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Speaker 3: While it is Thanksgiving week, it certainly has not been
Speaker 3: slow in terms of newsflow. Much coming from the President
Speaker 3: elect Donald Trump, including last night his threat on True
Speaker 3: Social to pose higher tariffs on the US's three largest
Speaker 3: trading partners twenty five percent on all goods coming from
Speaker 3: Mexico and Canada and an additional ten percent on all
Speaker 3: goods from China. The President elect says this is necessary
Speaker 3: to clamp down on migrants and illegal drugs like fentanyl
Speaker 3: coming over the US border. And keep in mind here
Speaker 3: he had floated tariffs much higher than this during the
Speaker 3: course of his president campaign. He threw sixty percent out
Speaker 3: there for China. So we want to turn now to
Speaker 3: someone who focuses on China extensively in the House of
Speaker 3: Representatives by sitting on the House China Select Committee. Democratic
Speaker 3: Congressman Jake Auchencloss of Massachusetts is here with me now
Speaker 3: on Bloomberg TV and Radio. Congressman, thanks for your time.
Speaker 3: As we considered the authority Donald Trump would use to
Speaker 3: do this if he indeed follows through on this threat,
Speaker 3: it really is about protecting US national security interest in
Speaker 3: large part. Is this a justified means to an end.
Speaker 4: Good afternoon, Thanks for having me on. Before we talk
Speaker 4: about the politics and the legality, I think it's helpful
Speaker 4: to start with the facts of the matter. I'm the
Speaker 4: co chair of the Fentanyl Working Group. I'm on the
Speaker 4: Joint Task Force for combating the Mexican Drug Cartel, so
Speaker 4: I've been able to see both sides of this problem.
Speaker 4: And the facts are this. The Chinese are exporting about
Speaker 4: ninety seven percent of all fentanyl precursors to either the
Speaker 4: West coast of Mexico, where it then gets channeled into
Speaker 4: the United States, or to the United States. It's causing
Speaker 4: about one hundred thousand American deaths every year, about a
Speaker 4: nine to eleven every week. The Mexican drug cartels are
Speaker 4: absolutely part of this supply chain, both through trafficking and
Speaker 4: also through money laundering, and yes, as the Mexican President said,
Speaker 4: they are also being equipped by US arm sales going
Speaker 4: to the South. So there are no clean hands in
Speaker 4: this problem. But what is for certain is that Donald
Speaker 4: Trump's knee jerk approach to using tariffs right off the
Speaker 4: bat does two things. One, it removes his most potent
Speaker 4: leverage as opposed to using an escalatory ladder starting with
Speaker 4: other more targeted reprisals to Chinese exports.
Speaker 5: And two, it's.
Speaker 4: Gonna raise prices on Americans. It's gonna raise prices on
Speaker 4: Americans for car insurance, for housing, and it's also going
Speaker 4: to compress wages for American employees who are working for
Speaker 4: companies that now have smaller end markets.
Speaker 3: Okay, well, so if we consider that this notion that
Speaker 3: these things do need to be calibrated, is there a
Speaker 3: level of tariff you think would be appropriate to put
Speaker 3: in place to use his leverage to get more favorable
Speaker 3: outcomes when it comes to the flow of things over
Speaker 3: the US border, both people and illegal drugs as Donald
Speaker 3: Trump suggests, or is this not the right way of
Speaker 3: approaching this policy?
Speaker 4: Putting tariffs on the table as negotiating leverage is not
Speaker 4: a bad idea. And by the way, Donald Trump didn't
Speaker 4: invent that. I know he likes to claim that he's
Speaker 4: the person who thought of the idea of mutual market
Speaker 4: access being a negotiating tactic.
Speaker 2: He's not.
Speaker 4: US trade representatives have been using that for time immemorial.
Speaker 4: Here's the more targeted approach, though. There's about two dozen
Speaker 4: Chinese manufacturers who account for the vast majority of this
Speaker 4: fentanyl active pharmaceutical ingredients, and these Chinese manufacturers actually have
Speaker 4: a lot of illicit business as well as illicit business
Speaker 4: that means they are highly susceptible to sanctions. So step
Speaker 4: number one is the United States needs to impose and
Speaker 4: draconiously enforce very tough sanctions on Chinese chemical manufacturers that
Speaker 4: are shipping fentanol. Number two, we should be charging docking
Speaker 4: fees on Chinese ships coming to ports, and we can
Speaker 4: escalate those docking fees until they get better screening and
Speaker 4: customs process on their end. We can also establish a
Speaker 4: joint Task Force Counter Opioid that would fuse together various
Speaker 4: organs of US state power, intelligence, law enforcement, customs, immigration
Speaker 4: to targeting fentanmol shipments into the United States, whether by
Speaker 4: air or by sea. And finally, we should totally get
Speaker 4: rid of the dominimus exemption that Chinese both lisit and
Speaker 4: illicit manufacturers have been abusing to ship in projects to
Speaker 4: the United States. All of these things that I just
Speaker 4: said don't raise the price of car insurance for the
Speaker 4: average American family, don't raise the price of housing for
Speaker 4: the average American family, but they still get the point
Speaker 4: across to China.
Speaker 3: Well, and in many of those things you just said
Speaker 3: also involve other cabinet officials. Presumably will are other departments
Speaker 3: at the very least Treasury for the enforcement of sanctions,
Speaker 3: tariffs obviously there as well the Secretary of State potentially
Speaker 3: to handle with the diplomacy aspects. And when we consider
Speaker 3: the individuals that the President elect has selected for those posts,
Speaker 3: does that give you more confidence about the way China
Speaker 3: policy is going to be approached under this administration.
Speaker 4: Well, as I look at the opioid epidemic cascading over
Speaker 4: the United States, and then I look at the nominee
Speaker 4: for Health and Human Services secretary, No, that doesn't fill
Speaker 4: me with confidence because he starts by looking at problems
Speaker 4: from a position of conspiracy, not from a position of science.
Speaker 4: RFK is somebody who doesn't believe that AIDS is caused
Speaker 4: by a virus. He thinks the high speed internet causes
Speaker 4: leaky brain syndrome. He thinks that COVID was ethnically targeted
Speaker 4: to spare Jews in Chinese and target black Americans. So
Speaker 4: this is not an individual that I trust to look
Speaker 4: at the evidence and take a rational and science informed
Speaker 4: view of how we reduce opioid deaths and how we
Speaker 4: tackle fentanyl imports to the United States. But this is
Speaker 4: why it is so critical that Congress mandated joint task
Speaker 4: force kind of opioid that brings together all the various
Speaker 4: elements of US state power and makes fentanyl a priority.
Speaker 4: Because there's really two short term things that we want
Speaker 4: from China in my opinion, One stop exporting fentanyl to
Speaker 4: the United States and two stop importing Irani and oil
Speaker 4: that is funding these proxy terror groups in the Middle East.
Speaker 4: We can accomplish those two things in the first year,
Speaker 4: but not if Donald Trump punishes American citizens with higher
Speaker 4: prices as opposed to punishing China.
Speaker 3: Well, I'm glad, Congressman that you raised the Middle East,
Speaker 3: because we're watching that as well today. In fact, any
Speaker 3: minute now, we're expecting we will hear from Israeli Prime
Speaker 3: Minister Benjamin Netanyahu. As we've been made to understand both
Speaker 3: by Israeli officials but even the US Secretary of State
Speaker 3: Anthony Blincoln as well, that a ceasefire agreement with Lebanon
Speaker 3: or with Hesbola in Lebanon is within reach. We've talked
Speaker 3: to you extensively about the conflict between Israel and these
Speaker 3: proxies on this program. Congressman, how do you feel about
Speaker 3: the pros of this being done and what it might
Speaker 3: mean for a potential ceasefire in Gaza as well?
Speaker 4: We should be cautious that they are distinct issues. What's
Speaker 4: going to be critical for any ceasefire agreement with Hisbela,
Speaker 4: in my view, is that these Israelis who have been
Speaker 4: displaced from their homes and communities in northern Israel because
Speaker 4: of indiscriminate Hbela rocket fire need to be able to
Speaker 4: return back to their homes. And we also need to
Speaker 4: see that Hisbela is not going to relocate to the
Speaker 4: southern border of Lebanon and be able to continue their
Speaker 4: launching of precision guided munitions, but rather that the Lebanese
Speaker 4: Army will gain operational control of that area so that
Speaker 4: the two thousand and six agreement can really be honored,
Speaker 4: which is that there needs to be that buffer zone.
Speaker 4: Gaza really remains a separate issue, and I think we
Speaker 4: should be cautious about interlocking them too much. Of course,
Speaker 4: every ceasefire agreement is progress, but in Gaza it still
Speaker 4: comes down to those hostages. We have human beings held
Speaker 4: underground in terror tunnel and they need to be released home.
Speaker 4: And Israel has every right to continue to operation, to
Speaker 4: operate against Hamas until those hostages are home.
Speaker 3: Well, and we know that's something that the President has
Speaker 3: been trying advocating for the last year or more. Congressman,
Speaker 3: he has fifty five days left to go before Donald
Speaker 3: Trump takes over. What would it mean if some ceasefire
Speaker 3: agreement at least a greater degree of peace in the
Speaker 3: Middle East can be achieved before President Biden leaves office.
Speaker 4: Every president has aspired to that since Jimmy Carter and
Speaker 4: onwards right, So of course every president used that as
Speaker 4: a golden ring to furnish their legacy. What would be
Speaker 4: really critical for Joe Biden, I think, is a hostage
Speaker 4: deal for Gaza that got these hostages home and that
Speaker 4: also transitioned towards Palestinian led Arab finance, Western backed reconstruction
Speaker 4: of Gaza that respects Israel's security. That is the pinnacle
Speaker 4: of a Israel Gaza accord. I think the second thing
Speaker 4: that he can do within these next fifty five days
Speaker 4: is enforce the oil export sanctions against Iran with more
Speaker 4: muscle and vigor. Iran is exporting about ninety percent of
Speaker 4: its oil to China, and it's using that hard currency
Speaker 4: one to keep its own regime afloat, but two to
Speaker 4: fund these proxetaria groups across the Middle East. And what
Speaker 4: we saw with Israel's attack against Iran is that Iran
Speaker 4: is significantly more vulnerable now than it was even six
Speaker 4: months ago. And I think when it's in a position
Speaker 4: of weakness is when you want to pounce.
Speaker 3: All right, Congressman, thank you so much for joining me.
Speaker 3: Congressman Jake Auchincloss, the Democrat from Massachusetts.
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Speaker 3: The Israeli Prime Minister Benjamin Netnia, who has just begun
Speaker 3: his televised remarks, will of course bring you the headlines
Speaker 3: from this as we get them, but we want to
Speaker 3: add the voice as we await the news here of
Speaker 3: Evelyn Farcas. She's executive director of the McCain Institute, joining
Speaker 3: us now here on Bloomberg TV and Radio Evelyn, as
Speaker 3: we await the words of Netna who and clarity as
Speaker 3: to whether or not an agreement has been reached. The
Speaker 3: reporting suggests that this would be temporary sixty day ceasefire.
Speaker 3: How if it is agreed to, do you make sixty
Speaker 3: days something more permanent?
Speaker 6: Kayley, thank you for having me on. I think it
Speaker 6: needs to be really considered what kind of armed force
Speaker 6: might be in there to reinforce this agreement, because if
Speaker 6: there's no enforcement, I'm afraid the agreement won't hold. And
Speaker 6: there have been various proposals. Perhaps the IDF could go
Speaker 6: in there. It would of course require the United Nations
Speaker 6: to agree to that, which is a difficult proposition right now,
Speaker 6: given the perspective that a lot of the United Nations
Speaker 6: members have on Israel and the Israeli defense forces. You
Speaker 6: know how they have been fighting in Gaza.
Speaker 3: Well, we are nataniahu is speaking as we mentioned Evelyn
Speaker 3: in Hebrew, we understand. But initially the first read of
Speaker 3: his comments in part say that he says the war
Speaker 3: will not end until residents can return to the North
Speaker 3: and all goals are accomplished, including that safe return. And
Speaker 3: it does raise the question of the goals Israel had
Speaker 3: here at the outset Evelyn, and to what extent they
Speaker 3: have been largely achieved. And that doesn't just go for
Speaker 3: in Lebanon, but in Gaza.
Speaker 7: As well well.
Speaker 6: I think Killy clearly, the Israeli government has managed to
Speaker 6: neutralize Hesbala as a threat, and in doing so it
Speaker 6: has significantly weakened Iran, leaving a side of course, or
Speaker 6: let's add to it what Israel has done in Gaza
Speaker 6: and what Israel has done directly in Iran. So Iran
Speaker 6: is much weakened. So there is an opportunity now to
Speaker 6: put pressure on Iran to make a bigger deal, meaning
Speaker 6: to stop the fighting through the power they have over
Speaker 6: Hamas in Gaza. And there's an opportunity to maybe get
Speaker 6: Iran's nuclear program back in the box.
Speaker 4: If you will.
Speaker 3: Yeah, and Netanyahu is now saying that he's determined to
Speaker 3: prevent Iran from having nuclear arms. So we're talking about
Speaker 3: the same thing here, Evelyn, and I do wonder if
Speaker 3: the role you think Iran has in the knowledge that
Speaker 3: it is going to take Iranian blessing, you would think
Speaker 3: or at least allowance of, but it's proxy Hesbela to
Speaker 3: agree to a deal like this with Israel. If one
Speaker 3: is to be reached, I wonder what it signals to you,
Speaker 3: knowing that their proxies have been weakened, if Iran is
Speaker 3: going to sanction this.
Speaker 6: Yeah, I mean I think Iran probably doesn't have a choice.
Speaker 6: Hesbela is significantly weakened. They probably want a break, if
Speaker 6: you will, a break from the fighting. My guess is
Speaker 6: that hesbe Lah would you know, probably be itching or
Speaker 6: would be willing to conduct more attacks against Israel in
Speaker 6: the future. That's why I think there needs to be
Speaker 6: some kind of mechanism for enforcement. But I don't think
Speaker 6: Iran has much of a choice. If Hesbela says we
Speaker 6: can't hold out, and if Iran wants to take some
Speaker 6: of the pressure off of itself again minimize the likelihood
Speaker 6: that Israel might do something further to further weaken Iran,
Speaker 6: whether it's in their nuclear facilities or elsewhere. I think
Speaker 6: Iran might be feeling like this is a good deal
Speaker 6: for the moment.
Speaker 3: Well, and Iran also knows, as does Israel and Netan Yahoo,
Speaker 3: as do the Iranian proxies, that fifty five days from
Speaker 3: now there will be a different US administration in place.
Speaker 3: Donald Trump will be the president and commander in chief.
Speaker 3: And I wonder at the extent to which Evelyn, you
Speaker 3: think that is factoring in to the timing of this,
Speaker 3: as it's been months of pushing for a deal like
Speaker 3: this one, and now three weeks after the election, it
Speaker 3: does seem like it could come to fruition.
Speaker 2: Yeah.
Speaker 6: I think Iran is definitely concerned about what will happen
Speaker 6: under US government led by President Trump. We know from
Speaker 6: media accounts that Iran tried to assassinate him, so they
Speaker 6: clearly didn't want him to be our next president. They
Speaker 6: are worried about this because Donald Trump has taken a
Speaker 6: hard line against Iran, so I would think that they're
Speaker 6: eager to have this deal. The Israelis, I think, would
Speaker 6: be more likely to drag this out and offer a
Speaker 6: peace agreement, even if it's temporary with Hezbollah as a
Speaker 6: gift to incoming President Trump. So I'm a little bit skeptical, Kelly,
Speaker 6: that this is going to get signed before the inauguration
Speaker 6: on January twentieth.
Speaker 3: Okay, So, and it is worth pointing out as we're
Speaker 3: and if you're with us here on Bloomberg TV, you
Speaker 3: see that Israeli Prime Minister Benjamin Etnia who is still speaking.
Speaker 3: We have yet to see him specifically address a ceasefire
Speaker 3: or to hear from him on that. We're still waiting
Speaker 3: for that news, Evelyn. But fifty five days, I guess,
Speaker 3: is not that long of a time. And what the
Speaker 3: question I started with this notion that it could be
Speaker 3: a sixty day secession of hostilities window that would essentially
Speaker 3: bring us what five days in to a Trump presidency.
Speaker 3: How could that play in here? They say we'll pause
Speaker 3: things for now, but when Trump comes back, we're revisiting this.
Speaker 6: Yeah, I mean as possible, And maybe Israel thinks that
Speaker 6: that they'll be in a better position then I think
Speaker 6: they will be, frankly, given the relationship between Primis Yahu
Speaker 6: and President Trump. So that is another option they could
Speaker 6: sign now. And then, as you point out, I hadn't
Speaker 6: done the map, then the gifts to President Trump is
Speaker 6: a chance to revisit and chance to make another deal.
Speaker 3: Well, we just heard from that Neahu saying the duration
Speaker 3: of the truce in Lebanon depends on developments. He says,
Speaker 3: if Hesbela chooses to rearm, then Israel will attack once again.
Speaker 3: As we consider here, Evelyn, this notion that things can
Speaker 3: be temporary or they could be longer in duration, depending
Speaker 3: on the decisions here of the Iranian proxies. You were
Speaker 3: just speaking about this notion that they have been materially weakened,
Speaker 3: commanders taken out infrastructure targeted by Israeli strikes. How long,
Speaker 3: realistically would it take Hesbela to reconstitute them themselves to
Speaker 3: be in the position to be as great a threat
Speaker 3: to Israel as it was beginning on October eighth and
Speaker 3: through now.
Speaker 6: It's hard for me to say that's really kind of
Speaker 6: a military question. Clearly, they lost a lot of manpower.
Speaker 6: The people who'se you know, hands were blown off. They
Speaker 6: are not likely to be fighters, so they need to
Speaker 6: be replaced. They need to replace their weaponry, because of
Speaker 6: course we know Israel has taken out large stockpiles all
Speaker 6: the places where Hesbola had kept their weapons, those have
Speaker 6: been eliminated. I don't think it takes that long, so
Speaker 6: you know, probably maybe six months to a year. So
Speaker 6: this isn't a window of opportunity for Israel, certainly, and
Speaker 6: I would imagine that the Iranians and Hesbola would be
Speaker 6: interested in, you know, quickly going to a ceasefire so
Speaker 6: that they can take advantage and try to rebuild.
Speaker 3: And just again reminding our audience on Bloomberg TV and
Speaker 3: Radio that Israeli Prime Minister Benjamin Netnia who is speaking
Speaker 3: suggesting now that he will be bringing a truce agreement
Speaker 3: in Lebanon to the Cabinet for cabinet approval, which of
Speaker 3: course we understood that the cabinet was meeting today, so
Speaker 3: that might suggest this has not been fully agreed to yet, Evelyn.
Speaker 3: We also thought we might hear from President Biden today.
Speaker 3: I suppose we still could before he travels to Nantucket
Speaker 3: for Thanksgiving. And that plays into the fact that it
Speaker 3: was not just the US at the table here in
Speaker 3: these negotiations. In part, this agreement was negotiated with the
Speaker 3: help of France and French President Emmanuel and Crone. We
Speaker 3: understand was involved here. What do you make of the
Speaker 3: role of another ally, another mediating force in this, knowing
Speaker 3: of course that there were many mediators at play in
Speaker 3: the talks that have yet to come to a fruitful
Speaker 3: ceasefire deal when it comes to Israel and Hamas.
Speaker 6: Yeah, it is interesting that the French were involved. Of course,
Speaker 6: the French have a long history in and with Lebanon,
Speaker 6: and so they want to maintain their relevance in the
Speaker 6: Middle East. So I would imagine that was part of
Speaker 6: what was motivating France. But clearly they would also like
Speaker 6: to tamp down the danger that we're going to have
Speaker 6: a wider war in the Middle East involving Iran and
Speaker 6: Israel continuing to target one another directly. That's dangerous for
Speaker 6: the world, frankly, and so I think France was motivated
Speaker 6: to try to help us with the diplomacy. The Lebanese government,
Speaker 6: of course, is also involved because we the United States,
Speaker 6: we don't deal directly with Hezbolah because they're terrorist organizations.
Speaker 6: So the Lebanese government was essentially doing some of that
Speaker 6: go between work.
Speaker 3: Well, that is an important point. There's obviously a distinction
Speaker 3: between the Lebanese government and Hezbola forces to reiterate. Netanyahu
Speaker 3: here is saying that he will bring the Lebanon truce
Speaker 3: agreement to the Security Cabinet for a vote, suggesting that
Speaker 3: vote has not happened yet, though he does say the
Speaker 3: truce proposed will help isolate Hamas and free hostages. We
Speaker 3: also just had a headline cross the Bloomberg Terminal that
Speaker 3: ten minutes from now, at least scheduled ten minutes from
Speaker 3: now one thirty pm Eastern time, Biden will be delivering
Speaker 3: remarks at the White House. I would presume, Evelyn, those
Speaker 3: remarks would pertain to this just before I let you go,
Speaker 3: knowing he is in the final weeks here of his presidency,
Speaker 3: which is fifty five days to go. As we've discussed,
Speaker 3: what would it mean if this can be achieved under
Speaker 3: this president in particular, who has been pushing for a
Speaker 3: ceasefire and said he wants part of his legacy to
Speaker 3: be greater peace in the Middle East.
Speaker 6: Well, it would mean that he has achieved, of course,
Speaker 6: that objective, and he will have brought some peace to
Speaker 6: the Middle East. In the aftermath of the horrible attack
Speaker 6: that was conducted by Lebanese proxies by Hamas out of Gaza.
Speaker 6: And then of course the fact that the Hesbola struck
Speaker 6: Israel again the first time since, you know, in a
Speaker 6: massive way, since the two thousand and six negotiations to
Speaker 6: end the conflict between Hesbela and Israel in the north.
Speaker 6: So it would be an achievement certainly, that would bring
Speaker 6: us closer to It will bring some peace, and it'll
Speaker 6: allow the people, the Israeli people to go back and
Speaker 6: live in the north and also the Lebanese people to
Speaker 6: live in their south. But it wouldn't solve the Hamas.
Speaker 6: It might make it easier to solve Hamas, but those
Speaker 6: are very different situations, so I'm a bit skeptical as
Speaker 6: to whether that would open the door wide enough.
Speaker 3: All right, Evelyn, appreciate you joining us as we work
Speaker 3: through these headlines from the Israeli Prime Minister Benjamin Netanyahu.
Speaker 3: Evelyn Farcas, Executive Director of the McCain Institute.
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Speaker 3: We want to assemble our signature political panel. Rick Davis,
Speaker 3: Stone Court Capital Partner and Bloomberg Politics contributor. Also Bloomberg
Speaker 3: Politics contributor, Jeanie Shanzino, Senior demok Chrissy Fellow at the
Speaker 3: Center for the Study of the Presidency and Congress. Genie,
Speaker 3: I'd like to ask you the same question I just
Speaker 3: asked Evelyn. As we consider here a US president in
Speaker 3: his final weeks as Commander in chief, final weeks in
Speaker 3: the Oval office, what would it mean for President Biden
Speaker 3: if indeed a ceasefire between Israel and Hesbela is reached
Speaker 3: while he still holds that title.
Speaker 8: Yeah, it would be enormously important for President Biden. This
Speaker 8: is something he has been committed to, as Evelyn mentioned,
Speaker 8: since the October seventh horrific attack. He went right over
Speaker 8: to Israel. He is obviously a great friend of Israel,
Speaker 8: and so he would like to see this happen. That said,
Speaker 8: history doesn't sort of suggest that he should be incredibly optimistic,
Speaker 8: because Middle East peace has been one of the most
Speaker 8: confounding things for presidents in the modern era to get
Speaker 8: and to achieve, and they've all tried a left, right
Speaker 8: and center Republican Democrat, very hard to get to and
Speaker 8: you know, to hear and Yahoo say that he has
Speaker 8: an outline or there is an outline that the French
Speaker 8: and the US diplomats were able to negotiate and he's
Speaker 8: bringing it to the cabinet. I just keep wondering, in
Speaker 8: the back of Joe Biden's mind, is he thinking he
Speaker 8: is the next Jimmy Carter with the Iran hostages, that
Speaker 8: he is going to work this hard and Donald Trump
Speaker 8: will come in and on January twenty first, we will
Speaker 8: see an agreement. You know, it's hard to say, but
Speaker 8: that's got to be weighing in the back of his mind.
Speaker 8: It's going to be curious to see how he handles
Speaker 8: this when he speaks in a couple of minutes.
Speaker 3: Yeah, and we actually do have a correction here on
Speaker 3: the timeline. He'll be speaking now at two thirty pm
Speaker 3: Eastern Time from the Rose Garden at the White House,
Speaker 3: so just over one hour from now is when we
Speaker 3: expect those remarks.
Speaker 2: Rick.
Speaker 3: I'd love for you to weigh in on this kind
Speaker 3: of legacy shaping question as well, because we all remember
Speaker 3: when President Biden came into office, he was suggesting America's back.
Speaker 3: He made foreign policy a really key pillar of his presidency.
Speaker 3: Is it going to end on a foreign policy oriented note?
Speaker 9: Well, I think certainly foreign policy is going to be
Speaker 9: one of the things that shapes Joe Biden's legacy. You know,
Speaker 9: starting with the withdrawal from Afghanistan, you know, a horrific
Speaker 9: outcome for him and something that actually hurt his standing
Speaker 9: amongst the American people that sort of lasted all the
Speaker 9: way through to the election. But then you know, the
Speaker 9: vexing war in Ukraine. And even though many observers will
Speaker 9: say that Joe Biden's been a staunch advocate and supporter
Speaker 9: of Ukraine and fighting the war of Russian aggression, you know,
Speaker 9: there are just as many who will say he hasn't
Speaker 9: done enough quick enough to really end the war, but
Speaker 9: has now resulted in a prolonged conflict with no end
Speaker 9: in sight. And to some degree, this whole Israeli situation.
Speaker 9: You take it from the time that he got elected
Speaker 9: and that everyone was celebrating the Abraham Accords. People in
Speaker 9: his own administration were saying, you know, this is a
Speaker 9: peaceful situation, least could last for a long time. And
Speaker 9: then it was just after that that of course, Israel
Speaker 9: got the worst attack in their history, you know, from
Speaker 9: Hamas and lit up this war that we're now talking about.
Speaker 9: So yeah, this is definitely going to frame the foreign
Speaker 9: policy legacy of Joe Biden and frankly difficult to find
Speaker 9: real successes inside that legacy. And so on the domestic side,
Speaker 9: totally different equation. Has done a lot to get us
Speaker 9: out of COVID and restore the economic health of our country,
Speaker 9: But on foreign policy national security, I think it's going
Speaker 9: to be a spotty legacy at least unless we see
Speaker 9: how all this unwinds itself well.
Speaker 3: And to that point, Genies, we consider the domestic legacy
Speaker 3: foreign policy as well, how much of it, even as
Speaker 3: it stands now and when he leaves office, could be unround,
Speaker 3: unwound over the course of the next four years when
Speaker 3: Donald Trump gets his turn again.
Speaker 8: Yeah, that's the big fear of every president and it
Speaker 8: is absolutely possible. You know, as we think about Joe
Speaker 8: Biden talking at two thirty or when he comes out,
Speaker 8: I'm reminded that he was at the g twenty and
Speaker 8: he did not speak to the press for like almost
Speaker 8: a week, and so you know, it's unclear how he
Speaker 8: is going to move forward with his attempts to protect
Speaker 8: his legacy. And the efforts are widespread because, as you mentioned,
Speaker 8: as it comes to regulations, they started in February and
Speaker 8: March trying to protect those against a potential Republican takeover,
Speaker 8: which has now happened. As you think about legislation, just
Speaker 8: think about the Chips Act. Huge success for the Biden
Speaker 8: administration and the Democrats in Congress, and yet about thirty
Speaker 8: billion of that has not been spent yet, and you
Speaker 8: know it could be an issue of them running out
Speaker 8: of the time. And Rick was just talking about the
Speaker 8: policy legacy. So you look at this and he does
Speaker 8: have a lot of work to do to try to
Speaker 8: cement this legacy. And one thing we know that's how
Speaker 8: happening in Congress right now is the Senate is rushing
Speaker 8: as far as it can to confirm the rest of
Speaker 8: these judges because the Democrats will lose the Senate. All
Speaker 8: of this impacting Joe Biden's legacy. So it is a
Speaker 8: broad legacy. And of course Donald Trump he is you know,
Speaker 8: the Democrats and Joe Biden are firmly convinced he might
Speaker 8: do what he did in twenty seventeen and use the
Speaker 8: Congressional Review Act to unwind some of this and in
Speaker 8: EOS and that's very, very possible, so it is a
Speaker 8: challenge for them.
Speaker 3: Well, and something else President Biden has focused on is
Speaker 3: lowering the cost of prescription drugs, and we actually have
Speaker 3: a new proposal on that from the administration just today, Genie,
Speaker 3: proposing a rule that would require both Medicare and Medicaid
Speaker 3: to cover obesity drugs, the weight loss drugs we all
Speaker 3: have heard so much about in recent years. The White
Speaker 3: House says this will get more than seven million people
Speaker 3: access to weight loss treatment, but it also could add
Speaker 3: potentially forty billion dollars in costs over ten years in
Speaker 3: the process for these programs. So clearly he's trying to
Speaker 3: lower more prescription drug cost Genie. But does he still
Speaker 3: have time for it to do so to make this
Speaker 3: a reality?
Speaker 8: Yeah, yeah, And that was one of his big accomplishments,
Speaker 8: was the lowering of drug prices. They announced this, as
Speaker 8: you mentioned, the last twenty four hours, but they may,
Speaker 8: again to your point, run out of time. They also
Speaker 8: have to be cognizant that if we see say RFK
Speaker 8: Junior approved as HHS Secretary while he seems firmly and
Speaker 8: spoken a lot about you know better eating, exercise, and health,
Speaker 8: he has not been the biggest fan of these so
Speaker 8: called you know, weight loss drugs and prescription drugs. And
Speaker 8: so they have to understand that this could be reversed,
Speaker 8: pulled back by the next administration, particularly if they don't
Speaker 8: move with all deliberate speed. So they're trying to move
Speaker 8: in this direction, but they've only got about a month
Speaker 8: left to get this all in place.
Speaker 3: Well, and I wonder to what extent they might be
Speaker 3: rushing to get this into place, Rick, not just for
Speaker 3: legacy protection purposes, but also proofing purposes, if you will,
Speaker 3: if Biden is trying to make some health policy oriented
Speaker 3: decisions here at the end of his turn, before say
Speaker 3: RFK Junior takes the helmet Health and Human Services.
Speaker 9: Yeah, I actually don't think they have time. There are
Speaker 9: certain prescriptions to advertise these changes to Medicare and Medicaid,
Speaker 9: and they've just announced it, so it runs its course,
Speaker 9: which won't be over until after the inaugural. So this
Speaker 9: will fall into the category of things that the Trump
Speaker 9: administration will pick up. And look, there's a lot of
Speaker 9: dissidence within that administration on approaches, especially when it comes
Speaker 9: to Medicare and Medicaid. I mean, you've got doctor Oz,
Speaker 9: who famously on his TV shows promoted weight loss drugs
Speaker 9: and their effect on all range of things. And so
Speaker 9: the reality is, you know, what may hold for Bobby
Speaker 9: Kennedy might not be the same point of view as
Speaker 9: the person who's now in charge of running those programs,
Speaker 9: Doctor Oz. And of course all of this will probably
Speaker 9: fall under the prescription so to speak, of President Trump,
Speaker 9: who I think is probably much more populistic and attitude
Speaker 9: is if people who want their drugs, we should give
Speaker 9: them to them. And so I think that this is
Speaker 9: going to be a administration that makes decisions out of
Speaker 9: the White House and they will be implemented in their agencies,
Speaker 9: not the other way around.
Speaker 3: Well, Jeanie, I wonder if you agree with that. As
Speaker 3: we've talked about all of these various cabinet level selections
Speaker 3: and otherwise we've gotten from Donald Trump, the degrees to
Speaker 3: which they will have influence on policy is that that
Speaker 3: shapes policy. The White House approves it or the White
Speaker 3: House originates it, and everybody else just has to act
Speaker 3: on that desire.
Speaker 8: You know, I think what we're seeing clearly from what
Speaker 8: Donald Trump campaigned on and the folks that are in
Speaker 8: the cabinet, provided they're all confirmed, is that there is
Speaker 8: a real desire to move this all under the auspices
Speaker 8: of the White House.
Speaker 1: You know.
Speaker 8: You look at Boy, you look at others. They're very
Speaker 8: very clear that there is no independent agents anymore, there's
Speaker 8: no independent departments.
Speaker 2: In their view.
Speaker 8: They want and have a firm view of strong executive
Speaker 8: power that they would like to ensure is in the
Speaker 8: federal government in a way they don't feel it has
Speaker 8: been for several decades, if ever, And so I think
Speaker 8: their view is to give Donald Trump and the White
Speaker 8: House the power and to allow the President to do
Speaker 8: what he thinks is in his best interest, you know,
Speaker 8: as it concerns this particular weight loss drug. I don't
Speaker 8: personally recall Donald Trump speaking out about it. But the
Speaker 8: reality is there are different views in this cabinet, and
Speaker 8: if RFK is appointed AGTs Secretary, he may not take
Speaker 8: as kind lead to this as a doctor Oz or
Speaker 8: even the Surgeon General, who's a fascinating woman and a
Speaker 8: fascinating doctor if Jessup proved. So, you know, there is
Speaker 8: a lot of different views, and it's partly going to
Speaker 8: depend on how Donald Trump sees this and of course
Speaker 8: the costs of all of this.
Speaker 3: Well, and of course it also depends on if these
Speaker 3: individuals do get that approval from the Senate. Rick, nothing
Speaker 3: is done until it's really done when it comes to
Speaker 3: this transition process, in these nominees becoming confirm mees or
Speaker 3: officially being confirmed for their roles.
Speaker 9: That's right, and that could take a while.
Speaker 2: Right.
Speaker 9: We know that it's taken some time in his first administration.
Speaker 9: Although he's a head of schedule at naming these individuals,
Speaker 9: none of them have been through proper background checks, and
Speaker 9: the vetting process hasn't even really begun on Capitol Hill
Speaker 9: in the Senate, so it could take a while. Maybe
Speaker 9: some will get through quickly. I don't know about how
Speaker 9: the Senate Committee on Hell is going to work as
Speaker 9: far as bringing up these nominees, but it's going to
Speaker 9: be a high priority of this administration the first quarter
Speaker 9: of this year. But we could be still talking about
Speaker 9: this in March, all right.
Speaker 3: Rick Davis and Jeanie Shanzano, I look forward to talking
Speaker 3: about this with you in March and in the months
Speaker 3: in between. Our signature political panel here on Balance of Power.
Speaker 3: Thank you so much. And as we are here on
Speaker 3: Balance of Power, I would remind you that we have
Speaker 3: been dealing with some breaking news in the last several minutes,
Speaker 3: having just heard from the Israeli Prime Minister Benjamin net
Speaker 3: and Yahoo, who in part said that he will be
Speaker 3: bringing a ceasefire deal in Lebanon, that agreement to his
Speaker 3: security cabinet for approval this evening, so we're waiting the
Speaker 3: actual vote on that, but Netanyahu said the duration of
Speaker 3: the ceasefire depends on what happens in Lebanon.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast kens
Speaker 1: just Live weekdays at noon Eastern on Apple car Play
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Speaker 1: York station, Just Say Alexa Play Bloomberg eleven thirty.
Speaker 3: Just three weeks later, Donald Trump is seeming like he
Speaker 3: wants to make good on promises made on the campaign trail,
Speaker 3: including those around tariffs, taking to True Social last night
Speaker 3: suggesting he would put into place an additional ten percent
Speaker 3: tariff on all goods coming from China and twenty five
Speaker 3: percent on those coming from Mexico and Canada. The President
Speaker 3: alex suggesting that this needs to be done in order
Speaker 3: to clamp down on migrants and illegal drugs like fentanyl
Speaker 3: coming over the US border. It's unclear whether this is
Speaker 3: just a negotiating tack, though, and we should keep in
Speaker 3: mind that he had actually floated tariffs even higher than
Speaker 3: this over the course of his campaign. At one point,
Speaker 3: he was suggesting sixty percent Levy's placed on all Chinese goods,
Speaker 3: a level that our own economists here at Bloomberg think
Speaker 3: would effectively cut off trade in the world's two largest economies.
Speaker 3: It is, though, a reminder, of course, that what you
Speaker 3: do economically does have implications geopolitically, and that's where we
Speaker 3: really want to focus now with our first guest, Michael O'Hanlon.
Speaker 6: Is with me.
Speaker 3: He is Brookings Institution Senior Fellow and director of Research
Speaker 3: in the Foreign Policy Program. Michael, welcome back to balance
Speaker 3: of power. When we first just consider the authority Trump
Speaker 3: could use to do this, what powers are bestowed upon
Speaker 3: him and the executive branch. Many of those things stem
Speaker 3: from national security interests. Basically that the president can impose
Speaker 3: higher tariffs if they think it is necessary to protect
Speaker 3: US national security? Could that be adequate justification here?
Speaker 10: You know, it's a great question. According to the letter
Speaker 10: of the law, I'm not going to claim expertise to
Speaker 10: be able to answer your question. According to the spirit
Speaker 10: of the law, the answer would be yes. If you're
Speaker 10: talking about fentanyl and Mexico. I'm not really sure what
Speaker 10: Mexico can do in any realistic way or time horizon
Speaker 10: to dramatically cut back on the illegal shipments of fentanol
Speaker 10: to the United States, but it certainly is a national
Speaker 10: security consideration. I mean, when you have one hundred thousand
Speaker 10: Americans a year dying of opioid overdoses, I think that
Speaker 10: qualifies as a national security problem, and I don't think
Speaker 10: a court would be in a position to disagree, even
Speaker 10: if scholars might have a debate on that question. So
Speaker 10: in that sense, I think that it's plausible that both
Speaker 10: in regard to China with its power and its rise
Speaker 10: on the world stage, and the military implications of China's
Speaker 10: growing economic power, as well as the fentanyl connection and
Speaker 10: the illegal immigration connection with Mexico, I think that Trump
Speaker 10: probably could invoke national security considerations, at least in a
Speaker 10: political and strategic sense whether the law and the lawyers
Speaker 10: would let him I don't know.
Speaker 3: Well, So if we focus on China here specifically, what
Speaker 3: could higher tariffs or greater trade barriers ultimately mean for
Speaker 3: the nature of the relationship with an adversary like that.
Speaker 3: Is it actually something that can be exercised as leverage
Speaker 3: to get more favorable outcomes geopolitically, or is it something
Speaker 3: that could potentially be even more destabilizing geopolitically and risk
Speaker 3: undoing progress made in normalization of ties between.
Speaker 10: The US and China both and hence the riskiness of
Speaker 10: the strategy. Although I think that to get concessions you
Speaker 10: have to have a reasonable theory of the case for
Speaker 10: why the tariff is an appropriate policy tool. There has
Speaker 10: to be some sense of fair play or at least leverage,
Speaker 10: and I think that with Trump already having applied these
Speaker 10: high tariffs on China in his first term and President
Speaker 10: Biden having kept those in Biden's term, it's harder to
Speaker 10: see why a general sweeping tariff would be appropriate. Now, obviously,
Speaker 10: we do have intellectual property right disagreements with China. We
Speaker 10: feel they steal a lot of our ip are, and
Speaker 10: we also have national security concerns over high technology.
Speaker 5: So I think on either of.
Speaker 10: Those two more limited bins of technology, you could imagine
Speaker 10: Trump making this threat and perhaps having some justification for
Speaker 10: doing so, And you could imagine that the response by
Speaker 10: China that we would want to achieve would be less
Speaker 10: theft of intellectual property and also less provocative behavior in
Speaker 10: the Western Pacific militarily. So in that sense, there'd be
Speaker 10: a credible, plausible linkage. But a ten percent across the
Speaker 10: board tariff, I mean, it's harder for me to see
Speaker 10: how China reacts well to that. At least it's less
Speaker 10: than sixty percent. As you pointed out earlier, you know,
Speaker 10: ten percent the news there is almost that Trump's so
Speaker 10: dramatically lowering the additional tariff that he said he was
Speaker 10: going to apply to goods from China. That's more the
Speaker 10: news in some sense than the additional proposal for ten
Speaker 10: percent more.
Speaker 5: But you know, the Chinese are still not.
Speaker 10: Going to be thrilled, obviously, and whether Trump could actually
Speaker 10: extract out less threatening behavior militarily to China, that's pretty dubious.
Speaker 10: I do still like the idea of linkage, because China
Speaker 10: should know that there are going to be economic repercussions
Speaker 10: to strategically destabilizing behavior. I'm just not sure you're really
Speaker 10: going to get a negotiation on those terms anytime soon.
Speaker 3: Well, we'll see what happens. I suppose when Trump actually
Speaker 3: takes office once again. Something that could happen more immediately
Speaker 3: than that, potentially as soon as today, Michael, is a
Speaker 3: ceasefire agreement between Israel and Lebanon. Prime Minister Benjamin net
Speaker 3: Nyahu is set to give a televised address less than
Speaker 3: an hour from now. There's been reports that President Biden
Speaker 3: may speak to and Anthony Blincoln just said that the
Speaker 3: Lebanon ceasfire effort is near the finish line and could
Speaker 3: help end the conflict in Gaza as well. Even if
Speaker 3: this agreement is reached, Michael, do you believe it will
Speaker 3: stick and potentially have ramifications for beyond Lebanon but into
Speaker 3: Israel's war with Moss.
Speaker 10: You know, that's a great question. I think there's a
Speaker 10: good chance it could stick, as Below, of course, has
Speaker 10: lost of its leadership, so no one's quite sure who's
Speaker 10: calling the shots there and exactly how much control they
Speaker 10: have over the whole organization. So even if you get
Speaker 10: a deal, you could have some outliers who violate it
Speaker 10: on the Hesbola side, But I think that on balance,
Speaker 10: Hesbola still has demonstrated an ability to graduate to adjust
Speaker 10: the level of its fire and the locations of its
Speaker 10: fire as a function of where things stand with Gaza,
Speaker 10: where things stand more broadly with Israel. And so I'm
Speaker 10: guessing they've still got enough command and control over their
Speaker 10: organization irrespective of the loss of the top leadership that
Speaker 10: they probably could hue to such a ceapire. And certainly
Speaker 10: Israel would relish that because it wants to be able
Speaker 10: to move back the tens of thousands of citizens who
Speaker 10: have had to evacuate northern Israel due to the previous
Speaker 10: year's attacks from Levitnese territory by Hesbola against those locations
Speaker 10: in Israel. As to whether that could actually lead to
Speaker 10: a higher probability of a ceasefire in Gaza, I suppose
Speaker 10: in some broader political sense, because the atmosphere would have changed.
Speaker 10: I'm not sure though, that it really changes the specific
Speaker 10: options Israel would think it has in Gaza. It certainly
Speaker 10: doesn't want to do a deal with Hamas itself unless
Speaker 10: that deal also committed Hamas to no longer be in
Speaker 10: charge of Gaza longer term and to just have this
Speaker 10: be the step towards creation of a new political entity
Speaker 10: inside of the Palestinian territories. So if Hamas would agree
Speaker 10: to that deal, then maybe, But I don't know that
Speaker 10: Hamas would.
Speaker 3: Well, and it's a question of what Israel is willing
Speaker 3: to agree to as well. Considering from the very start
Speaker 3: of this conflict last October they said their end goal
Speaker 3: was the total eradication of Hamas. Are we though, coming
Speaker 3: to realize that that, at least from an ideology perspective,
Speaker 3: is not something that feasibly could have been accomplished.
Speaker 10: I don't think it could be. But one of the
Speaker 10: smartest things I've seen written about this conflict in recent
Speaker 10: weeks was by Michael Duran or the Hudson Institute, who
Speaker 10: suggested that Israel's real goal was not so much a
Speaker 10: ceasefire with what's left of centralized Thomas leadership, but rather
Speaker 10: individual ceasepires with local leaders of Hamas in various parts
Speaker 10: of Gaza, and to the extent they could achieve that,
Speaker 10: maybe they could claim that was essentially a realization of
Speaker 10: their earlier promise to eradicate Hamas as a central organization
Speaker 10: inside the Gaza strip. That may be also unrealistic, but
Speaker 10: a little less unrealistic than completely eradicating every previous member
Speaker 10: of the organization.
Speaker 3: And Michael, we have less than a minute left here.
Speaker 3: But how does the knowledge that Donald Trump will be
Speaker 3: the president fifty five days from now influence all sides
Speaker 3: of these negotiations.
Speaker 10: Well, I think that for Prime Minister net and Yahoo,
Speaker 10: he will be happier with Trump than with Biden. And
Speaker 10: I don't know if that means that he really therefore
Speaker 10: is more likely to agree to a cease fire. In
Speaker 10: other words, some people had the theory that Netanyahu wanted
Speaker 10: the war beyondgoing in a way that would hurt Biden
Speaker 10: and Harris politically. And now that that's over, the election
Speaker 10: is complete and Trump won, this same argument would no
Speaker 10: longer apply. But I doubt that was Netnaku's main calculus
Speaker 10: from the start, so I don't think.
Speaker 3: It changes that much, all right, Michael O'Hanlon, Brookings Institution
Speaker 3: Senior Fellow and director of Research in the Foreign Policy Program.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 3: As it was just last night that Donald Trump on
Speaker 3: True Social threatened to place higher tariffs on the US's
Speaker 3: three largest trading partners, an additional ten percent tariff on
Speaker 3: all goods coming from China and twenty five percent on
Speaker 3: those coming from Mexico and Canada. We want to talk
Speaker 3: more about the economic impact ultimately of levies of that kind,
Speaker 3: assuming that they do become reality, and this isn't just
Speaker 3: a negotiating tactic, and turned to Christopher Smart. He is
Speaker 3: managing partner at our Growth Group and former Special Assistant
Speaker 3: to President Barack Obama for International Economics. Christopher, Welcome back
Speaker 3: to Bloomberg TV and Radio. We've been debating all day
Speaker 3: whether this is negotiating tactic or if it's real. If
Speaker 3: it is the latter, what would this do to the
Speaker 3: cost of goods in the US.
Speaker 11: Well, Kelly, great to be with you, and I think
Speaker 11: just listening to you talk to your colleagues. A moment
Speaker 11: ago about President Biden trying to secure his legacy, set
Speaker 11: the agenda and foreign policy up until his last day
Speaker 11: in office, President Trump at least done trade and immigration policy,
Speaker 11: is already seized control of those agendas, and I think
Speaker 11: loud and clear he has broadcast his opening move. And
Speaker 11: what is always a trade negotiation, whether whether you put
Speaker 11: on tariffs or not, or threatened to put on tariffs,
Speaker 11: it is intended at least to extract some sorts of
Speaker 11: concessions from trade partners. In this case, the surprises that
Speaker 11: it has come now I think, and the surprise is that,
Speaker 11: or what is not clear is exactly what he hopes
Speaker 11: to get in return. I'll just say one quick thing.
Speaker 11: Framing it in terms of a national security threat, as
Speaker 11: the president elect has done, I think gives him some
Speaker 11: leeway legally at least to imposed tariffs without a lot
Speaker 11: of extra congressional authorities to do so. So that may
Speaker 11: be part of what he is thinking right now. What
Speaker 11: we don't really know is again, what he hopes to secure.
Speaker 3: Well, there's also the question of what the markets are
Speaker 3: thinking about all of this, because right now, Christopher, I'm
Speaker 3: looking at a fresh record high on the S and
Speaker 3: P five hundred. I would describe the general attitude today
Speaker 3: is pretty nonplused. Is that appropriate?
Speaker 5: Well?
Speaker 11: I was trying to do the joke about denial as
Speaker 11: a river is not just river in Egypt.
Speaker 5: But I think there is a.
Speaker 11: Sense in markets that because again, this is something that
Speaker 11: is coming out two months before the president can do anything,
Speaker 11: and I think even then, I think he would issue
Speaker 11: an executive order and it may take some time for
Speaker 11: those tariffs to take effect. Will know much more in
Speaker 11: the next two months how Mexico, Canada, and China may
Speaker 11: respond to this. I think the fear for those of
Speaker 11: us who look at this from a longer term is
Speaker 11: that these are probably moving goalposts. And even if Ottawa,
Speaker 11: Mexico City, Beijing were able to satisfy the president's concerns,
Speaker 11: the president elects concerns right now on drugs and immigration.
Speaker 11: He's got a whole list of concerns that he is
Speaker 11: ready to come back to them with and use tariffs
Speaker 11: as a as leverage. So I would expect, you know,
Speaker 11: these tariffs, at least in some form to start getting
Speaker 11: phased in. Maybe not a blanket tariff the way he
Speaker 11: announced last night, but something is going to make trade
Speaker 11: with the countries more expensive, at least in certain industries,
Speaker 11: and probably that's we're in for a longer and more
Speaker 11: protracted set of negotiations.
Speaker 3: Well, Christopher, it is last night that we learned about
Speaker 3: this new threat. We ended Monday with that, after beginning
Speaker 3: Monday with the initial market welcoming with open arms of
Speaker 3: the selection of Scott Besson for Treasury secretary. What check
Speaker 3: on not just the tariff policy but all of these
Speaker 3: kind of economic policy suggestions from the President elect. Could
Speaker 3: Bessont actually be in this incoming administration.
Speaker 11: Well, the president is the president and the secretary is
Speaker 11: just the secretary. I think Scott Messon is obviously a
Speaker 11: very experienced market savvy investor who can at least give
Speaker 11: the president advice on how markets will react to certain
Speaker 11: things that he is doing. And the President obviously does
Speaker 11: care about that because he talks about certainly the stock
Speaker 11: market as one of the measures of.
Speaker 5: His success or the success of his presidency. So I'm
Speaker 5: sure that is part of it.
Speaker 11: One only wishes one could be in the room to
Speaker 11: know just how much Scott Bessont was part of this
Speaker 11: announcement or whether you know, welcome to the team. This
Speaker 11: is our first move, and whether he's going to be
Speaker 11: trying to catch up with the president and the trade
Speaker 11: agenda but we'll have to see how that plays out.
Speaker 11: As you recall, Secretary Mnuchin was a moderating impact on
Speaker 11: a lot of the trade tariff agenda in the president
Speaker 11: in President Trump's.
Speaker 3: First term, there's also a question not just of the
Speaker 3: role besst will play in trade policy, but also what
Speaker 3: role of any he would play on applying pressure to
Speaker 3: the independent Federal Reserve, because he certainly has thoughts about that.
Speaker 3: In fact, he shared some with the host of Bloomberg
Speaker 3: Wall Street Week, David weston just this summer. Take a listen.
Speaker 7: Let's go back to the original sin, the original sin
Speaker 7: and the independence of the FED. J. Powell's reappointment was
Speaker 7: the latest this century for a FED chair. Latest is century,
Speaker 7: and I think that that is what stoked or certainly
Speaker 7: they accelerated the inflation at Jackson Hole August twenty twenty one.
Speaker 7: You go back and read J. Powell's speech. He knew
Speaker 7: inflation was hot. Biden administration did not announce his reappointment
Speaker 7: until November, so they had him under the thumb.
Speaker 2: He could have been a.
Speaker 7: Good patriot and risk his job and started raising raids,
Speaker 7: but he didn't.
Speaker 3: And that maybe gets best into this notion He's put
Speaker 3: forward of a shadow FED chair Christopher all of it, though,
Speaker 3: as we're now less than ten minutes away from the
Speaker 3: minutes of the fed's latest meeting, raises the question on
Speaker 3: the trajectory or trajectory rather of monetary policy as we
Speaker 3: move forward into the next four years.
Speaker 11: Yeah, and I think Scott Beston is back to way
Speaker 11: a little bit from those remarks since then. Obviously very
Speaker 11: concerning for those who want the Fed's independence to be
Speaker 11: protected and reinforced, and I think most independent investors, certainly
Speaker 11: global investors, expect that to continue.
Speaker 5: And I think it's also worth giving him.
Speaker 11: The benefit of the doubt to actually be enshrined as
Speaker 11: Treasury Secretary and to reiterate, reiterate his views on that question.
Speaker 11: I think once you are in office and you have
Speaker 11: those responsibilities, you may not be you'll feel a little
Speaker 11: bit more constrained about you what you want to say
Speaker 11: about the FED.
Speaker 5: Once you start.
Speaker 11: Once people start feeling like you have influence over the
Speaker 11: fed's policy, then you also become responsible for it. And
Speaker 11: I think that's part of the double edged sword of
Speaker 11: FED independence. If they get things wrong, you can disown
Speaker 11: them while it is going wrong until it gets back
Speaker 11: on track.
Speaker 5: So we'll watch that story play out.
Speaker 11: My expectations once he gets into office, he'll play a
Speaker 11: much more conventional role given his experience with markets.
Speaker 5: But we'll be watching that one closely well.
Speaker 3: And the Fed gets to make one more rate decision
Speaker 3: before Donald Trump takes office. There's a decision coming up
Speaker 3: in just a few weeks. Christopher and a lot of
Speaker 3: people are looking to the minutes we're about to get
Speaker 3: as a signal potentially on what that move is going
Speaker 3: to be as we await them. What will you be
Speaker 3: looking for and what's your call on December right now?
Speaker 11: Well, I think my call on December would be another
Speaker 11: twenty five basis points. I think it would be a
Speaker 11: little bit odd for them to stop now, and it
Speaker 11: might start looking a little bit political if they're looking ahead.
Speaker 11: They say they don't, and I believe that they don't.
Speaker 11: But if they were to sort of start front running
Speaker 11: potential legislative changes, tax changes next year and pausing on
Speaker 11: their rate cut path, I think one more this year
Speaker 11: probably gives them a little bit of room to pause
Speaker 11: going into next year. In terms of the minutes, Kelly,
Speaker 11: with all due respect, this seems you know the minutes
Speaker 11: story is one of the least interesting ones to me
Speaker 11: as somebody who watches the FED. I mean, is it's
Speaker 11: two week old news about people talking about two month
Speaker 11: old data, and so I'm not sure it really gives
Speaker 11: us a whole lot of insight into what the FED
Speaker 11: is going to do this time around, and certainly that
Speaker 11: plus President Biden's Rose Garden announcement is going to overshadow
Speaker 11: anything that might come out in the minutes.
Speaker 3: You're sounding suspiciously like my colleague Tom Keene, who has
Speaker 3: some pretty choice thoughts on the FED minutes every time
Speaker 3: they come out. Christopher, I'm glad that you raise what
Speaker 3: we are expecting. It is a compliment, it is intended
Speaker 3: as one. But you raise the fact that we are
Speaker 3: expecting to hear from President Biden just over half an
Speaker 3: hour from now, speaking from the Rose Garden. We expect
Speaker 3: that may pertain to what's going on in the Middle
Speaker 3: East and relate to foreign policy, but it's also a
Speaker 3: reflection on this as a president now reflecting on his
Speaker 3: legacy with just fifty five days left to go in office,
Speaker 3: when you consider his economic legacy, Christopher, how would you
Speaker 3: describe it?
Speaker 11: Well, I think it's obviously going to be shaped by
Speaker 11: people's use of inflation, and the loss of this election
Speaker 11: by the Democratic nominee is directly related to those higher prices.
Speaker 11: But I think if if you take it back to
Speaker 11: look at the context of what he has done both
Speaker 11: in the moment cyclically to dig us out of the
Speaker 11: whole from the COVID pandemic, but also to structurally put
Speaker 11: in place policies that reinforce phil if you will market
Speaker 11: failures around climate development, around technology innovation, around our supply
Speaker 11: of chips in the United States, I think that will
Speaker 11: reflect very well on his legacy when historians look back.
Speaker 5: This is a moment where he really has.
Speaker 11: Invested in the next stage of US economic growth. And
Speaker 11: in spite of what inflation is and people feel it
Speaker 11: to be, inflation has actually been coming down.
Speaker 5: As you know, It's just not necessarily reflecting a very.
Speaker 10: Good point see at the start.
Speaker 3: Christopher Smart, thank you for joining me here on Balance
Speaker 3: of Power. This is Bloomberg TV and Radio.
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