker 5: Up next, the government is tightening up the rules on

447
00:23:44,880 --> 00:23:48,000
Speaker 5: food stamps to save money and avoid fraud, but the

448
00:23:48,040 --> 00:23:51,200
Speaker 5: effects may ripple well passed snap recipients in a food

449
00:23:51,240 --> 00:24:04,840
Speaker 5: supply chain dependent on that government support. This is a

450
00:24:04,880 --> 00:24:09,000
Speaker 5: story about doing well by doing good. The Supplemental Nutrition

451
00:24:09,080 --> 00:24:12,520
Speaker 5: Assistance Program, formerly known as food stamps, was created to

452
00:24:12,560 --> 00:24:15,440
Speaker 5: help those who could not afford to feed their families.

453
00:24:15,800 --> 00:24:18,639
Speaker 5: But over time it's become harder to do that good

454
00:24:19,119 --> 00:24:21,600
Speaker 5: even it's turned into an important part of the larger

455
00:24:21,640 --> 00:24:25,159
Speaker 5: industry that provides food to Americans of all income levels.

456
00:24:27,320 --> 00:24:29,320
Speaker 10: You need help, and we're going to help you. We

457
00:24:29,400 --> 00:24:32,800
Speaker 10: don't ask for specific details. If you show a need,

458
00:24:33,160 --> 00:24:33,960
Speaker 10: we're going to be there.

459
00:24:38,320 --> 00:24:40,679
Speaker 5: This may look like a lot of moving parts.

460
00:24:40,840 --> 00:24:43,240
Speaker 2: Watch everybody, please, it's.

461
00:24:43,119 --> 00:24:46,879
Speaker 5: Actually a well oiled operation of volunteers at Feeding Westchester,

462
00:24:47,280 --> 00:24:50,000
Speaker 5: sorting and packing food for their hungry neighbors.

463
00:24:50,280 --> 00:24:51,920
Speaker 10: In this space, we have a variety of things.

464
00:24:52,119 --> 00:24:55,439
Speaker 5: Tammy Wilson is at the helm. You are feeding Westchester

465
00:24:56,160 --> 00:24:58,960
Speaker 5: and most of us I think think of Westchester County

466
00:24:58,960 --> 00:24:59,800
Speaker 5: as being relatively a.

467
00:25:00,440 --> 00:25:03,760
Speaker 10: Absolutely so Westchester having need was a shaker to me.

468
00:25:03,960 --> 00:25:08,359
Speaker 10: You know, even affluent counties have food insecurity, and food

469
00:25:08,359 --> 00:25:10,679
Speaker 10: insecurity can look like anyone.

470
00:25:11,240 --> 00:25:14,560
Speaker 5: Wilson says, SNAP can only get you so far. For

471
00:25:14,680 --> 00:25:18,000
Speaker 5: most families, the program provides only enough food for the

472
00:25:18,080 --> 00:25:21,360
Speaker 5: first two or three weeks. In the month after that,

473
00:25:21,560 --> 00:25:24,560
Speaker 5: they turned to food banks for help. But people may

474
00:25:24,560 --> 00:25:26,800
Speaker 5: be getting even less of the food they need with

475
00:25:26,920 --> 00:25:30,359
Speaker 5: revisions to SNAP hotly debated in the so called One

476
00:25:30,520 --> 00:25:34,440
Speaker 5: Big Beautiful Bill about to come into effect.

477
00:25:34,080 --> 00:25:38,440
Speaker 6: Cuts waste, fraud, and abuse in government programs like SNAP

478
00:25:38,520 --> 00:25:39,320
Speaker 6: and Medicaid.

479
00:25:39,640 --> 00:25:42,439
Speaker 5: Although the target of the program has always been helping

480
00:25:42,480 --> 00:25:45,879
Speaker 5: Americans who can't afford food, the tens of billions of

481
00:25:45,920 --> 00:25:49,439
Speaker 5: dollars it injects into the economy each year have wide

482
00:25:49,600 --> 00:25:52,679
Speaker 5: ranging impacts, spreading all the way from grocers.

483
00:25:52,880 --> 00:25:56,199
Speaker 11: It's our job to make sure that, regardless of that

484
00:25:56,240 --> 00:26:00,920
Speaker 11: person's budget, they can still get healthy, nutritious food to farmers.

485
00:26:01,160 --> 00:26:03,879
Speaker 12: If people eat food, that benefits us that grow food.

486
00:26:04,280 --> 00:26:06,520
Speaker 12: Just being a farmer, being someone who grows food, I

487
00:26:06,520 --> 00:26:07,360
Speaker 12: want to see everyone eat.

488
00:26:07,600 --> 00:26:10,440
Speaker 5: The journey of a SNAP dollar starts with families who

489
00:26:10,520 --> 00:26:13,720
Speaker 5: use it to buy food from grocery stores. From the grocer,

490
00:26:13,800 --> 00:26:17,320
Speaker 5: it's passed to suppliers and farmers and to their employees,

491
00:26:17,920 --> 00:26:20,280
Speaker 5: all of whom can then spend the money on all

492
00:26:20,280 --> 00:26:22,960
Speaker 5: the things they need. All of this results in a

493
00:26:23,040 --> 00:26:27,520
Speaker 5: multiplier effect. It's estimated that every dollar of SNAP spending

494
00:26:27,600 --> 00:26:31,440
Speaker 5: generates about one dollar and fifty cents in economic activity.

495
00:26:31,960 --> 00:26:35,200
Speaker 5: Sally Lions WYAT has been tracking SNAP spending for over

496
00:26:35,240 --> 00:26:35,920
Speaker 5: a decade.

497
00:26:36,040 --> 00:26:39,520
Speaker 13: The Snap shopper is pretty savvy, so they actually navigate

498
00:26:39,640 --> 00:26:43,720
Speaker 13: to fit their needs. Food retailers, so grocery stores are

499
00:26:43,760 --> 00:26:44,680
Speaker 13: the largest share.

500
00:26:44,960 --> 00:26:47,200
Speaker 3: But I will tell you.

501
00:26:46,560 --> 00:26:48,840
Speaker 13: You can flip that and look at it differently, and

502
00:26:48,880 --> 00:26:53,000
Speaker 13: it's which retailers depend on Snap more than others, and

503
00:26:53,080 --> 00:26:56,120
Speaker 13: it is dollar and then some of the value channels

504
00:26:56,119 --> 00:26:58,240
Speaker 13: and convenience that depend on snaps.

505
00:26:58,400 --> 00:27:00,600
Speaker 5: What do we know about how the consumers use their

506
00:27:00,640 --> 00:27:01,680
Speaker 5: Snap dollars?

507
00:27:02,000 --> 00:27:05,480
Speaker 13: Snap consumers have their own money because they have to

508
00:27:05,520 --> 00:27:08,560
Speaker 13: be working, so they use this to supplement their own

509
00:27:08,680 --> 00:27:12,760
Speaker 13: income to just try and get meals on the table

510
00:27:12,880 --> 00:27:17,120
Speaker 13: or into the lunch bags or dinner served. Snap consumers

511
00:27:17,240 --> 00:27:20,800
Speaker 13: do make more trips to the stores than non Snap

512
00:27:21,200 --> 00:27:23,480
Speaker 13: and they also spend a bit more when they're on

513
00:27:23,560 --> 00:27:27,600
Speaker 13: those trips. They're also more dependent on retail because it

514
00:27:27,680 --> 00:27:30,080
Speaker 13: is more expensive to eat out these days. In fact,

515
00:27:30,480 --> 00:27:33,000
Speaker 13: it costs four point three times more to eat out

516
00:27:33,080 --> 00:27:34,280
Speaker 13: than it does to eat at home.

517
00:27:35,040 --> 00:27:37,960
Speaker 5: For every dollar spent at the grocery store, about twenty

518
00:27:38,000 --> 00:27:41,479
Speaker 5: four cents gets passed down to the farmers. Brian Cavey

519
00:27:41,600 --> 00:27:44,720
Speaker 5: is the senior vice president of Government Affairs at Kobank,

520
00:27:45,119 --> 00:27:47,000
Speaker 5: a lender to rural America.

521
00:27:47,200 --> 00:27:49,480
Speaker 14: An area that I think not a lot of people

522
00:27:49,880 --> 00:27:54,800
Speaker 14: are familiar with, and that is that food benefit ultimately

523
00:27:55,000 --> 00:27:58,040
Speaker 14: is buying food in the grocery store. But I think

524
00:27:58,200 --> 00:28:01,639
Speaker 14: that impact that funding making its way back to the

525
00:28:01,680 --> 00:28:04,400
Speaker 14: producer may not be on the minds of people when

526
00:28:04,440 --> 00:28:07,800
Speaker 14: they look at the spending that goes into the nutrition programs,

527
00:28:08,359 --> 00:28:11,879
Speaker 14: and those dollars have a rollover impact in the rural community.

528
00:28:12,880 --> 00:28:16,879
Speaker 5: But all of this is about to change. Grocery stores, farmers,

529
00:28:16,920 --> 00:28:20,000
Speaker 5: and families are now bracing for the largest reductions in

530
00:28:20,040 --> 00:28:21,439
Speaker 5: the SNAP program's history.

531
00:28:21,600 --> 00:28:24,520
Speaker 10: Welcome to where the magic happens. So before the pandemic,

532
00:28:24,520 --> 00:28:27,080
Speaker 10: we're about twenty five thousand square feet. Now we're at

533
00:28:27,119 --> 00:28:31,520
Speaker 10: a whopping sixty two thousand square feet. As you can see,

534
00:28:31,680 --> 00:28:34,199
Speaker 10: we are prepared for what is coming. We're ready for

535
00:28:34,240 --> 00:28:35,040
Speaker 10: space and people.

536
00:28:35,240 --> 00:28:38,480
Speaker 5: The One Big, Beautiful Bill includes plans to shrink SNAP

537
00:28:38,560 --> 00:28:41,560
Speaker 5: spending by more than one hundred and eighty six billion

538
00:28:41,600 --> 00:28:45,040
Speaker 5: dollars over the next decade. So now food banks like

539
00:28:45,080 --> 00:28:48,560
Speaker 5: Feeding Westchester are preparing for the fallout. How big is

540
00:28:48,600 --> 00:28:49,200
Speaker 5: your operation?

541
00:28:49,440 --> 00:28:52,080
Speaker 10: So food banking is about a pounds game, so we

542
00:28:52,120 --> 00:28:54,600
Speaker 10: often will talk in pounds. We are a twenty one

543
00:28:54,600 --> 00:28:58,160
Speaker 10: million pound organization. Given everything that is changed, we are

544
00:28:58,280 --> 00:29:00,320
Speaker 10: at a cusp. We believe that we're going to be

545
00:29:00,440 --> 00:29:02,840
Speaker 10: at some point over the next few years a forty

546
00:29:02,880 --> 00:29:04,400
Speaker 10: to fifty million pounds, if not more.

547
00:29:06,200 --> 00:29:08,920
Speaker 5: The effects of these reductions will ripple through the food

548
00:29:09,000 --> 00:29:12,040
Speaker 5: ecosystem all the way to the plains of North Dakota,

549
00:29:12,480 --> 00:29:15,360
Speaker 5: where farmers make up one of the highest proportions of

550
00:29:15,400 --> 00:29:17,440
Speaker 5: the workforce of any US state.

551
00:29:17,720 --> 00:29:20,880
Speaker 15: I take some to market in town directly during harvest,

552
00:29:20,960 --> 00:29:24,120
Speaker 15: and some get stored out here hoping for better market conditions.

553
00:29:24,800 --> 00:29:27,520
Speaker 15: And then during the winter months, I haul my commodities

554
00:29:27,560 --> 00:29:30,360
Speaker 15: a town room. This family here was my father's, and

555
00:29:30,400 --> 00:29:33,040
Speaker 15: then I do farm about six hundred acres that's on my.

556
00:29:33,000 --> 00:29:37,120
Speaker 5: Mother's side family. Farmers like Tyler Stafflin and Matt Purdue

557
00:29:37,120 --> 00:29:41,000
Speaker 5: have for generations made a living growing and selling commodities

558
00:29:41,040 --> 00:29:44,880
Speaker 5: at the mercy of the market, whether it's frigid winters

559
00:29:44,960 --> 00:29:48,520
Speaker 5: or turbulent trade dynamics. They need help from programs in

560
00:29:48,560 --> 00:29:52,080
Speaker 5: the US Farm Bill, a wide ranging package of legislation

561
00:29:52,160 --> 00:29:55,440
Speaker 5: that gets rewritten by Congress about every five years.

562
00:29:55,680 --> 00:29:59,480
Speaker 12: The Farmville offers a safety net, essentially for farmers, so

563
00:30:00,240 --> 00:30:03,240
Speaker 12: downturns like we are experiencing today. You can kind of

564
00:30:03,240 --> 00:30:05,560
Speaker 12: count on that farm bill to keep you in operation,

565
00:30:06,000 --> 00:30:08,480
Speaker 12: and you know, hopefully I can pass my farm onto

566
00:30:08,760 --> 00:30:11,480
Speaker 12: the next generation. A farm bill is a huge crucial

567
00:30:11,560 --> 00:30:12,080
Speaker 12: piece of that.

568
00:30:13,960 --> 00:30:17,520
Speaker 5: Roughly eighty percent off the farm Bill is nutrition programs,

569
00:30:17,920 --> 00:30:21,720
Speaker 5: mainly SNAP. Purdue is the president of the North Dakota

570
00:30:21,840 --> 00:30:25,360
Speaker 5: Farmers Union. While farmers may not see SNAP cuts show

571
00:30:25,440 --> 00:30:29,480
Speaker 5: up directly in their pocketbooks, Purdue says, the indirect impact

572
00:30:29,720 --> 00:30:30,680
Speaker 5: spells trouble.

573
00:30:31,120 --> 00:30:34,400
Speaker 16: Sixty years now, the Farm Bill has been a bill

574
00:30:34,440 --> 00:30:37,320
Speaker 16: that supports the entire food system, and so that includes

575
00:30:37,360 --> 00:30:40,400
Speaker 16: programs to support family farmers and ranchers and programs to

576
00:30:40,440 --> 00:30:41,640
Speaker 16: support consumers.

577
00:30:41,840 --> 00:30:43,640
Speaker 2: No more than twenty percent.

578
00:30:43,480 --> 00:30:47,920
Speaker 16: Of the US House of Representatives represents primarily rural districts,

579
00:30:48,440 --> 00:30:52,320
Speaker 16: and so from a political pragmatism standpoint, it's really important

580
00:30:52,360 --> 00:30:57,720
Speaker 16: that we have support from legislators who primarily represent urban interests, right,

581
00:30:57,760 --> 00:30:59,480
Speaker 16: and their primary interest in the.

582
00:30:59,440 --> 00:31:01,280
Speaker 2: Farm Bill are the nutrition programs.

583
00:31:01,480 --> 00:31:04,960
Speaker 14: It's usually a broad group of folks that ranges from

584
00:31:05,040 --> 00:31:08,640
Speaker 14: the general farm organizations to the commodity organizations, to the

585
00:31:08,680 --> 00:31:13,960
Speaker 14: conservation organizations, and then the nutritions and anti poverty advocates

586
00:31:14,000 --> 00:31:17,239
Speaker 14: and those folks come together and the result of that

587
00:31:17,320 --> 00:31:21,360
Speaker 14: can be a bill that passes with wide bipartisan support

588
00:31:21,440 --> 00:31:24,320
Speaker 14: in a very large margin. There have been efforts to

589
00:31:24,360 --> 00:31:29,120
Speaker 14: try to divorce the food programs from the farm programs

590
00:31:29,120 --> 00:31:33,040
Speaker 14: and push them independently, and that candidly is a recipe

591
00:31:33,040 --> 00:31:36,000
Speaker 14: for both to fail. And we have food insecurity and

592
00:31:36,040 --> 00:31:38,520
Speaker 14: poverty kind of spread out across the country, and it's

593
00:31:38,560 --> 00:31:42,720
Speaker 14: actually a slightly higher percentage of folks that are both

594
00:31:42,720 --> 00:31:46,520
Speaker 14: impoverished and food insecure in our rural areas than in

595
00:31:46,560 --> 00:31:49,600
Speaker 14: our urban areas. And that's important thing to consider is

596
00:31:49,640 --> 00:31:53,280
Speaker 14: that economic impact for those rural communities. And we have

597
00:31:53,400 --> 00:31:57,240
Speaker 14: a lot of counties that are heavily dependent on this program.

598
00:31:57,320 --> 00:31:59,360
Speaker 14: If you look at the top one hundred or so

599
00:31:59,520 --> 00:32:03,520
Speaker 14: counties across the country that are most heavily dependent on SNAP,

600
00:32:03,680 --> 00:32:07,160
Speaker 14: the majority of those are not metro communities, but rather

601
00:32:07,200 --> 00:32:09,320
Speaker 14: are counties that are more rural.

602
00:32:09,840 --> 00:32:12,440
Speaker 12: People in general are probably too proud to say that

603
00:32:12,480 --> 00:32:16,000
Speaker 12: they have to look for assistance in any way, shape

604
00:32:16,080 --> 00:32:18,520
Speaker 12: or form. So the closest grocery store to where we

605
00:32:18,520 --> 00:32:21,000
Speaker 12: are today is about thirty miles away, So I'd say

606
00:32:21,040 --> 00:32:25,640
Speaker 12: that that's a concern in rural America's, especially in rural

607
00:32:25,640 --> 00:32:27,680
Speaker 12: North Dakota, is access to groceries.

608
00:32:29,000 --> 00:32:32,640
Speaker 5: For grocers and hungry families, the impact of SNAP cuts

609
00:32:32,760 --> 00:32:35,720
Speaker 5: is not hard to imagine. They felt its effects during

610
00:32:35,760 --> 00:32:39,920
Speaker 5: the last November's government shutdown when the program's benefits got delayed.

611
00:32:40,280 --> 00:32:43,280
Speaker 5: You had a particular advantage point on what that stress

612
00:32:43,280 --> 00:32:45,600
Speaker 5: on SNAP meant for food and security and for the

613
00:32:45,600 --> 00:32:47,360
Speaker 5: people you supply. What did you find?

614
00:32:48,240 --> 00:32:51,560
Speaker 10: We found that the first thing is that people were

615
00:32:51,800 --> 00:32:56,200
Speaker 10: mentally stressed, concerned. Some days they were really really heavy.

616
00:32:56,480 --> 00:33:00,800
Speaker 10: They were fearful, confused, some very angry, just didn't know

617
00:33:00,880 --> 00:33:02,520
Speaker 10: what was going to happen next. So a lot of

618
00:33:02,520 --> 00:33:06,360
Speaker 10: our food pantries, our schools, we saw a huge increase

619
00:33:06,480 --> 00:33:08,760
Speaker 10: in November, and it was leading into the holidays.

620
00:33:08,960 --> 00:33:11,480
Speaker 11: When there's a change, it's not just a policy change.

621
00:33:11,520 --> 00:33:14,880
Speaker 11: It's about food security. As I say, it's about people

622
00:33:15,360 --> 00:33:19,160
Speaker 11: putting food on the table that night. The education picture

623
00:33:19,200 --> 00:33:20,000
Speaker 11: is really important.

624
00:33:20,320 --> 00:33:23,400
Speaker 5: Adam Kirk is the chief store operator of the wind

625
00:33:23,440 --> 00:33:26,680
Speaker 5: Dixie Company, a regional supermarket chain in the South.

626
00:33:26,920 --> 00:33:30,720
Speaker 11: When it comes to making choices for that evening meal,

627
00:33:30,760 --> 00:33:34,800
Speaker 11: it always starts with protein. And when we see funding suppression,

628
00:33:35,320 --> 00:33:40,440
Speaker 11: or we see price increases or cost increases in that area,

629
00:33:40,880 --> 00:33:43,560
Speaker 11: that's where you notice it most in first so that's

630
00:33:43,560 --> 00:33:46,280
Speaker 11: where we react quickly to make sure that we are

631
00:33:46,320 --> 00:33:48,800
Speaker 11: providing the very best value for our customers. We don't

632
00:33:48,840 --> 00:33:51,280
Speaker 11: have control of policy change, we do have control over

633
00:33:51,320 --> 00:33:55,240
Speaker 11: our purpose, and our purpose remains the same regardless of

634
00:33:55,280 --> 00:33:57,600
Speaker 11: the policy, and that is to feed and enrich the

635
00:33:57,600 --> 00:34:01,520
Speaker 11: communities that we serve. So we really work with local

636
00:34:01,520 --> 00:34:05,040
Speaker 11: communities and local nonprofits to make sure that we've got

637
00:34:05,080 --> 00:34:08,920
Speaker 11: partnerships that exist for exactly these moments, so they're not

638
00:34:09,200 --> 00:34:11,400
Speaker 11: on off programs. We have always on programs.

639
00:34:11,960 --> 00:34:15,400
Speaker 5: Perhaps there is one silver lining for US food producers.

640
00:34:15,840 --> 00:34:19,840
Speaker 5: Last year's budget legislation did increase funding for farmers, but

641
00:34:19,920 --> 00:34:23,920
Speaker 5: it creates a potentially contentious backdrop as Congress negotiates a

642
00:34:23,960 --> 00:34:25,480
Speaker 5: new farm bill this year.

643
00:34:25,840 --> 00:34:29,120
Speaker 16: The farm economy is in really tough shape. Most farmers

644
00:34:29,160 --> 00:34:33,480
Speaker 16: are losing money every acre of crop that they plant

645
00:34:33,480 --> 00:34:37,319
Speaker 16: and harvest, and so when we face some of the

646
00:34:37,360 --> 00:34:40,120
Speaker 16: financial challenges we're facing right now, we're always going to

647
00:34:40,160 --> 00:34:43,560
Speaker 16: advocate for improvements to the farm safety net, improvements to

648
00:34:43,600 --> 00:34:46,799
Speaker 16: crop insurance. You know, I'm concerned that The perception of

649
00:34:46,800 --> 00:34:49,600
Speaker 16: some folks who live in urban communities is that, you know,

650
00:34:49,680 --> 00:34:53,040
Speaker 16: farmers and ranchers and folks out in rural America don't

651
00:34:53,080 --> 00:34:56,520
Speaker 16: really care about you know, our hungry neighbors. And that

652
00:34:56,520 --> 00:34:58,799
Speaker 16: couldn't be farther from the truth. We need to get

653
00:34:58,800 --> 00:35:02,279
Speaker 16: the farm bill done, and I think that requires us

654
00:35:02,360 --> 00:35:05,759
Speaker 16: to bring the Farm Buil coalition together. If we don't

655
00:35:05,760 --> 00:35:08,040
Speaker 16: get that farm build done, we won't have updates to

656
00:35:08,400 --> 00:35:11,000
Speaker 16: farm loan programs at a time when farmers and ranchers

657
00:35:11,000 --> 00:35:13,319
Speaker 16: are dealing with record debt loads. If we don't get

658
00:35:13,320 --> 00:35:16,400
Speaker 16: that farm buil done, we're looking at, you know, not

659
00:35:16,560 --> 00:35:21,040
Speaker 16: having the opportunity to improve rural development programs, programs that

660
00:35:21,160 --> 00:35:25,600
Speaker 16: support small communities, to improve conservation programs where there's always

661
00:35:25,600 --> 00:35:27,760
Speaker 16: opportunities to make those programs better.

662
00:35:28,520 --> 00:35:30,640
Speaker 2: And so there is a lot at stake here.

663
00:35:31,160 --> 00:35:32,440
Speaker 5: So are we going to do some sort of here?

664
00:35:32,480 --> 00:35:33,040
Speaker 5: Is that what we're doing?

665
00:35:33,080 --> 00:35:34,080
Speaker 3: Let's do Let's do it.

666
00:35:34,160 --> 00:35:34,720
Speaker 2: I'm excited.

667
00:35:35,120 --> 00:35:38,640
Speaker 5: We may not know what's ahead, but one thing is certain.

668
00:35:39,239 --> 00:35:41,879
Speaker 5: If we all do a little more good, it goes

669
00:35:41,920 --> 00:35:48,080
Speaker 5: a long way for our communities to be well coming. Next,

670
00:35:48,160 --> 00:35:50,560
Speaker 5: if you think you are the only parent spending a

671
00:35:50,600 --> 00:35:54,120
Speaker 5: small fortune to support your young athlete in travel leagues

672
00:35:54,160 --> 00:35:54,880
Speaker 5: and clinics.

673
00:35:55,520 --> 00:35:57,680
Speaker 17: Again, it used to be almost like a hobby. Now

674
00:35:57,680 --> 00:35:59,120
Speaker 17: it's like it's like a job.

675
00:35:59,239 --> 00:36:01,360
Speaker 5: We look at the huge, huge, and growing business of

676
00:36:01,520 --> 00:36:14,920
Speaker 5: youth sports, rivaling even the largest pro leagues. This is

677
00:36:14,920 --> 00:36:18,080
Speaker 5: a story about big money and big sports. They've gone

678
00:36:18,120 --> 00:36:22,239
Speaker 5: together four years, but recently there's been an explosion, whether

679
00:36:22,280 --> 00:36:26,360
Speaker 5: it's pro teams selling for astronomical prices or college players

680
00:36:26,400 --> 00:36:30,479
Speaker 5: receiving seven figures for their name, image, and likeness. Now

681
00:36:30,560 --> 00:36:33,960
Speaker 5: big money is reaching down into high school and beyond

682
00:36:34,480 --> 00:36:45,960
Speaker 5: as parents invest in the dreams of their kids.

683
00:36:41,880 --> 00:36:43,520
Speaker 17: The goals to play Major League Baseball.

684
00:36:44,920 --> 00:36:48,640
Speaker 5: Brayson Hoffman is like many young kids in America, chasing

685
00:36:48,719 --> 00:36:51,280
Speaker 5: big dreams and facing long odds.

686
00:36:51,480 --> 00:36:53,360
Speaker 17: It's weird because its kind of starting to change. They

687
00:36:53,440 --> 00:36:55,840
Speaker 17: used to be almost like a hobby. Now it's like

688
00:36:55,880 --> 00:36:58,880
Speaker 17: a job almost. But it's like if I could have

689
00:36:58,920 --> 00:37:01,160
Speaker 17: any job in the world, that's what it was, and.

690
00:37:01,200 --> 00:37:05,000
Speaker 5: For families like the Hoffmans, supporting that job requires a

691
00:37:05,040 --> 00:37:06,640
Speaker 5: full time commitment of their own.

692
00:37:07,360 --> 00:37:09,480
Speaker 18: We literally drive three and a half hours for him

693
00:37:09,520 --> 00:37:13,440
Speaker 18: to play with this organization because of their level of development,

694
00:37:13,719 --> 00:37:15,719
Speaker 18: and the coaches they have.

695
00:37:16,719 --> 00:37:21,440
Speaker 5: Between club fees, private lessons, nutrition, coaching, and equipment, the

696
00:37:21,480 --> 00:37:24,960
Speaker 5: Hoffman family spends more than sixteen thousand dollars a year

697
00:37:25,120 --> 00:37:27,800
Speaker 5: on their son Brason's baseball.

698
00:37:27,880 --> 00:37:30,080
Speaker 18: We would just make it work. I mean sometimes there

699
00:37:30,160 --> 00:37:33,320
Speaker 18: was points where when he was younger and first starting

700
00:37:33,440 --> 00:37:35,719
Speaker 18: before I got the job I have now, and we

701
00:37:35,719 --> 00:37:37,960
Speaker 18: were traveling a little more than we traveled now. We

702
00:37:38,000 --> 00:37:40,760
Speaker 18: didn't have cable because we put you know that hundred

703
00:37:40,760 --> 00:37:42,200
Speaker 18: dollars a month towards ball for him.

704
00:37:42,719 --> 00:37:46,680
Speaker 5: The costs got so high the family invested in this

705
00:37:47,000 --> 00:37:50,920
Speaker 5: RV to travel to Brayson's summer tournaments to avoid spending

706
00:37:51,120 --> 00:37:52,920
Speaker 5: on hotels.

707
00:37:53,239 --> 00:37:54,440
Speaker 17: Last night, I was hungry.

708
00:37:54,640 --> 00:37:58,160
Speaker 5: And the Hoffmans are not alone. Across America, parents are

709
00:37:58,239 --> 00:38:01,279
Speaker 5: estimated to spend forty billion million dollars a year on

710
00:38:01,320 --> 00:38:05,480
Speaker 5: their children's sporting dreams, dwarfing the annual revenue of America's

711
00:38:05,520 --> 00:38:07,000
Speaker 5: big four sports leagues.

712
00:38:07,480 --> 00:38:10,600
Speaker 9: I have so many of my friends Greg today that say, Alex,

713
00:38:10,680 --> 00:38:12,399
Speaker 9: if you were a kid today, if you were ten

714
00:38:12,440 --> 00:38:15,040
Speaker 9: years old, Alex Rodriguez would never make it to the

715
00:38:15,080 --> 00:38:17,759
Speaker 9: big leagues. And I would say why, Well, because you

716
00:38:17,760 --> 00:38:21,040
Speaker 9: and your mother couldn't afford it, and the same parents

717
00:38:21,560 --> 00:38:24,880
Speaker 9: are selling their cars, they're having a double mortgage in

718
00:38:24,920 --> 00:38:27,960
Speaker 9: their homes to be traveling around this perfect game stuff

719
00:38:27,960 --> 00:38:32,239
Speaker 9: and all this nonsense. You have to make sports more affordable.

720
00:38:32,560 --> 00:38:35,960
Speaker 19: When I was a kid, I played youth sports. I

721
00:38:36,040 --> 00:38:40,680
Speaker 19: didn't start any form of travel sports until maybe eighth grade,

722
00:38:41,280 --> 00:38:45,000
Speaker 19: and it was barely travel. It was travel around the county,

723
00:38:46,680 --> 00:38:50,279
Speaker 19: and sport was accessible, it was affordable. That experience has

724
00:38:50,400 --> 00:38:53,800
Speaker 19: been transformed over the past twenty twenty five years.

725
00:38:54,800 --> 00:38:57,880
Speaker 5: Tom Ferry is the founder and executive director of the

726
00:38:57,880 --> 00:39:01,759
Speaker 5: Aspen Institutes Sports and Society Program. He has studied the

727
00:39:01,760 --> 00:39:03,440
Speaker 5: growing industry for decades.

728
00:39:03,960 --> 00:39:07,040
Speaker 19: The growth really started with the travel team industry. So

729
00:39:07,080 --> 00:39:10,040
Speaker 19: in the nineteen seventies and for most of the nineteen eighties,

730
00:39:10,520 --> 00:39:14,880
Speaker 19: youth sports were dominated by local, low cost in town

731
00:39:14,960 --> 00:39:21,640
Speaker 19: recreation leagues, and then hockey, and then basketball and baseball

732
00:39:21,840 --> 00:39:24,960
Speaker 19: and soccer and other sports. Really in the nineteen nineties

733
00:39:25,360 --> 00:39:29,359
Speaker 19: in the early aughts really discovered the idea of youth

734
00:39:29,400 --> 00:39:34,840
Speaker 19: sports tourism, building these large what we call megacilities in

735
00:39:34,920 --> 00:39:39,759
Speaker 19: places like you know, central Florida or Indiana or Arizona,

736
00:39:40,520 --> 00:39:44,400
Speaker 19: with many fields or gyms where you could attract teams

737
00:39:44,440 --> 00:39:47,239
Speaker 19: and host these large tournaments and make a lot of

738
00:39:47,239 --> 00:39:51,040
Speaker 19: money from parents who are paying for fees or watching

739
00:39:51,080 --> 00:39:55,200
Speaker 19: their kids play, or local hotel rooms which the tournament

740
00:39:55,280 --> 00:39:59,360
Speaker 19: organizers get a cut of. So once the youth Sport

741
00:39:59,520 --> 00:40:04,799
Speaker 19: Tours thing was put in place, then we saw the

742
00:40:04,880 --> 00:40:08,400
Speaker 19: explosive growth of the travel team industry and ultimately the

743
00:40:08,440 --> 00:40:13,040
Speaker 19: pushing aside of these local, low cost recreational leagues that

744
00:40:14,880 --> 00:40:18,320
Speaker 19: once existed really up through eighth grade and now often

745
00:40:18,360 --> 00:40:21,280
Speaker 19: disappear around third or fourth grade from most kids.

746
00:40:21,680 --> 00:40:24,440
Speaker 5: Who's paying that money? I mean, if it's the parents,

747
00:40:24,480 --> 00:40:26,640
Speaker 5: I mean not all parents can afford that kind of.

748
00:40:26,560 --> 00:40:30,479
Speaker 19: Expense, right, So that's part of the challenge is once

749
00:40:30,520 --> 00:40:34,400
Speaker 19: you introduce these travel teams at ever earlier ages, you

750
00:40:34,480 --> 00:40:38,000
Speaker 19: structurally begin to push aside the kids from the lower

751
00:40:38,080 --> 00:40:40,600
Speaker 19: income home, sometimes a kid from the middle income home

752
00:40:41,000 --> 00:40:45,759
Speaker 19: whose family can't afford them, especially if they have two, three, four,

753
00:40:45,960 --> 00:40:47,920
Speaker 19: five kids. You can't do this for every kid, and

754
00:40:47,960 --> 00:40:49,640
Speaker 19: you also don't have the time for it.

755
00:40:50,920 --> 00:40:54,239
Speaker 5: Yes, for the most part, as costs rise, parents have

756
00:40:54,320 --> 00:40:58,360
Speaker 5: continued to show a willingness to pay, and big business

757
00:40:58,640 --> 00:41:02,680
Speaker 5: is taking notice. IMG Sports Academy was acquired for more

758
00:41:02,719 --> 00:41:06,080
Speaker 5: than one billion dollars in twenty twenty three, and other

759
00:41:06,280 --> 00:41:08,920
Speaker 5: high profile investors are looking to get a slice of

760
00:41:08,960 --> 00:41:10,600
Speaker 5: the youth sports pie.

761
00:41:11,239 --> 00:41:15,240
Speaker 19: It's a great environment for private equity to get into. Yeah,

762
00:41:15,320 --> 00:41:18,760
Speaker 19: you look at this messy space. You begin to buy companies,

763
00:41:18,800 --> 00:41:22,759
Speaker 19: you roll them up, you cansolidate, you know, move to

764
00:41:22,920 --> 00:41:25,680
Speaker 19: as best as possible, sort of a vertical integration. There

765
00:41:25,719 --> 00:41:30,640
Speaker 19: are no rules around what private equity can or cannot

766
00:41:30,680 --> 00:41:33,600
Speaker 19: do in this space, as there are at the professional level.

767
00:41:34,160 --> 00:41:37,560
Speaker 19: It's a big, messy environment and an exciting environment for

768
00:41:37,600 --> 00:41:41,600
Speaker 19: private equity. Not all of them are doing the same thing.

769
00:41:42,000 --> 00:41:45,800
Speaker 19: Some of them are really super focused on the elite environment,

770
00:41:46,000 --> 00:41:48,400
Speaker 19: ringing more and more money out of families under the

771
00:41:48,440 --> 00:41:50,360
Speaker 19: idea that your kid might be a lead.

772
00:41:51,080 --> 00:41:54,520
Speaker 5: And the word might is doing the heavy lifting. A

773
00:41:54,520 --> 00:41:57,839
Speaker 5: recent study found eleven percent of parents believe their child

774
00:41:57,960 --> 00:42:02,319
Speaker 5: could go pro, but the actual chances are tiny. Out

775
00:42:02,360 --> 00:42:06,200
Speaker 5: of ten thousand high school players, fewer than sixteen will

776
00:42:06,200 --> 00:42:09,080
Speaker 5: be drafted by a major League baseball team, and the

777
00:42:09,080 --> 00:42:14,120
Speaker 5: odds are even longer for the NBA and NFL. But

778
00:42:14,280 --> 00:42:16,440
Speaker 5: even if a young athlete may not make it to

779
00:42:16,480 --> 00:42:19,160
Speaker 5: the big leagues, there are a growing number of avenues

780
00:42:19,200 --> 00:42:22,719
Speaker 5: to see a return on investment. Name, image and likeness

781
00:42:22,800 --> 00:42:26,560
Speaker 5: deals offer college athletes and those even younger the chance

782
00:42:26,640 --> 00:42:29,719
Speaker 5: to make real money that goes far beyond the traditional

783
00:42:29,840 --> 00:42:34,799
Speaker 5: athletic scholarship. That's part of what drives new businesses like Overtime,

784
00:42:35,160 --> 00:42:37,040
Speaker 5: founded and led by Dan Porter.

785
00:42:37,560 --> 00:42:40,800
Speaker 20: We kind of started when we realized that this whole

786
00:42:40,880 --> 00:42:45,799
Speaker 20: generation gen z Jen Alpha now just wasn't watching television,

787
00:42:45,840 --> 00:42:48,520
Speaker 20: and they weren't watching live sports on television, but they

788
00:42:48,560 --> 00:42:52,080
Speaker 20: were watching all their favorite YouTubers and now their favorite TikTokers.

789
00:42:52,120 --> 00:42:55,920
Speaker 20: So in between that space of traditional sports media and digital,

790
00:42:56,239 --> 00:42:58,120
Speaker 20: we created a new sports entity.

791
00:42:58,440 --> 00:43:01,160
Speaker 3: And after five years of doing that and growing it.

792
00:43:01,120 --> 00:43:04,200
Speaker 20: Really big, we thought, okay, now we're this really big

793
00:43:04,239 --> 00:43:07,160
Speaker 20: sports media company for young people, but we don't actually

794
00:43:07,160 --> 00:43:09,960
Speaker 20: own anything. And we saw a bunch of opportunities and

795
00:43:10,000 --> 00:43:13,320
Speaker 20: we launched Overtime Elite, which is a basketball league, Overtime

796
00:43:13,360 --> 00:43:16,360
Speaker 20: Select which is a women's basketball league, and OT seven,

797
00:43:16,400 --> 00:43:17,480
Speaker 20: which is a football league.

798
00:43:17,520 --> 00:43:20,200
Speaker 3: It's our left sun. That's a touchdown.

799
00:43:20,480 --> 00:43:22,640
Speaker 20: So now we're I guess in business school they would

800
00:43:22,640 --> 00:43:25,839
Speaker 20: say vertically integrated in that we both own the IP

801
00:43:26,040 --> 00:43:26,800
Speaker 20: and we also.

802
00:43:26,640 --> 00:43:29,680
Speaker 5: Distribute made up of some of the best sixteen to

803
00:43:29,680 --> 00:43:32,920
Speaker 5: twenty year olds in their sports. It's elite competition paired

804
00:43:32,960 --> 00:43:36,600
Speaker 5: with a platform that lets athletes build their brand and

805
00:43:36,640 --> 00:43:40,080
Speaker 5: their earning power along the way. How does it overtime

806
00:43:40,160 --> 00:43:42,600
Speaker 5: path compare with what we think of as a traditional one.

807
00:43:42,600 --> 00:43:44,879
Speaker 5: You go to high school and you play college ball,

808
00:43:44,960 --> 00:43:47,320
Speaker 5: maybe you end up in pros. How does it compare?

809
00:43:47,360 --> 00:43:48,120
Speaker 5: How does it fit up?

810
00:43:48,320 --> 00:43:48,800
Speaker 3: Yeah?

811
00:43:48,880 --> 00:43:52,640
Speaker 20: I would say in general, you know, if you look

812
00:43:52,640 --> 00:43:56,600
Speaker 20: at basketball or football, there's maybe twenty five or thirty

813
00:43:56,640 --> 00:44:00,759
Speaker 20: five kind of schools or platforms us that play a

814
00:44:00,840 --> 00:44:01,880
Speaker 20: national program.

815
00:44:02,160 --> 00:44:04,160
Speaker 3: I always say, there's I don't know, thirty two.

816
00:44:04,080 --> 00:44:08,680
Speaker 20: Thousand high schools in America, and thirty one nine hundred

817
00:44:08,680 --> 00:44:10,359
Speaker 20: and fifty of them will keep doing the same thing

818
00:44:10,360 --> 00:44:11,320
Speaker 20: that they've always done.

819
00:44:11,600 --> 00:44:14,200
Speaker 3: They'll play their local school, they'll do other stuff.

820
00:44:14,400 --> 00:44:20,040
Speaker 20: But there are these national programs that play and that

821
00:44:20,200 --> 00:44:22,320
Speaker 20: invest a lot of money in where all the best

822
00:44:22,360 --> 00:44:25,800
Speaker 20: players gravitate. And so it is kind of a little

823
00:44:25,800 --> 00:44:28,279
Speaker 20: bit of tiered system. For those people who say, oh,

824
00:44:28,320 --> 00:44:29,960
Speaker 20: I remember when I was in high school, we just

825
00:44:30,000 --> 00:44:30,799
Speaker 20: did a.

826
00:44:30,760 --> 00:44:32,080
Speaker 3: Lot of that still exists.

827
00:44:32,560 --> 00:44:36,359
Speaker 20: It's just that both the demand from the audience as well,

828
00:44:36,440 --> 00:44:40,320
Speaker 20: is from the best possible players playing in high school.

829
00:44:40,320 --> 00:44:43,160
Speaker 20: If you're really good and scoring one hundred points on

830
00:44:43,280 --> 00:44:45,799
Speaker 20: somebody who's going to be your local dentist or real

831
00:44:45,920 --> 00:44:49,120
Speaker 20: estate agent isn't as desired as it once was.

832
00:44:49,360 --> 00:44:51,520
Speaker 5: Do the parents pay you? Do you pay the parents?

833
00:44:51,560 --> 00:44:52,480
Speaker 5: How does the money flow?

834
00:44:53,000 --> 00:44:54,399
Speaker 3: The parents don't pay us.

835
00:44:54,600 --> 00:44:57,880
Speaker 20: There are of course academies across the country where parents

836
00:44:57,960 --> 00:45:01,520
Speaker 20: do pay for us. Where a media product, So the

837
00:45:01,640 --> 00:45:06,320
Speaker 20: economics go through sponsorship in media and then NIL exists

838
00:45:06,360 --> 00:45:08,520
Speaker 20: at the high school level as well as the college level,

839
00:45:08,600 --> 00:45:11,640
Speaker 20: so there's always going to be a small number of

840
00:45:11,680 --> 00:45:14,520
Speaker 20: players who get paid if you want.

841
00:45:15,120 --> 00:45:18,480
Speaker 5: As earning potential for athletes expands, so do the business

842
00:45:18,480 --> 00:45:22,640
Speaker 5: opportunities around them, changing the economics of the system.

843
00:45:23,040 --> 00:45:28,520
Speaker 20: Until five, six seven years ago, all sports teams were

844
00:45:29,000 --> 00:45:32,319
Speaker 20: owned by families mostly or occasionally companies. There was no

845
00:45:32,360 --> 00:45:35,799
Speaker 20: private equity in sports. There weren't a lot of investment opportunities.

846
00:45:35,880 --> 00:45:40,360
Speaker 20: That's clearly changed. So what happens when that starts to

847
00:45:40,360 --> 00:45:43,759
Speaker 20: get saturated at the pro level, It moves to the

848
00:45:43,800 --> 00:45:49,040
Speaker 20: college level and NIL and conference readjustment and television rights

849
00:45:49,360 --> 00:45:52,279
Speaker 20: now see a lot of money pouring into the college level. Well,

850
00:45:52,280 --> 00:45:54,839
Speaker 20: now that you know that picture is overflowing and going

851
00:45:54,920 --> 00:45:56,120
Speaker 20: to the high school level.

852
00:45:56,280 --> 00:46:01,880
Speaker 5: Be it nil college scholarships, leagues, life overtime, or playing

853
00:46:01,880 --> 00:46:04,759
Speaker 5: for the Yankees, there are more pathways for kids to

854
00:46:04,760 --> 00:46:07,680
Speaker 5: see a return on investment. But Tom Ferry says that

855
00:46:07,920 --> 00:46:11,160
Speaker 5: just encourages parents to spend even more money.

856
00:46:11,600 --> 00:46:18,360
Speaker 19: This whole industry is built on incentives, and those incentives

857
00:46:18,400 --> 00:46:22,200
Speaker 19: have changed dramatically over the past thirty or so years.

858
00:46:22,680 --> 00:46:25,600
Speaker 19: So in the early nineteen nineties, there was about two

859
00:46:25,680 --> 00:46:29,560
Speaker 19: hundred and fifty million dollars a year in athletic aid

860
00:46:29,800 --> 00:46:32,799
Speaker 19: that was handed out by Division IE in Division two

861
00:46:32,920 --> 00:46:37,919
Speaker 19: universities in the ncaa quarter million dollars. Today, that's north

862
00:46:37,960 --> 00:46:42,600
Speaker 19: of four billion dollars. So that's a lot of chum

863
00:46:42,640 --> 00:46:45,240
Speaker 19: that has been thrown in the water of youth sports,

864
00:46:45,840 --> 00:46:48,680
Speaker 19: and it's making the fish. The parents a little bit crazy.

865
00:46:48,719 --> 00:46:50,920
Speaker 19: They want them, They think this is an actual meal.

866
00:46:51,640 --> 00:46:54,600
Speaker 19: What they don't realize is it's really still hard to

867
00:46:55,520 --> 00:46:57,480
Speaker 19: get your kid a college scholarship.

868
00:46:58,719 --> 00:47:01,400
Speaker 5: For families like the Hoffmann, they know it's a long

869
00:47:01,760 --> 00:47:05,200
Speaker 5: and expensive road to see their son Brayson chase his dream,

870
00:47:05,960 --> 00:47:08,319
Speaker 5: but it's one they're willing to take.

871
00:47:09,400 --> 00:47:13,160
Speaker 18: Every single time Brayson like kind of reaches the next level,

872
00:47:13,840 --> 00:47:17,239
Speaker 18: I have like a moment is what I usually call it,

873
00:47:17,280 --> 00:47:20,040
Speaker 18: Like I'll have a moment, I'll get emotional, Like the

874
00:47:20,040 --> 00:47:22,279
Speaker 18: first time, you know he goes onto like he went

875
00:47:22,280 --> 00:47:25,040
Speaker 18: onto a high school baseball field, I was like wow.

876
00:47:25,200 --> 00:47:29,640
Speaker 18: I was like, Okay, we're making progress, we'moving. I don't

877
00:47:29,680 --> 00:47:33,520
Speaker 18: doubt he will make it because he's focused and driven

878
00:47:34,160 --> 00:47:37,120
Speaker 18: and it's what he wants and we'll see him.

879
00:47:37,000 --> 00:47:37,480
Speaker 2: There one day.

880
00:47:39,840 --> 00:47:41,680
Speaker 5: That does it for us here at Wall Street Week,

881
00:47:41,840 --> 00:47:45,040
Speaker 5: I'm David Weston. See you next week for more stories

882
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Speaker 5: of capitalism