1
00:00:00,080 --> 00:00:02,920
Speaker 1: Brought you by Bank of America Mary Lynch. Investing in

2
00:00:03,000 --> 00:00:07,840
Speaker 1: local communities, economies and a sustainable future. That's the power

3
00:00:08,080 --> 00:00:12,320
Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated

4
00:00:12,760 --> 00:00:27,400
Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast.

5
00:00:27,800 --> 00:00:31,520
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

6
00:00:31,560 --> 00:00:36,600
Speaker 1: insight from the best in economics, finance, investment, and international relations.

7
00:00:37,000 --> 00:00:41,599
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and

8
00:00:41,680 --> 00:00:49,920
Speaker 1: of course on the Bloomberg. Joining us now as Gabriela Santa,

9
00:00:50,000 --> 00:00:53,000
Speaker 1: She's Global Chief Strategy to JP Morgan Funds. And let

10
00:00:53,000 --> 00:00:55,160
Speaker 1: me start just by asking about the Federal Reserve meeting

11
00:00:55,200 --> 00:00:57,880
Speaker 1: we had this week. In the hierarchy of what's important

12
00:00:57,880 --> 00:01:00,560
Speaker 1: to investors right now, where do you position the FED

13
00:01:00,600 --> 00:01:03,040
Speaker 1: compared to say, political events and what we saw in

14
00:01:03,080 --> 00:01:05,280
Speaker 1: Europe and indeed what we're looking forward to in France.

15
00:01:05,800 --> 00:01:08,400
Speaker 1: So I think the FED is still relevant. It's perhaps

16
00:01:08,560 --> 00:01:10,520
Speaker 1: less of a focus than it has been over the

17
00:01:10,520 --> 00:01:13,479
Speaker 1: past few years, which ultimately is a healthy thing. We

18
00:01:13,520 --> 00:01:16,440
Speaker 1: should be focusing a little bit back on fundamentals on

19
00:01:16,480 --> 00:01:20,640
Speaker 1: how the economy and earnings and are actually doing UM,

20
00:01:20,640 --> 00:01:22,880
Speaker 1: but I do think we could have gleamed some interesting

21
00:01:23,560 --> 00:01:27,039
Speaker 1: perspectives from the FED meeting. In particular for me was

22
00:01:27,080 --> 00:01:30,000
Speaker 1: their approach towards inflation UH and I didn't see a

23
00:01:30,000 --> 00:01:34,920
Speaker 1: particular concern from their side towards inflation. Even as you

24
00:01:35,000 --> 00:01:37,840
Speaker 1: get some of these UH indicries, whether it's CPI or

25
00:01:37,880 --> 00:01:41,360
Speaker 1: even pc getting closer to their target, they signaled a

26
00:01:41,400 --> 00:01:44,440
Speaker 1: bit of a willingness to look through that. So to me,

27
00:01:44,520 --> 00:01:46,920
Speaker 1: that signals a faster pace of rate hikes than over

28
00:01:46,959 --> 00:01:49,680
Speaker 1: the past few years. UM. But it removes some of

29
00:01:49,720 --> 00:01:52,280
Speaker 1: that tail risk of the FED being overly aggressive, at

30
00:01:52,360 --> 00:01:54,560
Speaker 1: least for now. How much to a disconnect was there,

31
00:01:54,640 --> 00:01:57,000
Speaker 1: or is there, between what the Fed is projecting and

32
00:01:57,040 --> 00:01:58,920
Speaker 1: what investors thought would happen what would come out of

33
00:01:58,960 --> 00:02:02,000
Speaker 1: the meeting. I think it was decently in line, so

34
00:02:02,320 --> 00:02:06,000
Speaker 1: very well telegraphed rate hike the statement did reflect a

35
00:02:06,240 --> 00:02:10,280
Speaker 1: slightly better view towards the economy and inflation. UH. And

36
00:02:10,320 --> 00:02:14,240
Speaker 1: then Janet Yellen during the press conference seemed very hesitant

37
00:02:14,480 --> 00:02:17,480
Speaker 1: to to precipitate any sort of fiscal policy change as

38
00:02:17,520 --> 00:02:20,639
Speaker 1: she has in the past, right as she did last year. UM.

39
00:02:20,639 --> 00:02:23,040
Speaker 1: What perhaps was a little bit of a surprise was

40
00:02:24,240 --> 00:02:26,920
Speaker 1: the willingness to look through some of that inflation, and

41
00:02:26,960 --> 00:02:28,760
Speaker 1: that's why I think the market reacted the way he

42
00:02:28,800 --> 00:02:32,280
Speaker 1: did with bond yields falling with the dollar falling, was

43
00:02:32,320 --> 00:02:34,519
Speaker 1: removing that tail a risk of a very aggressive FED.

44
00:02:34,760 --> 00:02:38,400
Speaker 1: We're talking to Sebastian Mallaby yesterday, uh and he talked

45
00:02:38,440 --> 00:02:41,040
Speaker 1: how talked about how problematic it can be if if

46
00:02:41,080 --> 00:02:43,280
Speaker 1: the FED is too predictable. He had a column in

47
00:02:43,280 --> 00:02:45,040
Speaker 1: the Post I think about a week ago suggesting the

48
00:02:45,040 --> 00:02:48,320
Speaker 1: FED could really do a good service by raising rates

49
00:02:48,320 --> 00:02:51,200
Speaker 1: by fifty basis points instead. Of course that didn't happen.

50
00:02:51,240 --> 00:02:53,359
Speaker 1: But is there a problem with predictability? Do you think,

51
00:02:53,360 --> 00:02:55,360
Speaker 1: as as an investor, as a strategisty to see that

52
00:02:55,400 --> 00:02:57,919
Speaker 1: being a problem. I think it's a problem to the

53
00:02:57,960 --> 00:03:00,840
Speaker 1: extent that if we take last year as an example,

54
00:03:00,960 --> 00:03:04,320
Speaker 1: right in our view, given where the economy was, given

55
00:03:04,320 --> 00:03:07,799
Speaker 1: where inflation already was trending, last year was already a

56
00:03:07,880 --> 00:03:11,000
Speaker 1: year to have hiked more than just once right at

57
00:03:11,040 --> 00:03:14,720
Speaker 1: the end of the year. However, the Fed's preoccupation around

58
00:03:14,720 --> 00:03:19,920
Speaker 1: preparing the market and being overly concerned and predictable removed

59
00:03:20,080 --> 00:03:23,040
Speaker 1: some of that optionality for them. Uh. And I think

60
00:03:23,080 --> 00:03:25,680
Speaker 1: that is a concern for us in some some to

61
00:03:25,760 --> 00:03:28,680
Speaker 1: some extent, right, the fed ney stacked regardless of whether

62
00:03:28,720 --> 00:03:31,280
Speaker 1: the market is ready or not. Um, and that's ultimately

63
00:03:31,400 --> 00:03:35,160
Speaker 1: better for for the economy. Gabrielle. I believe in Pennsylvania

64
00:03:35,280 --> 00:03:37,600
Speaker 1: buried in the textbooks with the idea you don't do

65
00:03:37,680 --> 00:03:40,320
Speaker 1: share buy backs at market tops, are we going to

66
00:03:40,400 --> 00:03:43,480
Speaker 1: see fewers share buy backs? I believe the theory is

67
00:03:43,520 --> 00:03:46,400
Speaker 1: if the stock market goes up, you don't buy back

68
00:03:46,480 --> 00:03:49,720
Speaker 1: your shares. But it's always broken, isn't it? It has?

69
00:03:49,800 --> 00:03:52,760
Speaker 1: And I think that's such a crucial question because the market,

70
00:03:53,000 --> 00:03:54,840
Speaker 1: if we look at the equity market, has been getting

71
00:03:54,880 --> 00:03:59,160
Speaker 1: a little bit excited about tax reform repatriation UM and

72
00:03:59,240 --> 00:04:02,120
Speaker 1: thinking about how companies can choose to act on that

73
00:04:02,200 --> 00:04:05,560
Speaker 1: extra cash. And there's some excitement that they'll shift away

74
00:04:05,560 --> 00:04:09,280
Speaker 1: from buy backs, from dividends, from the usual use of

75
00:04:09,320 --> 00:04:12,080
Speaker 1: cash over the past few years, towards actually using it

76
00:04:12,120 --> 00:04:16,120
Speaker 1: for capex, which would be revolutionary if we think about

77
00:04:16,160 --> 00:04:20,400
Speaker 1: the last ten years, right even before the Cristi um. So,

78
00:04:20,480 --> 00:04:24,040
Speaker 1: I think there's a question mark here, um. This was

79
00:04:24,080 --> 00:04:27,640
Speaker 1: a behavior of companies before the financial crisis, right, and

80
00:04:27,680 --> 00:04:31,239
Speaker 1: so do we create the environment where companies are willing

81
00:04:31,279 --> 00:04:33,719
Speaker 1: to spend on capex? And that's not just about tax

82
00:04:33,720 --> 00:04:37,240
Speaker 1: reform in cash, it's also about removing several other types

83
00:04:37,279 --> 00:04:42,200
Speaker 1: of uncertainty as well, such as there's the potential perhaps

84
00:04:42,279 --> 00:04:46,160
Speaker 1: for less regulation or perhaps we could say more targeted

85
00:04:46,279 --> 00:04:49,560
Speaker 1: or smarter types of regulation, which could remove some of

86
00:04:49,600 --> 00:04:52,040
Speaker 1: that uncertainty that's often been cited as one of the

87
00:04:52,360 --> 00:04:56,080
Speaker 1: top concerns for companies of all different types and sizes

88
00:04:56,120 --> 00:04:58,720
Speaker 1: in the US. However, you're adding at the same time

89
00:04:58,760 --> 00:05:02,240
Speaker 1: another layer of uncertainty here with regards to trade, with

90
00:05:02,240 --> 00:05:05,880
Speaker 1: regards to immigration, with regards to geopolitics. So we have

91
00:05:05,920 --> 00:05:08,640
Speaker 1: to be careful in figuring out the balance there um.

92
00:05:08,680 --> 00:05:11,280
Speaker 1: And something that's interesting if you look at sentiment surveys,

93
00:05:11,320 --> 00:05:14,640
Speaker 1: companies have been feeling more optimistic, but they're still feeling uncertain.

94
00:05:15,200 --> 00:05:17,560
Speaker 1: So whether they actually act on that optimism and that

95
00:05:17,600 --> 00:05:20,360
Speaker 1: capex is a whole different matter. How about volatility, You

96
00:05:20,360 --> 00:05:22,240
Speaker 1: look at the fix having at eleven and twelve, what

97
00:05:22,360 --> 00:05:24,360
Speaker 1: is that that to tell you about what's to come?

98
00:05:25,080 --> 00:05:27,520
Speaker 1: That tells us that it's it's pretty easy to say

99
00:05:27,560 --> 00:05:32,080
Speaker 1: that volatility will go up from here. When we say that,

100
00:05:32,120 --> 00:05:34,920
Speaker 1: people are just like, well, yes, but I do think

101
00:05:35,000 --> 00:05:38,200
Speaker 1: it holds true because if you think historically all the

102
00:05:38,240 --> 00:05:41,839
Speaker 1: way back to usually you see a ten percent correction

103
00:05:41,920 --> 00:05:44,960
Speaker 1: once a year, five percent once a quarter. Uh, and

104
00:05:45,000 --> 00:05:47,479
Speaker 1: it's difficult to think that this year will be different

105
00:05:47,600 --> 00:05:50,000
Speaker 1: with regards to that. It doesn't mean the market has

106
00:05:50,040 --> 00:05:51,839
Speaker 1: to end down. It can end up for the year.

107
00:05:51,839 --> 00:05:54,840
Speaker 1: It often does eighty percent of the time, but there

108
00:05:54,960 --> 00:05:57,040
Speaker 1: is that digestion that needs to take place. We look

109
00:05:57,080 --> 00:05:59,520
Speaker 1: at retail in the same store sales, and retail been

110
00:05:59,640 --> 00:06:02,960
Speaker 1: challenged a Tiffany's just out with a light global same

111
00:06:03,000 --> 00:06:06,680
Speaker 1: services as I believe it was negative, the flagship store negative.

112
00:06:07,560 --> 00:06:11,279
Speaker 1: But it does get back to revenue responsiveness. With all

113
00:06:11,320 --> 00:06:14,840
Speaker 1: that's going on in politics, fiscal stimulus and that at

114
00:06:14,839 --> 00:06:17,520
Speaker 1: the top line, do you people believe that you'll add

115
00:06:17,560 --> 00:06:19,919
Speaker 1: more to revenue, that they'll that there will be a

116
00:06:19,920 --> 00:06:23,160
Speaker 1: better oof to corporate revenue this year? We do. We

117
00:06:23,240 --> 00:06:26,480
Speaker 1: do UM and that's really crucial from this part onwards

118
00:06:26,520 --> 00:06:28,640
Speaker 1: in the cycle, where we've done a lot of that

119
00:06:28,680 --> 00:06:30,800
Speaker 1: margin expansion, a lot of that cost cutting, and now

120
00:06:30,880 --> 00:06:33,280
Speaker 1: it's all about revenue growth UM and if we think

121
00:06:33,320 --> 00:06:36,640
Speaker 1: about companies, what's helpful for them is if they feel

122
00:06:36,640 --> 00:06:39,640
Speaker 1: like they have enough uh pricing power right where they

123
00:06:39,640 --> 00:06:42,160
Speaker 1: feel like they can raise prices and consumers will still

124
00:06:42,160 --> 00:06:44,800
Speaker 1: buy their goods. UH. And that's really where we are

125
00:06:44,800 --> 00:06:47,920
Speaker 1: in this cycle is testing that uh and for companies

126
00:06:48,320 --> 00:06:50,760
Speaker 1: really to to feel like they can increase their prices

127
00:06:50,760 --> 00:06:53,479
Speaker 1: and hence increase their revenue growth. UM and I and

128
00:06:53,880 --> 00:06:56,040
Speaker 1: we do feel optimistic that we will see that. I mean,

129
00:06:56,080 --> 00:06:58,599
Speaker 1: it's an amazing David. I'm looking at a boring toothpaste

130
00:06:58,600 --> 00:07:01,880
Speaker 1: and not company. It will be remain nameless. Their revenue

131
00:07:01,880 --> 00:07:05,080
Speaker 1: growth is two point nine, So if you put a

132
00:07:05,120 --> 00:07:08,360
Speaker 1: stick on that, it's a lift in revenue. It's kind

133
00:07:08,400 --> 00:07:10,400
Speaker 1: of leverage you get off of that. Where are you

134
00:07:10,440 --> 00:07:12,280
Speaker 1: looking overseas right now? I see that we're having the

135
00:07:12,280 --> 00:07:14,160
Speaker 1: best week for emerging markets I think in eight or

136
00:07:14,240 --> 00:07:17,120
Speaker 1: nine months. UM, what's attractive to you at this point

137
00:07:17,200 --> 00:07:18,680
Speaker 1: in sort of how do you, as you're bouncing out

138
00:07:18,680 --> 00:07:21,560
Speaker 1: of portfolio look to emerging markets at this point? So

139
00:07:21,720 --> 00:07:24,480
Speaker 1: if we think about portfolios at this point in time,

140
00:07:24,520 --> 00:07:27,040
Speaker 1: we would say we're looking around the world, we're seeing

141
00:07:27,040 --> 00:07:30,440
Speaker 1: an acceleration and growth that's very encouraging. It's translating to

142
00:07:30,480 --> 00:07:33,600
Speaker 1: a better earnings outlook. So overall we would be looking

143
00:07:33,640 --> 00:07:37,840
Speaker 1: at equity markets versus government bonds. Then when you think

144
00:07:37,840 --> 00:07:40,160
Speaker 1: about where does the US fit in that um, and

145
00:07:40,200 --> 00:07:42,320
Speaker 1: we're talking about at this point in the cycle, it's

146
00:07:42,360 --> 00:07:45,760
Speaker 1: normal to have less earnings growth, and so we have

147
00:07:45,920 --> 00:07:49,320
Speaker 1: lowered our expectations for US returns too close to five

148
00:07:49,360 --> 00:07:52,200
Speaker 1: percent over the next few years. That's not bad, it's

149
00:07:52,240 --> 00:07:53,920
Speaker 1: just less than what you were getting over the past

150
00:07:53,960 --> 00:07:57,840
Speaker 1: few years. So international is crucial from here on out.

151
00:07:57,960 --> 00:08:00,160
Speaker 1: And we're really in the sweet spot where the US

152
00:08:00,200 --> 00:08:03,320
Speaker 1: is in a more mature phase but not approaching recession,

153
00:08:03,800 --> 00:08:06,600
Speaker 1: and that's where it's really valuable to have a good

154
00:08:06,600 --> 00:08:10,080
Speaker 1: allocation to international. So we're looking to emerging markets, and

155
00:08:10,080 --> 00:08:12,760
Speaker 1: we're looking at the Eurozone. We under play this, David,

156
00:08:12,920 --> 00:08:15,040
Speaker 1: We're so eurocentric. I mean, if you look at the

157
00:08:15,080 --> 00:08:19,800
Speaker 1: Dow US based up nineteen eight percent last twelve months.

158
00:08:20,280 --> 00:08:23,040
Speaker 1: If you're in London and you invest in the Dow

159
00:08:23,440 --> 00:08:30,720
Speaker 1: was sterling weakness, you're up four zero. It's remarkable. Help

160
00:08:30,760 --> 00:08:33,000
Speaker 1: me here with small camp, large Camp. I mean, there's

161
00:08:33,040 --> 00:08:35,480
Speaker 1: just this whole idea of JP Morgan. I mean, you

162
00:08:35,520 --> 00:08:39,160
Speaker 1: already have a small company's apple help me here with

163
00:08:39,240 --> 00:08:44,120
Speaker 1: small cap, mid camp large cap. So the argument is

164
00:08:44,120 --> 00:08:48,640
Speaker 1: is was a bit stronger last year, right before small

165
00:08:48,679 --> 00:08:51,600
Speaker 1: caps had such a strong rally. So the argument was,

166
00:08:51,679 --> 00:08:54,760
Speaker 1: if you're starting to see all of these UH policy

167
00:08:54,800 --> 00:08:58,199
Speaker 1: proposals that could be good for smaller companies, things like

168
00:08:58,320 --> 00:09:03,120
Speaker 1: less regulation, like change the Affordable Care Act um UH

169
00:09:03,360 --> 00:09:08,160
Speaker 1: focusing on improving the domestic economy, that argues perhaps for

170
00:09:08,559 --> 00:09:11,920
Speaker 1: prioritization of small and mid caps. However, you've already seen

171
00:09:11,960 --> 00:09:15,360
Speaker 1: a big move there, and valuations are less attractive and

172
00:09:15,520 --> 00:09:18,480
Speaker 1: decently equal but between the two, so there's less of

173
00:09:18,520 --> 00:09:22,040
Speaker 1: an argument to pick one versus the other. Now, Gabriel sentis,

174
00:09:22,040 --> 00:09:40,199
Speaker 1: thank you so much. With JP Morgan, Doug Elmendorf joins

175
00:09:40,240 --> 00:09:42,800
Speaker 1: his folks. If you are into fiscal policy, he needs

176
00:09:42,800 --> 00:09:46,319
Speaker 1: no inner induction of former Congressional Budget Office director and

177
00:09:46,400 --> 00:09:50,320
Speaker 1: now his leadership at the Harvard Kennedy School. UM. What

178
00:09:50,400 --> 00:09:54,040
Speaker 1: I find so sad here, Dr Elmendorff, is if I

179
00:09:54,080 --> 00:09:58,080
Speaker 1: go to the CBO and a two document of a

180
00:09:58,160 --> 00:10:02,360
Speaker 1: year ago options for reducing the deficit two thousand seventeen

181
00:10:02,400 --> 00:10:07,360
Speaker 1: to two thousand, the White House had all sorts of

182
00:10:07,559 --> 00:10:10,880
Speaker 1: expert opinion on how to get the job done, and

183
00:10:10,960 --> 00:10:14,840
Speaker 1: they clearly didn't listen. We've seen that within the uproar

184
00:10:15,600 --> 00:10:20,280
Speaker 1: is the damage from this irreparable. It can Can the

185
00:10:20,320 --> 00:10:24,520
Speaker 1: White House and the budget process recover from the idea

186
00:10:24,520 --> 00:10:28,880
Speaker 1: of having Nick Burns react to acent reduction and State Department?

187
00:10:30,040 --> 00:10:32,640
Speaker 1: This damage can be repaired. It depends on what the

188
00:10:32,679 --> 00:10:38,440
Speaker 1: Congress does in actually passing appropriations. The President proposes these cuts,

189
00:10:38,559 --> 00:10:41,600
Speaker 1: but the Congress will ultimately put the numbers down on paper.

190
00:10:41,679 --> 00:10:44,400
Speaker 1: Do they work with and this is really important, folks,

191
00:10:44,480 --> 00:10:47,240
Speaker 1: this is a huge privilege of Dr Elmendorff with this

192
00:10:47,240 --> 00:10:49,920
Speaker 1: this morning. Do they work with any kind of document

193
00:10:50,400 --> 00:10:54,360
Speaker 1: Kevin Hassett or Mr Wilvanian others give them or do

194
00:10:54,440 --> 00:10:59,319
Speaker 1: they start from scratch this morning? All the Congress will

195
00:10:59,360 --> 00:11:02,120
Speaker 1: look at them now mers that the President's team sends over,

196
00:11:02,360 --> 00:11:04,920
Speaker 1: but they'll ultimately do what they think makes sense. A

197
00:11:05,000 --> 00:11:08,360
Speaker 1: number of the leading Republicans in Congress have already expressed

198
00:11:08,679 --> 00:11:12,959
Speaker 1: strong disagreements with aspects at least of the proposals. We

199
00:11:13,320 --> 00:11:15,640
Speaker 1: had some sense here that regular order would be restored

200
00:11:15,720 --> 00:11:19,000
Speaker 1: in Washington, d C. Is it going to be Can

201
00:11:19,040 --> 00:11:21,080
Speaker 1: you foresee greed luck that would prevent that from happening.

202
00:11:21,080 --> 00:11:23,520
Speaker 1: What if the consequence has been of having a continuing

203
00:11:23,520 --> 00:11:27,000
Speaker 1: resolution after continuing resolution, after continuing resolution. I think the

204
00:11:27,040 --> 00:11:30,440
Speaker 1: big obstacle to regular order on the budget is that

205
00:11:30,840 --> 00:11:34,199
Speaker 1: some members of Congress are setting goals that sound good

206
00:11:34,200 --> 00:11:37,360
Speaker 1: in the abstract to trim back government spending, but that

207
00:11:37,440 --> 00:11:41,560
Speaker 1: aren't realizable in the specifics. People are unhappy about high

208
00:11:41,600 --> 00:11:44,319
Speaker 1: government spending in many ways, but they like their Social

209
00:11:44,320 --> 00:11:47,400
Speaker 1: Security benefits, they like their Medicare benefits. They want us

210
00:11:47,400 --> 00:11:50,280
Speaker 1: to have strong diplomatic presence around the world, they want

211
00:11:50,280 --> 00:11:53,640
Speaker 1: biomedical research. So in the specifics, people like a lot

212
00:11:53,640 --> 00:11:55,920
Speaker 1: of things that are going on. And if the Congress

213
00:11:55,920 --> 00:11:58,040
Speaker 1: sets a goal in this case, the president has set

214
00:11:58,040 --> 00:12:01,720
Speaker 1: a goal that can't be reached to the actual appropriations process.

215
00:12:02,000 --> 00:12:03,679
Speaker 1: That's gonna make it much harder to proceed in a

216
00:12:03,760 --> 00:12:06,400
Speaker 1: regular way. Just get an historical sense here, we have

217
00:12:06,480 --> 00:12:08,559
Speaker 1: a Congressman french Hill a moment ago talking about the

218
00:12:08,559 --> 00:12:11,559
Speaker 1: president's budget saying that at the beginning of an administration,

219
00:12:12,160 --> 00:12:15,199
Speaker 1: president put puts forth budget for in part symbolic value

220
00:12:15,200 --> 00:12:17,120
Speaker 1: to show what he or perhaps in the future is

221
00:12:17,120 --> 00:12:19,080
Speaker 1: is interested in. Is that what we're seeing, or how

222
00:12:19,080 --> 00:12:21,160
Speaker 1: do you regard a first budget from a president? How

223
00:12:21,240 --> 00:12:23,200
Speaker 1: much of it is is realistic versus how much is

224
00:12:23,200 --> 00:12:26,840
Speaker 1: it a symbolically important? A lot of it is symbol

225
00:12:26,960 --> 00:12:30,080
Speaker 1: in this case, I think particularly Director Mulveney is trying

226
00:12:30,120 --> 00:12:33,320
Speaker 1: to convey his vision of what the government should be.

227
00:12:33,720 --> 00:12:36,040
Speaker 1: On the other hand, if that symbol that you're setting

228
00:12:36,080 --> 00:12:39,359
Speaker 1: out is too far away from reality, it's actually diminishing

229
00:12:39,360 --> 00:12:44,280
Speaker 1: your ability to influence the outcome. Figure three, one page

230
00:12:44,320 --> 00:12:48,679
Speaker 1: sixties six of this document. It's all there for the

231
00:12:48,720 --> 00:12:52,720
Speaker 1: White House, the glide path of discretionary spending, and the

232
00:12:52,800 --> 00:12:55,160
Speaker 1: president's defense. A lot of people upset we're gonna come

233
00:12:55,200 --> 00:12:58,160
Speaker 1: back and talk about this, But the President has a

234
00:12:58,200 --> 00:13:00,600
Speaker 1: point that we're now at a tipping point, aren't we

235
00:13:00,920 --> 00:13:04,480
Speaker 1: in terms of total debt to GDP. We have a

236
00:13:04,480 --> 00:13:06,800
Speaker 1: lot of debt from the federal government relative to the

237
00:13:06,840 --> 00:13:09,400
Speaker 1: size of the economy. I don't use the word tipping point.

238
00:13:09,520 --> 00:13:12,960
Speaker 1: We don't know what level of debt can be particularly dangerous.

239
00:13:13,120 --> 00:13:15,520
Speaker 1: And at the moment, as you know, treasury interest rates

240
00:13:15,559 --> 00:13:18,680
Speaker 1: are quite low. That gives us more run room. Doesn't

241
00:13:18,720 --> 00:13:20,640
Speaker 1: mean we shouldn't do something, but it's not as urgent

242
00:13:20,679 --> 00:13:22,720
Speaker 1: as otherwise. We're gonna come back and talk about this,

243
00:13:22,800 --> 00:13:25,640
Speaker 1: and I think this is the word urgent really comes

244
00:13:25,679 --> 00:13:28,640
Speaker 1: up here, the debate over do something now versus do

245
00:13:28,720 --> 00:13:30,600
Speaker 1: it in a measured manner. What a prova you dougas

246
00:13:30,640 --> 00:13:33,439
Speaker 1: Almondo for this from the Kennedy School at Harvard, a

247
00:13:33,480 --> 00:13:44,320
Speaker 1: former Congressional Budget Office director, brought you by Bank of

248
00:13:44,360 --> 00:13:48,400
Speaker 1: America Mary Lynch. Dedicated to bringing our clients insights and

249
00:13:48,480 --> 00:13:52,640
Speaker 1: solutions to meet the challenges of a transforming world. That's

250
00:13:52,640 --> 00:13:57,920
Speaker 1: the power of global connections. Mary Lynch, Pierce Federin Smith Incorporated,

251
00:13:58,080 --> 00:14:04,840
Speaker 1: Member s I PC, dug out of a snow bank

252
00:14:04,880 --> 00:14:08,480
Speaker 1: in Cambridge, Massachusetts, dug in Salmandorff joining a Center studios

253
00:14:09,200 --> 00:14:12,559
Speaker 1: here in New York. We're talking about where we were.

254
00:14:12,600 --> 00:14:16,160
Speaker 1: We were romancing about LBJ and back when we spent

255
00:14:16,240 --> 00:14:19,440
Speaker 1: money on defense and discretion areas a percent of our

256
00:14:19,520 --> 00:14:21,880
Speaker 1: g d P. And then there was this thing called

257
00:14:21,880 --> 00:14:26,960
Speaker 1: the Clintons surplus. What's the real story about the Clintons surplus?

258
00:14:27,360 --> 00:14:30,120
Speaker 1: How did it happen? And can we get back to

259
00:14:30,200 --> 00:14:33,720
Speaker 1: the nirvana of what six weeks it was? In two

260
00:14:33,800 --> 00:14:37,480
Speaker 1: thousand there were two main factors. One was that with

261
00:14:37,560 --> 00:14:41,880
Speaker 1: the end of the Cold War, defense spending declined significantly

262
00:14:42,120 --> 00:14:44,760
Speaker 1: as a percentage of GDP. The other factor was that

263
00:14:44,800 --> 00:14:47,760
Speaker 1: the economy was booming and the financial sector was booming,

264
00:14:48,120 --> 00:14:50,160
Speaker 1: so we had a big surge of income tax revenues.

265
00:14:50,760 --> 00:14:53,800
Speaker 1: And those two factors are hard to reproduce. Defense spending

266
00:14:53,880 --> 00:14:56,360
Speaker 1: can't fall a lot further as a share of GDP.

267
00:14:56,520 --> 00:14:58,960
Speaker 1: There's discussion about how big it should be, but it's

268
00:14:58,960 --> 00:15:00,880
Speaker 1: not going to fall in half again as a percentage

269
00:15:00,880 --> 00:15:03,720
Speaker 1: of GDP as it did, and a boom in the

270
00:15:03,720 --> 00:15:06,360
Speaker 1: economy will obviously help the budget, but it's hard to

271
00:15:06,640 --> 00:15:09,560
Speaker 1: just order that up. Ask you abouts of what drives

272
00:15:09,560 --> 00:15:11,920
Speaker 1: budgeting in Washington. You look at the Pentagon, and for

273
00:15:11,960 --> 00:15:14,280
Speaker 1: many weeks now it has been James Maddis and James

274
00:15:14,360 --> 00:15:16,600
Speaker 1: Maddis alone running that department. I think yesterday we've got

275
00:15:16,600 --> 00:15:19,800
Speaker 1: a few notices of nominations to under secretary positions and

276
00:15:19,840 --> 00:15:22,720
Speaker 1: assistant secretary positions. But you'll look at this big increase

277
00:15:22,720 --> 00:15:24,800
Speaker 1: in defense spending fifty four a billion dollars at the

278
00:15:24,800 --> 00:15:27,720
Speaker 1: White House once and you just have to think that

279
00:15:27,720 --> 00:15:29,920
Speaker 1: that cannot that's probably not being driven by the Pentagon.

280
00:15:30,000 --> 00:15:31,320
Speaker 1: At this point just by virtue of the fact there

281
00:15:31,320 --> 00:15:33,880
Speaker 1: aren't a whole lot of people there to strategize for it.

282
00:15:34,680 --> 00:15:37,960
Speaker 1: Speaking more broadly, uh, could agencies be doing more? Should

283
00:15:37,960 --> 00:15:40,320
Speaker 1: agencies be doing more to sort of tell the White House,

284
00:15:40,360 --> 00:15:43,120
Speaker 1: tell the Congress what they need and how respectful is

285
00:15:43,160 --> 00:15:46,160
Speaker 1: Congress of them? I think that's a terrible mistake by

286
00:15:46,160 --> 00:15:48,960
Speaker 1: this administration to not have filled more of those positions

287
00:15:49,000 --> 00:15:52,400
Speaker 1: more quickly, both because they want to have more influence

288
00:15:52,720 --> 00:15:54,920
Speaker 1: over those departments and because they need a source of

289
00:15:54,960 --> 00:15:58,800
Speaker 1: information from the departments. And those secretaries with their deput

290
00:15:58,880 --> 00:16:01,320
Speaker 1: secretaries and assistant stark Terries and so on, are the

291
00:16:01,360 --> 00:16:04,440
Speaker 1: conduits for both control of the government and information from

292
00:16:04,440 --> 00:16:07,840
Speaker 1: the government to the White House. Um, so they need

293
00:16:07,880 --> 00:16:10,480
Speaker 1: to fill those positions. I think the fifty four billion

294
00:16:10,480 --> 00:16:12,560
Speaker 1: dollars is a little overstated in the sense that it's

295
00:16:12,560 --> 00:16:16,000
Speaker 1: fifty four billion dollars relative to what the current law

296
00:16:16,040 --> 00:16:18,400
Speaker 1: will have for the coming year. It's actually a smaller

297
00:16:18,400 --> 00:16:21,280
Speaker 1: increased relative to last year spending level, and that just

298
00:16:21,360 --> 00:16:25,040
Speaker 1: reflects the fact that these caps on appropriations both defense

299
00:16:25,120 --> 00:16:29,240
Speaker 1: and non defense for next year are below levels of

300
00:16:29,240 --> 00:16:31,360
Speaker 1: spending that we're that we're doing right now, and that

301
00:16:31,600 --> 00:16:34,040
Speaker 1: goes back to the earlier point about these targets for

302
00:16:34,080 --> 00:16:37,720
Speaker 1: spending that aren't realizable in terms of the specific appropriations.

303
00:16:38,080 --> 00:16:40,320
Speaker 1: The death ceiling is back. We still have the sequester.

304
00:16:40,400 --> 00:16:42,200
Speaker 1: The President went to Capitol Hill, spoke before a joint

305
00:16:42,240 --> 00:16:43,960
Speaker 1: session of Congress, and said he'd like to get get

306
00:16:44,040 --> 00:16:46,360
Speaker 1: rid of it. How do we judge the success of

307
00:16:46,400 --> 00:16:49,120
Speaker 1: it as as the sequester done much here and how

308
00:16:49,160 --> 00:16:51,280
Speaker 1: easily can a president wave a wand and get rid

309
00:16:51,320 --> 00:16:54,800
Speaker 1: of this this mechanism. Well, I think the debt ceiling

310
00:16:54,880 --> 00:16:58,120
Speaker 1: is a mistake to have it mostly forces these showdowns

311
00:16:58,120 --> 00:16:59,800
Speaker 1: that have not done much to really put the budget

312
00:16:59,840 --> 00:17:04,320
Speaker 1: on better path. The sequester, as you recall, was the

313
00:17:04,480 --> 00:17:07,680
Speaker 1: accidental outcome of a process that was designed to generate

314
00:17:07,760 --> 00:17:12,720
Speaker 1: changes in benefit programs and taxes, which everybody agrees is

315
00:17:12,760 --> 00:17:15,000
Speaker 1: really the route to putting the budget on the better

316
00:17:15,000 --> 00:17:18,960
Speaker 1: path in the future. We backed into the limits on

317
00:17:19,080 --> 00:17:22,119
Speaker 1: these annual appropriations because the deal couldn't be struck. I

318
00:17:22,119 --> 00:17:24,159
Speaker 1: think everybody would like to go back to working in

319
00:17:24,160 --> 00:17:26,840
Speaker 1: that kind of deal. But whether that deal has great

320
00:17:26,840 --> 00:17:31,119
Speaker 1: prospects for being adopted given the polarization in our leaders

321
00:17:31,119 --> 00:17:33,440
Speaker 1: and in our country, is not very clear. Tug Elmendorf

322
00:17:33,520 --> 00:17:35,280
Speaker 1: with US. He's the dean of the Harvard Kennedy School.

323
00:17:35,520 --> 00:17:37,560
Speaker 1: Former director of the Congressional Budget Office. I was talking

324
00:17:37,600 --> 00:17:40,640
Speaker 1: to another director earlier this week, Robischer, and he said,

325
00:17:40,640 --> 00:17:42,280
Speaker 1: you could you could see the scars that he had

326
00:17:42,320 --> 00:17:44,560
Speaker 1: from being in that job, from dealing with all of

327
00:17:44,600 --> 00:17:47,240
Speaker 1: the politics of that that position, at least being subjected

328
00:17:47,800 --> 00:17:49,600
Speaker 1: to them. You look at it what we've heard over

329
00:17:49,600 --> 00:17:52,960
Speaker 1: these past few weeks about that institution. What do you

330
00:17:52,960 --> 00:17:55,600
Speaker 1: make of it? Has it been this politicized before, not

331
00:17:55,640 --> 00:17:59,080
Speaker 1: saying institutions politicized? Has it been facing so much political pressure,

332
00:17:59,119 --> 00:18:02,280
Speaker 1: so much political right or because it's something new. They've

333
00:18:02,600 --> 00:18:06,280
Speaker 1: always been criticisms of CBO, and that's fair if they're

334
00:18:06,320 --> 00:18:10,119
Speaker 1: based on evidence and logic. Uh, what worries means the

335
00:18:10,119 --> 00:18:13,760
Speaker 1: criticism is based on politics, people trying to pressure CBO,

336
00:18:13,840 --> 00:18:16,600
Speaker 1: and a succession of CBIO directors and a tremendous number

337
00:18:16,640 --> 00:18:20,640
Speaker 1: of talented CBIO analysts have resolutely resisted pressure for more

338
00:18:20,680 --> 00:18:23,280
Speaker 1: than forty years, and they'll keep doing that. Bob has

339
00:18:23,320 --> 00:18:27,200
Speaker 1: his scars. I have some. Keith Hall is now earning

340
00:18:27,280 --> 00:18:33,080
Speaker 1: his his his SCARSS never recovered. Don taken as well.

341
00:18:33,560 --> 00:18:36,000
Speaker 1: Did it twice, I think, and I Alice did it

342
00:18:36,040 --> 00:18:38,720
Speaker 1: longer than anybody, for more than eight years. But the

343
00:18:38,760 --> 00:18:42,399
Speaker 1: institution is incredibly important, and almost all the members of

344
00:18:42,440 --> 00:18:45,880
Speaker 1: Congress understand that, even when they object to particular estimates.

345
00:18:46,160 --> 00:18:50,240
Speaker 1: I found his director lots of reinforcement for the importance

346
00:18:50,240 --> 00:18:52,119
Speaker 1: of the agency and the work that it does. And

347
00:18:52,160 --> 00:18:54,679
Speaker 1: I think that will continue. I've been raving about I've

348
00:18:54,680 --> 00:18:56,840
Speaker 1: been It's nothing new. I've been doing it for years.

349
00:18:56,880 --> 00:19:00,080
Speaker 1: But again back to the weekend reading of options for

350
00:19:00,160 --> 00:19:02,840
Speaker 1: reducing the deficit. If you were to say to the

351
00:19:02,880 --> 00:19:07,400
Speaker 1: President or to his White House team, is political team, Okay,

352
00:19:07,480 --> 00:19:10,240
Speaker 1: you've really screwed this up. Even the Republicans are livid.

353
00:19:10,680 --> 00:19:14,879
Speaker 1: Here's what you need to do. Given the belief everyone

354
00:19:15,000 --> 00:19:18,480
Speaker 1: has that we have too much debt, what's the Almendorf

355
00:19:18,560 --> 00:19:21,920
Speaker 1: prescription to get his war Zak would say, to get

356
00:19:21,960 --> 00:19:26,840
Speaker 1: those glide pass back in the right direction. Now is

357
00:19:26,840 --> 00:19:30,480
Speaker 1: the time to be developing a set of policies that

358
00:19:30,520 --> 00:19:34,000
Speaker 1: would scale back on some of our entitlement programs over

359
00:19:34,040 --> 00:19:37,639
Speaker 1: time and would raise some revenues to pay for the

360
00:19:37,680 --> 00:19:40,359
Speaker 1: programs that we have. Remember that we have a very

361
00:19:40,400 --> 00:19:43,200
Speaker 1: in aging population, A lot more people are going to

362
00:19:43,280 --> 00:19:46,040
Speaker 1: be eligible for Social Security and Medicare in the coming years.

363
00:19:46,119 --> 00:19:48,720
Speaker 1: How do you respond to the idea that we need

364
00:19:48,720 --> 00:19:52,399
Speaker 1: to broaden tax break base and even very poor people

365
00:19:52,800 --> 00:19:55,639
Speaker 1: should play pay an itty bitty little bit of tax

366
00:19:56,119 --> 00:19:59,320
Speaker 1: or is that just conservative rhetoric that that doesn't move

367
00:19:59,359 --> 00:20:03,399
Speaker 1: the needle. Remember that poor working people are paying payroll tax.

368
00:20:04,280 --> 00:20:06,800
Speaker 1: Many Americans pay much more in payroll tax than they

369
00:20:06,880 --> 00:20:08,879
Speaker 1: paying income tax. So if you look at all of

370
00:20:08,880 --> 00:20:12,000
Speaker 1: the federal taxes together, not just the income tax, most

371
00:20:12,000 --> 00:20:15,840
Speaker 1: people are paying tax. Should we raise as a constructive exercise?

372
00:20:16,560 --> 00:20:20,479
Speaker 1: The amount of salary that's used to calculate the Social

373
00:20:20,520 --> 00:20:24,080
Speaker 1: Security tax is one twenty I'm guessing right now it

374
00:20:24,160 --> 00:20:26,840
Speaker 1: should it go up to one forty or one fifty

375
00:20:26,920 --> 00:20:30,920
Speaker 1: or would that create an uproar and make the president age? Yes?

376
00:20:30,960 --> 00:20:33,040
Speaker 1: And yes, I think we should and it would create

377
00:20:33,080 --> 00:20:36,200
Speaker 1: an uproar. I mean we create an uproar, but it would.

378
00:20:36,240 --> 00:20:39,480
Speaker 1: But we should remember that the share of total earnings

379
00:20:39,720 --> 00:20:42,600
Speaker 1: that are being captured now by the Social Security payroll

380
00:20:42,640 --> 00:20:45,560
Speaker 1: tax is smaller than the share we had for many

381
00:20:45,560 --> 00:20:48,800
Speaker 1: many decades. That share has slipped over time, So pushing

382
00:20:48,880 --> 00:20:51,320
Speaker 1: up the cap would really just go back to what

383
00:20:51,359 --> 00:20:53,359
Speaker 1: we were doing a few decades. I wrote a story

384
00:20:53,400 --> 00:20:57,639
Speaker 1: in this David Gura pushing eleven years ago for Bloomberg News,

385
00:20:58,080 --> 00:21:02,440
Speaker 1: and the hate mails still comes. Look at your perspective

386
00:21:02,440 --> 00:21:05,080
Speaker 1: on just the magnitude of what Congress is saying it's

387
00:21:05,080 --> 00:21:07,480
Speaker 1: going to consider this year. We see them working on

388
00:21:07,600 --> 00:21:10,000
Speaker 1: the Affordable Care Act now trying to make changes to

389
00:21:10,040 --> 00:21:11,679
Speaker 1: that with this new piece of legislation. Let some of

390
00:21:11,680 --> 00:21:15,240
Speaker 1: the ans Republicans are there's an eagerness among them to

391
00:21:15,320 --> 00:21:20,120
Speaker 1: tackle tax reform and financial reform as well. Uh, give

392
00:21:20,200 --> 00:21:23,040
Speaker 1: us a sense of how how big and undertaking that

393
00:21:23,200 --> 00:21:25,000
Speaker 1: is and the likelihood you think that we're going to

394
00:21:25,040 --> 00:21:30,200
Speaker 1: get tax reform this time around. To do big reform

395
00:21:30,280 --> 00:21:33,240
Speaker 1: to the health care system or the tax system is

396
00:21:33,280 --> 00:21:36,240
Speaker 1: really a year long project for the Congress because a

397
00:21:36,240 --> 00:21:37,920
Speaker 1: lot of other things have to happen along the way,

398
00:21:37,960 --> 00:21:41,040
Speaker 1: like the annual appropriations and other sorts of legislation. So

399
00:21:41,160 --> 00:21:44,600
Speaker 1: to push through some comprehensive reform of a big part

400
00:21:44,600 --> 00:21:47,640
Speaker 1: of federal policy is very hard and really takes much

401
00:21:47,640 --> 00:21:50,120
Speaker 1: of a year. I think it was a tactical mistake

402
00:21:50,400 --> 00:21:53,359
Speaker 1: for the Republican leadership to not turn to tax reform

403
00:21:53,560 --> 00:21:56,159
Speaker 1: to start with that would I think tax reform is

404
00:21:56,200 --> 00:21:59,399
Speaker 1: more important for our economy, and I think would be

405
00:21:59,480 --> 00:22:02,480
Speaker 1: more favor Ruble for them in political terms. They felt

406
00:22:02,480 --> 00:22:05,040
Speaker 1: a need to tackle health reform because of what they've

407
00:22:05,040 --> 00:22:07,399
Speaker 1: been saying about the Affordable Care Act for a long time,

408
00:22:07,880 --> 00:22:11,520
Speaker 1: but analysts all knew there was no way to satisfy

409
00:22:11,640 --> 00:22:14,800
Speaker 1: the set of objectives Republicans had laid out for healthcare reform,

410
00:22:14,840 --> 00:22:17,560
Speaker 1: and we're seeing that now in the debacle that's unfolding.

411
00:22:17,720 --> 00:22:22,440
Speaker 1: How do you respond to Leviathan the articles restraining the

412
00:22:22,560 --> 00:22:27,000
Speaker 1: Leviathan property tax limitation in Massachusetts. It's a good supplement

413
00:22:27,040 --> 00:22:32,879
Speaker 1: for ambient a few other lowlights. It is a levia

414
00:22:32,920 --> 00:22:34,640
Speaker 1: that a lot of people feel that way. A lot

415
00:22:34,640 --> 00:22:37,560
Speaker 1: of the Trump supporters feel that way. It's out of control,

416
00:22:37,920 --> 00:22:40,800
Speaker 1: it's too big. How do we tame the beast of

417
00:22:40,840 --> 00:22:44,000
Speaker 1: the budget? The problem is that the beast is growing

418
00:22:44,280 --> 00:22:48,280
Speaker 1: in budgetary terms, mostly because the population is aging and

419
00:22:48,480 --> 00:22:51,679
Speaker 1: healthcare costs are rising, and not just rising in the government,

420
00:22:51,680 --> 00:22:54,680
Speaker 1: but rising across the economy. Defense spending is a smaller

421
00:22:54,720 --> 00:22:57,480
Speaker 1: percentage of GDP than it's been for most of my lifetime.

422
00:22:57,960 --> 00:23:01,520
Speaker 1: The non defense discretionary spending, the appropriations every year, they're

423
00:23:01,520 --> 00:23:04,040
Speaker 1: about the same share of GDP today they were fifty

424
00:23:04,119 --> 00:23:07,480
Speaker 1: years ago. Uh, what's really grown is Social Security and

425
00:23:07,520 --> 00:23:10,960
Speaker 1: Medicare and Medicaid, and it's grown because we have more

426
00:23:10,960 --> 00:23:14,679
Speaker 1: older Americans and healthcare is more expensive. So to really

427
00:23:15,560 --> 00:23:19,600
Speaker 1: pull back on the leviathan in budgetary terms requires hard

428
00:23:19,680 --> 00:23:23,040
Speaker 1: choices about those programs. But I think it's a different matter.

429
00:23:23,240 --> 00:23:26,320
Speaker 1: Is the leviathan in a regulatory sense. The e p

430
00:23:26,440 --> 00:23:30,120
Speaker 1: A is matters for the economy, not so much through

431
00:23:30,160 --> 00:23:32,879
Speaker 1: its the appropriations. It gets those matter for states and

432
00:23:32,880 --> 00:23:35,760
Speaker 1: local governments. It matters for the economy through its regulation.

433
00:23:35,960 --> 00:23:39,480
Speaker 1: People shill distinguish a bit between the budgetary leviathan and

434
00:23:39,520 --> 00:23:43,440
Speaker 1: the regulatory leviathan. Professor Almendrove, thank you so much. Here's

435
00:23:43,480 --> 00:23:46,000
Speaker 1: with the Kennedy School Harvard, Dean of the Kennedy School

436
00:23:46,240 --> 00:23:48,399
Speaker 1: at Harvard, and of course formally with the CBO. This

437
00:23:48,600 --> 00:23:52,000
Speaker 1: entire conversation will be out at our iTunes podcast. We

438
00:23:52,040 --> 00:23:54,520
Speaker 1: thank Bank of America for their support of all of

439
00:23:54,520 --> 00:24:14,119
Speaker 1: our surveillance digital product worldwide. This is Bloomer. Now we

440
00:24:14,200 --> 00:24:17,399
Speaker 1: go to Nicholas Burns, Ambassador Nicholas Burns, Professor of the

441
00:24:17,400 --> 00:24:19,479
Speaker 1: Practice at the Kennedy School of Government at Harvard University,

442
00:24:19,560 --> 00:24:22,240
Speaker 1: joining us. Great to speak with you. Good morning. As always,

443
00:24:22,359 --> 00:24:24,400
Speaker 1: Let's start with the trip that Secretary of State Rex

444
00:24:24,440 --> 00:24:27,159
Speaker 1: Tillerson is taking through East Asia at this point. He

445
00:24:27,200 --> 00:24:29,359
Speaker 1: made it known on the first stop on that trip

446
00:24:29,400 --> 00:24:33,080
Speaker 1: he wants this administration to pursue a different policy toward

447
00:24:33,560 --> 00:24:35,760
Speaker 1: North Korea. Give us a sense of how much that

448
00:24:35,800 --> 00:24:39,919
Speaker 1: policy has changed from administration to administration. I do think

449
00:24:39,960 --> 00:24:43,000
Speaker 1: there's a consensus that we have to change policy towards

450
00:24:43,000 --> 00:24:45,840
Speaker 1: North Korea. Both President Clinton and President George W. Bush

451
00:24:45,920 --> 00:24:49,280
Speaker 1: tried diplomacy in the North Koreans didn't honor the agreements

452
00:24:49,280 --> 00:24:51,560
Speaker 1: we made, and now the problem is more serious because

453
00:24:51,640 --> 00:24:55,040
Speaker 1: they have nuclear weapons, and they have a ballistic missile,

454
00:24:55,560 --> 00:24:57,800
Speaker 1: which if they put a nuclear warhead on top of it,

455
00:24:57,840 --> 00:25:00,320
Speaker 1: if they can master that technology, could pass to belye

456
00:25:00,400 --> 00:25:03,040
Speaker 1: reach the west coast of the United States in the

457
00:25:03,080 --> 00:25:05,879
Speaker 1: next five or ten years, and that's an unacceptable threat

458
00:25:05,920 --> 00:25:08,960
Speaker 1: to the US. So I think that Secretary Tillerson's right

459
00:25:09,040 --> 00:25:12,440
Speaker 1: to suggest that we need to change course. Obviously, it's

460
00:25:12,480 --> 00:25:13,960
Speaker 1: not going to be in the direction of the use

461
00:25:14,000 --> 00:25:17,720
Speaker 1: of military force, because that could be potentially catastrophic. I

462
00:25:17,760 --> 00:25:20,760
Speaker 1: think what they're gonna do is try to convince China

463
00:25:21,280 --> 00:25:24,040
Speaker 1: that China has to finally use its leverage over North

464
00:25:24,160 --> 00:25:27,080
Speaker 1: Korea to try to resolve or at least contain this

465
00:25:27,240 --> 00:25:29,840
Speaker 1: problem and make this a big issue in the U. S.

466
00:25:29,960 --> 00:25:33,840
Speaker 1: China relationship. Patients is a part of diplomacy, probably a

467
00:25:33,880 --> 00:25:36,119
Speaker 1: frustrating part of diplomacy to someone like you who has

468
00:25:36,119 --> 00:25:39,400
Speaker 1: been engaged with it. We heard from Secretary tailorson yesterday

469
00:25:39,520 --> 00:25:42,199
Speaker 1: saying here that the era of strategic patients has to

470
00:25:42,320 --> 00:25:44,560
Speaker 1: end when it comes to North Korea. What would you

471
00:25:44,600 --> 00:25:48,000
Speaker 1: tell him about the importance of taking one's time, listening

472
00:25:48,000 --> 00:25:50,440
Speaker 1: to all sides and trying to figure this out. Well,

473
00:25:50,440 --> 00:25:52,000
Speaker 1: I think he knows that. I don't think he was

474
00:25:52,040 --> 00:25:56,320
Speaker 1: suggesting that we should be impetuous or um act hastily.

475
00:25:56,960 --> 00:25:59,240
Speaker 1: I think what he's saying is that the policy of

476
00:25:59,320 --> 00:26:02,520
Speaker 1: trying to contain the threat by either talking to the

477
00:26:02,560 --> 00:26:06,760
Speaker 1: North Koreans and negotiations which they entirely disregard, or having

478
00:26:06,760 --> 00:26:09,960
Speaker 1: them meet commitments to us which they then forego, you've

479
00:26:10,000 --> 00:26:12,120
Speaker 1: got to you've got to think of a different policy

480
00:26:12,160 --> 00:26:14,239
Speaker 1: and Beijing is going to be at the heart of this.

481
00:26:14,320 --> 00:26:16,640
Speaker 1: Jeju and Ping will be at Mara Lago in Florida

482
00:26:16,720 --> 00:26:19,480
Speaker 1: to visit President Trump in about a month's time, and

483
00:26:19,560 --> 00:26:21,959
Speaker 1: I expect that North Korea will be very high on

484
00:26:22,040 --> 00:26:24,840
Speaker 1: the list. But certainly we've got to be patient in

485
00:26:24,880 --> 00:26:28,399
Speaker 1: putting together a stronger and more effective policy. What are

486
00:26:28,440 --> 00:26:31,280
Speaker 1: you listening to from the Secretary on this trip? Of course,

487
00:26:31,280 --> 00:26:33,920
Speaker 1: we had Secretary Defense James Mattis a couple of weeks before,

488
00:26:34,520 --> 00:26:37,440
Speaker 1: making pretty much the same itinerary, what are you gonna

489
00:26:37,480 --> 00:26:38,959
Speaker 1: What are you gonna? Be a straining to hear from

490
00:26:38,960 --> 00:26:42,800
Speaker 1: the Secretary while he's overseas, A reaffirmation of America's commitment

491
00:26:42,840 --> 00:26:46,840
Speaker 1: to South Korea and to Japan. These are two critical allies.

492
00:26:47,240 --> 00:26:49,840
Speaker 1: One of the problems with the beginning of President Trump's

493
00:26:49,840 --> 00:26:53,680
Speaker 1: tenure in office as President Trump himself questioning the utility

494
00:26:54,040 --> 00:26:56,919
Speaker 1: and relevance of American alliances, whether it's the Far East,

495
00:26:57,160 --> 00:26:59,639
Speaker 1: which Japan and South Korea, or whether it's NATO. And

496
00:27:00,040 --> 00:27:02,840
Speaker 1: you see the Secretary Madison. Secretary twists and have to

497
00:27:02,920 --> 00:27:07,399
Speaker 1: follow behind and and and reaffirm what every American president

498
00:27:07,440 --> 00:27:10,480
Speaker 1: is Truman. Truman has since Truman has known that these

499
00:27:10,520 --> 00:27:13,520
Speaker 1: alliances are critical to us. And what is the relationship

500
00:27:13,960 --> 00:27:20,720
Speaker 1: of Senate in the House diplomacy leadership in instructing, teaching,

501
00:27:21,800 --> 00:27:26,000
Speaker 1: helping a president get to a better outcome. Did they

502
00:27:26,040 --> 00:27:29,320
Speaker 1: sit down over a scotch of their choice and say, well,

503
00:27:29,400 --> 00:27:33,080
Speaker 1: Mr President, how does that work? Well? This is an

504
00:27:33,240 --> 00:27:36,679
Speaker 1: unusual time where I think the leadership in Washington is

505
00:27:36,720 --> 00:27:40,879
Speaker 1: coming from the Senate, and particularly Senate Republicans, people like

506
00:27:41,680 --> 00:27:46,440
Speaker 1: Um certainly John McCain and Lindsey Graham and Rob Portman

507
00:27:46,520 --> 00:27:49,560
Speaker 1: and Susan Collins and Marc Rubio, and they've all been

508
00:27:49,600 --> 00:27:52,560
Speaker 1: suggesting to the President privately and publicly, you can't cut

509
00:27:52,560 --> 00:27:55,400
Speaker 1: the State Department budget by a third. That will decimate

510
00:27:55,400 --> 00:27:58,720
Speaker 1: our diplomacy. You have to honor allies. Angela Merkel is

511
00:27:58,720 --> 00:28:01,200
Speaker 1: going to be at the White House today. You can't see,

512
00:28:01,280 --> 00:28:05,480
Speaker 1: cannot see Germany as solely an economic competitor when it's

513
00:28:05,520 --> 00:28:08,360
Speaker 1: our strongest ally in Europe. And to try to suggest

514
00:28:08,359 --> 00:28:11,479
Speaker 1: to the President there's a history here, you're inheriting the history,

515
00:28:12,040 --> 00:28:15,920
Speaker 1: the wisdom of previous presidents policies that have worked, stick

516
00:28:16,000 --> 00:28:20,040
Speaker 1: with them. Don't strike out on this far right adventure.

517
00:28:20,119 --> 00:28:23,600
Speaker 1: Of economic nationalism and withdrawal of American influence in the world,

518
00:28:23,640 --> 00:28:26,480
Speaker 1: which is the great fear that Bannon, that Bannon and

519
00:28:26,520 --> 00:28:28,639
Speaker 1: others will get to the President and convince him to

520
00:28:28,800 --> 00:28:32,080
Speaker 1: renege on everything that's gone well in American foreign policy

521
00:28:32,080 --> 00:28:35,400
Speaker 1: in the past. On his last trip to Europe, Secretary

522
00:28:35,440 --> 00:28:38,160
Speaker 1: Tillers and traveled with I think six acting secretaries and

523
00:28:38,200 --> 00:28:40,600
Speaker 1: in acting a spokesman on this trip. I think the

524
00:28:40,600 --> 00:28:42,200
Speaker 1: picture is kind of the same. We don't have a

525
00:28:42,200 --> 00:28:45,960
Speaker 1: full complement of deputies in the State Department by by

526
00:28:46,000 --> 00:28:49,320
Speaker 1: any means. I wonder sort of how that's handicapping him.

527
00:28:49,320 --> 00:28:52,040
Speaker 1: I'm speaking with Max Bocks yesterday, the former senator from Montana,

528
00:28:52,080 --> 00:28:54,760
Speaker 1: of course, also ambassador to China, and he said that

529
00:28:54,800 --> 00:28:58,200
Speaker 1: it was a real shame that on his stop in Tokyo,

530
00:28:58,600 --> 00:29:01,720
Speaker 1: a Secretary taylors and did not up at the embassy there.

531
00:29:02,120 --> 00:29:04,120
Speaker 1: He kind of characterized that as an amateur mistake, but

532
00:29:04,120 --> 00:29:06,400
Speaker 1: one that could have a really deleterious effect on morale

533
00:29:06,960 --> 00:29:09,840
Speaker 1: in that embassy. Where a small mistake, but could it

534
00:29:09,920 --> 00:29:12,800
Speaker 1: have a bigger sense of import You should Secretary State

535
00:29:12,880 --> 00:29:16,360
Speaker 1: should always visit the American embassy. I think Secretary Tylorson

536
00:29:16,440 --> 00:29:18,800
Speaker 1: has all the skills to be a successful secretary, and

537
00:29:18,800 --> 00:29:21,600
Speaker 1: I certainly wish him well. I do think this has

538
00:29:21,640 --> 00:29:26,080
Speaker 1: been from the Trump White House the slowest transition in history.

539
00:29:26,720 --> 00:29:29,040
Speaker 1: We have a situation now where there's no Deputy Secretary

540
00:29:29,040 --> 00:29:32,080
Speaker 1: of State for the five under secretaries, not even appointed

541
00:29:32,160 --> 00:29:35,440
Speaker 1: yet much less confirmed, none of the assistant secretaries. These

542
00:29:35,440 --> 00:29:38,560
Speaker 1: are the people at the core of America's diplomatic power,

543
00:29:38,560 --> 00:29:42,160
Speaker 1: and none appointed. And it's mystifying. Some people think that

544
00:29:42,200 --> 00:29:44,960
Speaker 1: the Bannon agenda, the Trump agenda, is to hollow out

545
00:29:45,000 --> 00:29:48,080
Speaker 1: the government and to make it so much smaller that

546
00:29:48,160 --> 00:29:49,920
Speaker 1: it's a reflection of what it used to be. This

547
00:29:50,040 --> 00:29:52,840
Speaker 1: is a great mistake, and I think I don't blame

548
00:29:52,880 --> 00:29:55,480
Speaker 1: Secretary Tylerson. This is a White House decision not to

549
00:29:55,520 --> 00:29:59,320
Speaker 1: appoint these people. I'm going to pick on one guy ambassadors,

550
00:29:59,760 --> 00:30:01,640
Speaker 1: and I'm gonna do it because I can't pronounce his

551
00:30:01,720 --> 00:30:05,640
Speaker 1: last name, Stephen Covid six K O V A C

552
00:30:06,240 --> 00:30:09,760
Speaker 1: S I C S. He's at the consulate in Nagoya.

553
00:30:09,960 --> 00:30:12,800
Speaker 1: He's the guy that looks up to Nick Burns. He's

554
00:30:13,320 --> 00:30:16,760
Speaker 1: out of Temple University, has a privilege working for the

555
00:30:16,800 --> 00:30:20,480
Speaker 1: State Department he worked in Silicon Valley. I'm just reading

556
00:30:20,480 --> 00:30:24,680
Speaker 1: his bios and he's been there for fourteen years. I mean,

557
00:30:24,680 --> 00:30:27,400
Speaker 1: he's not jetting around like Dick Burns. He's not jetting

558
00:30:27,720 --> 00:30:33,120
Speaker 1: like this guy. This guy is in the trenches of

559
00:30:33,200 --> 00:30:36,440
Speaker 1: the State Department. How is he supposed to respond to

560
00:30:36,520 --> 00:30:39,920
Speaker 1: a tent haircut? Well, first time. You're a great champion

561
00:30:39,920 --> 00:30:43,320
Speaker 1: of American diplomacy. Thank you for that. Um. You know,

562
00:30:43,680 --> 00:30:47,040
Speaker 1: the State Department is basically people. We don't have weapons systems,

563
00:30:47,040 --> 00:30:48,840
Speaker 1: as I was telling Tom earlier today, we don't have

564
00:30:48,880 --> 00:30:51,480
Speaker 1: aircraft carriers to put in a mothballs to satisfy a

565
00:30:51,560 --> 00:30:55,040
Speaker 1: budget hawk. What we have our people, Um. And we

566
00:30:55,080 --> 00:30:58,320
Speaker 1: have people who are Arabists and Africanists and China specialists,

567
00:30:58,320 --> 00:31:02,120
Speaker 1: in Japan specialists. I spend their whole life learning these languages,

568
00:31:02,200 --> 00:31:04,560
Speaker 1: learning the history and culture. They're a national treasure. And

569
00:31:05,080 --> 00:31:08,040
Speaker 1: part of what it keeps America strong and safe is

570
00:31:08,080 --> 00:31:09,880
Speaker 1: that we have people on the front lines and our

571
00:31:09,920 --> 00:31:14,479
Speaker 1: embassies and consulates sometimes for years defending US, explaining US,

572
00:31:14,840 --> 00:31:18,200
Speaker 1: advancing American interests in a thousand different ways. And that's

573
00:31:18,200 --> 00:31:22,240
Speaker 1: what diplomacy is. And and President Trump's budget is entirely

574
00:31:22,800 --> 00:31:26,200
Speaker 1: military and homeland security. Now that's vital to us, and

575
00:31:26,280 --> 00:31:28,720
Speaker 1: I actually want to see the military budget increased, but

576
00:31:28,840 --> 00:31:31,120
Speaker 1: to cut the State Department, to cut the e p A,

577
00:31:31,680 --> 00:31:35,560
Speaker 1: to cut social welfare programs. This budget is not going

578
00:31:35,600 --> 00:31:39,880
Speaker 1: to pass the Republican Congress. Republicans will resist it. It

579
00:31:39,960 --> 00:31:42,880
Speaker 1: needs to be fundamentally resought. And Pastor Burnce, let me

580
00:31:42,880 --> 00:31:45,320
Speaker 1: ask you, lastly, hear about public diplomacy. How lucky it

581
00:31:45,400 --> 00:31:48,200
Speaker 1: is to be one Aaron at McPike traveling on behalf

582
00:31:48,200 --> 00:31:50,560
Speaker 1: of the Independent Journal Review with Secretary Tillerson and the

583
00:31:50,600 --> 00:31:53,960
Speaker 1: only journalist on that trip, Rex Tailers, and finally taking

584
00:31:54,040 --> 00:31:57,360
Speaker 1: questions in Japan for the first time from journalists. What

585
00:31:57,360 --> 00:31:59,680
Speaker 1: would you say to him about the importance of engaging

586
00:32:00,480 --> 00:32:02,680
Speaker 1: with the public and with journalists, And how big a

587
00:32:02,720 --> 00:32:04,640
Speaker 1: problem is this that he hasn't you know, he doesn't

588
00:32:04,680 --> 00:32:06,640
Speaker 1: need my advice, but I think, what what? What the

589
00:32:06,640 --> 00:32:09,600
Speaker 1: secretarian others will learn the Trump White House is you

590
00:32:09,640 --> 00:32:12,120
Speaker 1: want your Secretary of State and Defense traveled for the

591
00:32:12,120 --> 00:32:14,600
Speaker 1: American journalists. You want them to tell the story, not

592
00:32:14,760 --> 00:32:18,640
Speaker 1: just the Chinese State News agency, which is not exactly democratic.

593
00:32:18,880 --> 00:32:21,560
Speaker 1: You don't want the Chinese government run media to define

594
00:32:21,640 --> 00:32:25,880
Speaker 1: Secretary Tellerson's visit. You want free democrats, small d democratic

595
00:32:25,920 --> 00:32:27,920
Speaker 1: reporters to be able to do that. And in the

596
00:32:28,000 --> 00:32:30,840
Speaker 1: democracy where the press has First Amendment rights, it's the

597
00:32:30,880 --> 00:32:33,800
Speaker 1: responsibility of people in government to be transparent as much

598
00:32:33,800 --> 00:32:37,240
Speaker 1: as that's possible, to be accountable. This is what democracy is.

599
00:32:37,920 --> 00:32:40,760
Speaker 1: And the press is not the enemy of the American people,

600
00:32:40,800 --> 00:32:43,560
Speaker 1: as President Trump has been saying, Ambassador Burns, a great

601
00:32:43,560 --> 00:32:45,560
Speaker 1: privilege to speak with you. As always. That's Nicholas Burns

602
00:32:45,560 --> 00:33:02,280
Speaker 1: at the Harvard Kennedy School in Colander at the budget

603
00:33:02,280 --> 00:33:05,320
Speaker 1: guy on Twitter, a man who cautions us a time

604
00:33:05,320 --> 00:33:07,000
Speaker 1: that we should not call the document that the White

605
00:33:07,000 --> 00:33:09,959
Speaker 1: House released yesterday and sent to Capitol Hill a budget.

606
00:33:10,000 --> 00:33:12,080
Speaker 1: Stand it begs the question I gotta ask once the

607
00:33:12,160 --> 00:33:14,320
Speaker 1: last time we had what you would consider to be

608
00:33:14,360 --> 00:33:18,520
Speaker 1: what constitutes a budget? Wow, that was a very dramatic question.

609
00:33:18,560 --> 00:33:22,680
Speaker 1: Than's grassing. Good morning, everybody. Um. No, Look, the president,

610
00:33:22,800 --> 00:33:25,520
Speaker 1: President Obama has submitted a budget each of the previous

611
00:33:25,520 --> 00:33:29,320
Speaker 1: eight years. Um, it's not so much that this isn't

612
00:33:29,360 --> 00:33:33,000
Speaker 1: a budget. It's that the first, the first so called

613
00:33:33,000 --> 00:33:36,600
Speaker 1: budget coming out of the administration is only partially complete.

614
00:33:36,600 --> 00:33:38,800
Speaker 1: It only deals with about one third is spending, doesn't

615
00:33:38,800 --> 00:33:41,840
Speaker 1: deal with economics, doesn't deal with revenues, doesn't deal with

616
00:33:41,880 --> 00:33:44,800
Speaker 1: mandatory spending. Um. I mean, this was really just a

617
00:33:45,360 --> 00:33:48,560
Speaker 1: press release coming out of the Trump campaign about fulfilling

618
00:33:48,560 --> 00:33:51,200
Speaker 1: its campaign promises. But it doesn't really have the fiscal

619
00:33:51,240 --> 00:33:54,160
Speaker 1: policy involved. So I don't see how you can possibly

620
00:33:54,160 --> 00:33:57,360
Speaker 1: seriously take this as a budget. Yeah, but stand I mean, folks,

621
00:33:57,440 --> 00:34:00,840
Speaker 1: let's let's be clear here. Professor Collandar was noted by

622
00:34:00,880 --> 00:34:03,400
Speaker 1: the Laureate Paul Krugman today in the New York Times,

623
00:34:03,400 --> 00:34:05,840
Speaker 1: who you know, went to the source calendar. This is

624
00:34:05,840 --> 00:34:09,239
Speaker 1: not a budget, etcetera. It's a campaign document. I get

625
00:34:09,239 --> 00:34:12,240
Speaker 1: that Paul Kruegman doesn't like the budget. Paul Krugman doesn't

626
00:34:12,280 --> 00:34:16,319
Speaker 1: like any Trump thing. What about the Trump supporters that

627
00:34:16,320 --> 00:34:21,200
Speaker 1: are going say, what, how do they respond to this? Well, Tom,

628
00:34:21,239 --> 00:34:25,080
Speaker 1: I'm not even commenting on the specific proposals. I like some,

629
00:34:25,239 --> 00:34:27,640
Speaker 1: I dislike a lot of them. That's not the point.

630
00:34:27,719 --> 00:34:30,440
Speaker 1: But you know, the budget is a tool of fiscal policy.

631
00:34:30,600 --> 00:34:33,480
Speaker 1: It should it should be related to the economy. What

632
00:34:33,560 --> 00:34:35,200
Speaker 1: you where you think the economy is going to go?

633
00:34:35,280 --> 00:34:38,560
Speaker 1: And this budget doesn't include an economic forecast, and so

634
00:34:38,840 --> 00:34:40,879
Speaker 1: if you don't have an economic forecast, if you don't

635
00:34:40,920 --> 00:34:44,160
Speaker 1: have even an assumption even you guess, so how can

636
00:34:44,200 --> 00:34:47,040
Speaker 1: you come up with proposals? But you know the minutia

637
00:34:47,200 --> 00:34:50,600
Speaker 1: of actually the Joint Committee and all that I know.

638
00:34:50,640 --> 00:34:53,080
Speaker 1: The headline question is what does Speaker Ryan do forget

639
00:34:53,080 --> 00:34:57,760
Speaker 1: about that? What does the machinery that Stan Collendar knows perfect,

640
00:34:58,080 --> 00:35:01,520
Speaker 1: How does the machinery spy into this and then get

641
00:35:01,560 --> 00:35:05,080
Speaker 1: to the next step It sits back and waits. Uh.

642
00:35:06,880 --> 00:35:09,239
Speaker 1: Mc mulvaney, the O and B director, yesterday said they're

643
00:35:09,239 --> 00:35:11,440
Speaker 1: going to come out with the rest of their proposal

644
00:35:11,520 --> 00:35:14,600
Speaker 1: in May or June, and the machinery in congresses you

645
00:35:14,600 --> 00:35:16,919
Speaker 1: put it, the budget process is gonna wait until then

646
00:35:17,239 --> 00:35:19,160
Speaker 1: for two reasons. One because they want to see what

647
00:35:19,200 --> 00:35:20,920
Speaker 1: the President is going to propose and make him take

648
00:35:20,960 --> 00:35:24,760
Speaker 1: the political hit for anything to that that's pretty bad. Second,

649
00:35:24,880 --> 00:35:28,160
Speaker 1: um Congress really can't move on the next budget until

650
00:35:28,160 --> 00:35:31,320
Speaker 1: it finishes this one, that is two thousand seventeen, because

651
00:35:31,320 --> 00:35:33,480
Speaker 1: if they move ahead with two thousand and eighteen, that's

652
00:35:33,520 --> 00:35:35,680
Speaker 1: the budget that was submitted to Asteroid, the document that

653
00:35:35,760 --> 00:35:38,200
Speaker 1: was submitted yesterday, they're going to kill their chances of

654
00:35:38,280 --> 00:35:41,960
Speaker 1: doing a c A repeal and replace. So that's where

655
00:35:42,880 --> 00:35:48,000
Speaker 1: I mean, David, my head spinning. It's like my life

656
00:35:48,040 --> 00:35:50,880
Speaker 1: is now complete. Then it's like Maryland losing. That's what

657
00:35:50,960 --> 00:35:53,719
Speaker 1: it's like to stand. How many pounds are gonna be

658
00:35:53,719 --> 00:35:55,600
Speaker 1: packed on this skinny budget by the time we get

659
00:35:55,600 --> 00:35:57,799
Speaker 1: the next one? What detail are you expecting we're gonna get.

660
00:35:57,840 --> 00:36:00,720
Speaker 1: Are we gonna get some of the say, uh farther

661
00:36:00,760 --> 00:36:03,680
Speaker 1: out of prospects that we didn't get in this one? Well,

662
00:36:03,680 --> 00:36:06,719
Speaker 1: you're gonna don't forget this was just so called discretionary

663
00:36:06,800 --> 00:36:10,000
Speaker 1: spending that his appropriations and so um. And it was

664
00:36:10,080 --> 00:36:11,960
Speaker 1: just for one year. So we're gonna get five and

665
00:36:12,040 --> 00:36:15,360
Speaker 1: ten year forecasts for those for those programs, which is

666
00:36:15,360 --> 00:36:17,920
Speaker 1: about a trillion dollars in the budget. You're gonna get

667
00:36:17,960 --> 00:36:22,120
Speaker 1: mandatory programs, Social Security, Medicare, Medicaid, etcetera. Um, you're gonna

668
00:36:22,120 --> 00:36:25,240
Speaker 1: actually get a deficit forecast going out ten years or beyond.

669
00:36:25,800 --> 00:36:27,880
Speaker 1: UM that will show whether or not the president is

670
00:36:27,920 --> 00:36:29,759
Speaker 1: going to be able to keep his promise to eliminate

671
00:36:29,800 --> 00:36:32,120
Speaker 1: the deficit balance the budget by the end of his

672
00:36:31,920 --> 00:36:34,960
Speaker 1: his first actually a second term. Um. And you're going

673
00:36:35,000 --> 00:36:37,920
Speaker 1: to get an economic forecast and revenue. So that's going

674
00:36:38,000 --> 00:36:40,399
Speaker 1: to mean that the typical five books that we get

675
00:36:40,440 --> 00:36:43,520
Speaker 1: from the President, the bigger budget apendix to everything that

676
00:36:44,000 --> 00:36:47,120
Speaker 1: just the basic budget document should be available in May

677
00:36:47,239 --> 00:36:49,160
Speaker 1: or June, and until then we really don't have enough

678
00:36:49,200 --> 00:36:51,640
Speaker 1: information to make any decisions. Let me ask you about

679
00:36:51,719 --> 00:36:55,160
Speaker 1: Mr Mulvaaney. Watched him yesterday fulminating from that podium in

680
00:36:55,160 --> 00:36:58,200
Speaker 1: the White House press room. He's a guy who has

681
00:36:58,239 --> 00:37:00,399
Speaker 1: been very hard line, and I was wondering going into

682
00:37:00,400 --> 00:37:03,160
Speaker 1: this sort of how he would complement the White House

683
00:37:03,160 --> 00:37:04,480
Speaker 1: the rest of the White House when it comes to

684
00:37:04,480 --> 00:37:07,080
Speaker 1: budget issues. How is he fitting in and how much

685
00:37:07,120 --> 00:37:09,799
Speaker 1: is his message different from that of the White House. Well,

686
00:37:10,480 --> 00:37:14,280
Speaker 1: if you look at his his congressional career, his positions

687
00:37:14,320 --> 00:37:16,239
Speaker 1: on the budget are completely different to the White House.

688
00:37:16,280 --> 00:37:18,919
Speaker 1: Which is why I've said to our clients here, Um,

689
00:37:18,960 --> 00:37:20,880
Speaker 1: he's either going to be the most influential member of

690
00:37:20,880 --> 00:37:23,480
Speaker 1: the cabinet or the next one out the door. Um.

691
00:37:24,040 --> 00:37:26,280
Speaker 1: He mentioned one of the one of the differences yesterday

692
00:37:26,560 --> 00:37:29,120
Speaker 1: the White House. Uh, you know, she wants to spend

693
00:37:29,120 --> 00:37:32,320
Speaker 1: more on defense. But he that is mulvannying. When he

694
00:37:32,400 --> 00:37:33,800
Speaker 1: was a member of Congress said we don't want to

695
00:37:33,880 --> 00:37:36,439
Speaker 1: use it as part of the Overseas Contingency Operations Fund,

696
00:37:36,680 --> 00:37:39,040
Speaker 1: which allows you to spend more than the cap in defense.

697
00:37:39,480 --> 00:37:42,200
Speaker 1: So he seems so far to convinced the administration they

698
00:37:42,200 --> 00:37:44,960
Speaker 1: shouldn't do it that way, whether or not they actually

699
00:37:44,960 --> 00:37:46,640
Speaker 1: get there. But but I mean, that's a that's a

700
00:37:46,719 --> 00:37:51,120
Speaker 1: major change that he's essentially forcing reductions into in domestic

701
00:37:51,160 --> 00:37:53,919
Speaker 1: spending to pay for an increase in defense. Stan Collins

702
00:37:53,960 --> 00:37:56,359
Speaker 1: are executive vice president of Corvis. Always great to get

703
00:37:56,400 --> 00:37:59,840
Speaker 1: his perspective. Tom ready to see him get the FaceTime

704
00:38:00,040 --> 00:38:04,640
Speaker 1: book Ruitman to stand as a and earned source of

705
00:38:04,680 --> 00:38:07,400
Speaker 1: the minutia of our fiscal process. I love how he

706
00:38:07,480 --> 00:38:10,520
Speaker 1: sequenced the calendar there, they got to do this budget

707
00:38:10,560 --> 00:38:13,279
Speaker 1: before they do that budget. And then I did I

708
00:38:13,320 --> 00:38:15,239
Speaker 1: believe he say, we don't really don't do the next

709
00:38:15,239 --> 00:38:18,960
Speaker 1: thing till me. So it's a waiting game until then.

710
00:38:19,160 --> 00:38:36,160
Speaker 1: That's the next next iteration from the White House joining

711
00:38:36,200 --> 00:38:40,640
Speaker 1: us Stephen Ratner, will it who I should point out

712
00:38:40,760 --> 00:38:44,400
Speaker 1: manage his money for? Uh? Michael Blomberg, the principal owner

713
00:38:44,440 --> 00:38:48,000
Speaker 1: of the station. But far more importantly, Steve, your public

714
00:38:48,080 --> 00:38:50,560
Speaker 1: service is our did you have a budget when you

715
00:38:50,600 --> 00:38:52,640
Speaker 1: were zar, like, did they call you up and say,

716
00:38:53,200 --> 00:38:58,239
Speaker 1: you know, the gulf stream Detroit? Detroit's killing us. I

717
00:38:58,280 --> 00:39:02,840
Speaker 1: didn't have a gulf stream. The great advantage of seriously

718
00:39:03,160 --> 00:39:05,080
Speaker 1: is of what we did was that we didn't have

719
00:39:05,120 --> 00:39:07,680
Speaker 1: a budget because we were operating using tart money, which

720
00:39:07,680 --> 00:39:11,040
Speaker 1: Congress had appropriated at the depths of the crisis, regretted

721
00:39:11,080 --> 00:39:12,880
Speaker 1: immediately that it had done it because it gave the

722
00:39:12,880 --> 00:39:15,600
Speaker 1: White House too much power, and so we were actually

723
00:39:15,640 --> 00:39:17,759
Speaker 1: able to do everything we did without ever having to

724
00:39:17,920 --> 00:39:21,239
Speaker 1: face those wonderful folks up on Capitol Hill. Have you

725
00:39:21,320 --> 00:39:23,440
Speaker 1: seen a budget like this before? Mcmilvanny, the head of

726
00:39:23,440 --> 00:39:26,200
Speaker 1: the m B calling this a hard power budget, one

727
00:39:26,200 --> 00:39:29,120
Speaker 1: that's emphasizing security and defense so much. Let's just be

728
00:39:29,160 --> 00:39:32,360
Speaker 1: clear one thing. This budget is a political statement, not

729
00:39:32,600 --> 00:39:34,600
Speaker 1: not a budget that's going to happen. Because one thing

730
00:39:34,640 --> 00:39:37,200
Speaker 1: that doesn't get enough attention is that you need sixty

731
00:39:37,280 --> 00:39:40,080
Speaker 1: votes in the Senate to pass this, So you're never

732
00:39:40,120 --> 00:39:42,960
Speaker 1: going to get eight Democrats to flip around and be

733
00:39:43,040 --> 00:39:46,120
Speaker 1: for this budget. So even so, there's also opposition within

734
00:39:46,160 --> 00:39:49,240
Speaker 1: the Republican Party. But these guys are making a statement

735
00:39:49,360 --> 00:39:51,160
Speaker 1: as to what they want. Now. The thing that you

736
00:39:51,200 --> 00:39:54,320
Speaker 1: should remember is that if this budget does not pass,

737
00:39:54,560 --> 00:39:57,799
Speaker 1: and it won't or any budget won't pass, then you

738
00:39:57,840 --> 00:40:00,719
Speaker 1: go into a continuing resolution, which means you go back

739
00:40:00,719 --> 00:40:03,680
Speaker 1: into the sequestration caps and the deal that was made

740
00:40:03,680 --> 00:40:06,399
Speaker 1: between Party and Petty Murray and Paul Paul Ryan when

741
00:40:06,440 --> 00:40:08,960
Speaker 1: he was in charge of budgets to defer some of

742
00:40:08,960 --> 00:40:11,400
Speaker 1: the worst cuts take effect. And so a lot of

743
00:40:11,400 --> 00:40:14,720
Speaker 1: bad stuff is going to happen in October one on autopilot,

744
00:40:15,400 --> 00:40:18,680
Speaker 1: even if this budget has not passed. So the sequestration

745
00:40:18,719 --> 00:40:20,480
Speaker 1: is not going away, much as the President hope that

746
00:40:20,520 --> 00:40:22,080
Speaker 1: it would when he when he spoke before the Joint

747
00:40:22,120 --> 00:40:24,759
Speaker 1: Session of Commress. No no end in sight to those caps. Well,

748
00:40:24,800 --> 00:40:27,000
Speaker 1: the president should know better that if you propose a

749
00:40:27,000 --> 00:40:31,040
Speaker 1: budget that's gonna cut out of agencies that many of

750
00:40:31,120 --> 00:40:33,120
Speaker 1: us think are important, then you obviously aren't gonna have

751
00:40:33,120 --> 00:40:35,920
Speaker 1: a budget deal, and and the sequestration isn't gonna go away.

752
00:40:36,640 --> 00:40:38,640
Speaker 1: What must it be like to run one of these agencies?

753
00:40:38,640 --> 00:40:40,440
Speaker 1: I think if Secretary State Rex Tilligen, he seems to

754
00:40:40,440 --> 00:40:42,120
Speaker 1: be on board with with cuts of these magnitudes, But

755
00:40:42,120 --> 00:40:44,919
Speaker 1: we're talking about cuts here that would radically reconfigure again.

756
00:40:44,920 --> 00:40:46,760
Speaker 1: Should they be affected, they probably will not be affected

757
00:40:46,760 --> 00:40:49,680
Speaker 1: in full, at least the institutions that these people are heading.

758
00:40:50,320 --> 00:40:52,600
Speaker 1: It's interesting because, of course some of the institutions like

759
00:40:52,640 --> 00:40:54,200
Speaker 1: the e p A are headed by people who want

760
00:40:54,239 --> 00:40:58,160
Speaker 1: to abolish them anyway. But I which is award. But

761
00:40:58,160 --> 00:40:59,919
Speaker 1: but I do think of Rex to listen a lot,

762
00:41:00,080 --> 00:41:02,799
Speaker 1: because I can't imagine that he would sit there and

763
00:41:02,800 --> 00:41:05,440
Speaker 1: say to himself that I want my budget cut by

764
00:41:05,160 --> 00:41:08,439
Speaker 1: thirty who wants his budget cut by But I think

765
00:41:08,440 --> 00:41:10,520
Speaker 1: he may also say to himself, this is never gonna happen,

766
00:41:10,520 --> 00:41:12,160
Speaker 1: and so I can still stay on the team and

767
00:41:12,280 --> 00:41:15,160
Speaker 1: kind of let this sort of glide along and be

768
00:41:15,200 --> 00:41:19,759
Speaker 1: worrying about North Korea and other things. What does this say? Okay,

769
00:41:19,760 --> 00:41:21,319
Speaker 1: so let's say it's not gonna pass. What does it

770
00:41:21,360 --> 00:41:23,719
Speaker 1: say about strategy? What did you learn yesterday about the

771
00:41:23,760 --> 00:41:26,920
Speaker 1: seriousness with which this administration is treating the budget or

772
00:41:26,960 --> 00:41:29,960
Speaker 1: treating its promises of cutting back the size of the

773
00:41:30,000 --> 00:41:32,880
Speaker 1: federal government. I think that that does make you gasp

774
00:41:32,920 --> 00:41:36,800
Speaker 1: a little bit, is that an administration, any administration, would

775
00:41:36,800 --> 00:41:39,600
Speaker 1: come forward with something this radical. I haven't gone back

776
00:41:39,640 --> 00:41:42,560
Speaker 1: and studied Reagan but Reagan's budgets. I covered them as

777
00:41:42,560 --> 00:41:45,560
Speaker 1: a reporter, actually, but I I don't believe they were

778
00:41:45,600 --> 00:41:48,200
Speaker 1: even remotely of this order of magnitude of trying to

779
00:41:48,239 --> 00:41:51,200
Speaker 1: reshape the government. You lost a good one this week.

780
00:41:51,320 --> 00:41:54,359
Speaker 1: Will the advisors Ellis Ruth will return to Dartmouth. She's

781
00:41:54,360 --> 00:41:57,319
Speaker 1: out of deer fielding Dartmouth and she will go up

782
00:41:57,360 --> 00:42:00,440
Speaker 1: there to their Dartmouth endowment and help them with quiet

783
00:42:00,480 --> 00:42:03,960
Speaker 1: and conservative money. Is it about making money or is

784
00:42:04,000 --> 00:42:08,080
Speaker 1: the game of endowment investment about not losing money? Which

785
00:42:08,120 --> 00:42:11,000
Speaker 1: is it? It's about making money in the long run.

786
00:42:11,320 --> 00:42:13,880
Speaker 1: You know, every endowment, and and we're a foundation in

787
00:42:13,960 --> 00:42:17,400
Speaker 1: large part, has its own approach to how they tolerate volatility,

788
00:42:17,440 --> 00:42:20,719
Speaker 1: how they tolerate risk. We have a very very thanks

789
00:42:20,760 --> 00:42:23,560
Speaker 1: to our our founder Michael Bloomberg, part owner of Bloomberg

790
00:42:23,920 --> 00:42:27,520
Speaker 1: Radio and and LP, we have a very long time horizon,

791
00:42:27,600 --> 00:42:30,520
Speaker 1: so we're able to take risk. Other institutions are more

792
00:42:30,560 --> 00:42:34,000
Speaker 1: conservative because they don't want the volatility. I'm sure Elis

793
00:42:34,080 --> 00:42:37,200
Speaker 1: is listening this morning, help us here with the debate.

794
00:42:37,280 --> 00:42:39,680
Speaker 1: She's going to be hit over the head with which

795
00:42:39,719 --> 00:42:43,440
Speaker 1: is active versus passive? Harvard's had to deal with every endowment.

796
00:42:43,760 --> 00:42:46,520
Speaker 1: He said, well, Harvard has a sum of a different situation.

797
00:42:46,600 --> 00:42:49,240
Speaker 1: Harvard's issue was that they were trying to do active

798
00:42:49,280 --> 00:42:53,560
Speaker 1: management internally, and in today's world, you can't attract the

799
00:42:53,600 --> 00:42:56,399
Speaker 1: best talent to come internally into a place like that,

800
00:42:56,880 --> 00:42:59,440
Speaker 1: and so they're now going to an external mode mode.

801
00:42:59,760 --> 00:43:03,919
Speaker 1: I've the major endowments, whether it's Dartmouth, Harvard, what we do.

802
00:43:04,400 --> 00:43:07,600
Speaker 1: We still do believe that over time, active management can

803
00:43:07,680 --> 00:43:10,400
Speaker 1: produce better results, and we're still committed to that strategy.

804
00:43:10,480 --> 00:43:12,680
Speaker 1: Now are we simply doing it as in a self

805
00:43:12,760 --> 00:43:15,239
Speaker 1: preservation act? That we want to keep our jobs? So

806
00:43:15,280 --> 00:43:18,200
Speaker 1: therefore we have to believe in active management. We'll find out,

807
00:43:18,840 --> 00:43:22,600
Speaker 1: do you believe in the new environment, the regime shift,

808
00:43:22,640 --> 00:43:25,760
Speaker 1: in the Trump bump, etcetera. It will see revenue growth

809
00:43:25,840 --> 00:43:29,920
Speaker 1: out of American companies additional marginal revenue growth in the

810
00:43:29,960 --> 00:43:34,320
Speaker 1: coming years above what would otherwise happen or above compared

811
00:43:34,360 --> 00:43:37,000
Speaker 1: to what if we get four percent revenue growth? Is

812
00:43:37,000 --> 00:43:41,000
Speaker 1: the new four percent five percent better revenue growth? I

813
00:43:41,040 --> 00:43:43,839
Speaker 1: think you could get a little bit better revenue growth

814
00:43:43,920 --> 00:43:45,920
Speaker 1: for a short period of time if he puts in

815
00:43:45,960 --> 00:43:50,480
Speaker 1: place a stimulative tax policy that creates incentives for people

816
00:43:50,480 --> 00:43:53,120
Speaker 1: to buy things and for companies to make things. In

817
00:43:53,200 --> 00:43:56,759
Speaker 1: the UH, the revenue growth of our US companies are

818
00:43:56,800 --> 00:43:58,520
Speaker 1: going to be hurt by a strong dollar. It's going

819
00:43:58,560 --> 00:44:02,200
Speaker 1: to affect exploits UH. And secondly, it's as you know,

820
00:44:02,280 --> 00:44:05,520
Speaker 1: it's just basic economics that are long term growth rate

821
00:44:05,600 --> 00:44:08,960
Speaker 1: cannot exceed the supply of labor plus the productivity of

822
00:44:09,000 --> 00:44:12,280
Speaker 1: that labor. If he restricts immigration, the supply of labor

823
00:44:12,320 --> 00:44:15,960
Speaker 1: may be restricted somewhat. UH productivity has been very weak.

824
00:44:16,080 --> 00:44:18,880
Speaker 1: I don't see anything he's proposing particularly that would help it.

825
00:44:19,360 --> 00:44:21,600
Speaker 1: And so I I am I don't I'm not. I'm

826
00:44:21,640 --> 00:44:23,799
Speaker 1: not a pessimist by nature, but it's very hard to

827
00:44:23,840 --> 00:44:26,680
Speaker 1: see along term great threat growth much above two percent

828
00:44:26,680 --> 00:44:28,680
Speaker 1: at this moment, and with the news flow we've had,

829
00:44:29,239 --> 00:44:32,000
Speaker 1: healthcare is sort of drifted away. I believe that five

830
00:44:32,080 --> 00:44:34,520
Speaker 1: days ago that was front center, right, David, Yeah, And

831
00:44:34,600 --> 00:44:36,600
Speaker 1: I think that the House Speaker Paul Ryan probably would

832
00:44:36,600 --> 00:44:40,080
Speaker 1: prefer that it's still remain centers we're dealing with with

833
00:44:40,120 --> 00:44:42,400
Speaker 1: all of this stuff. Steve, how optimistic are you here

834
00:44:42,400 --> 00:44:45,040
Speaker 1: that we'll see maybe not this piece of legislation pass.

835
00:44:45,080 --> 00:44:47,560
Speaker 1: Might might be optimistic about that, but see some changes here,

836
00:44:47,560 --> 00:44:50,879
Speaker 1: some smart changes to this legislation. I don't know they're

837
00:44:50,880 --> 00:44:52,960
Speaker 1: gonna be changes. Whether they're gonna be smart changes or

838
00:44:53,040 --> 00:44:55,799
Speaker 1: less smart is the question. Because what Paul Ryan's got

839
00:44:55,800 --> 00:44:58,279
Speaker 1: to navigate are some people on his right flank who

840
00:44:58,360 --> 00:45:01,480
Speaker 1: want changes that I would you is not smart, and

841
00:45:01,520 --> 00:45:05,239
Speaker 1: then a bunch of several more or less moderate Republican

842
00:45:05,320 --> 00:45:08,360
Speaker 1: senators on the Senate side who want changes in the

843
00:45:08,360 --> 00:45:10,800
Speaker 1: other directions. So he's really caught between a rock and

844
00:45:10,840 --> 00:45:14,040
Speaker 1: a hard place. I I've been sort of vacillating around

845
00:45:14,040 --> 00:45:17,000
Speaker 1: fifty fifty for this, but I have to say that

846
00:45:17,080 --> 00:45:18,920
Speaker 1: it doesn't make sense to me for the people on

847
00:45:18,960 --> 00:45:21,879
Speaker 1: the right side of Paul Ryan to actually ultimately vote

848
00:45:21,920 --> 00:45:25,000
Speaker 1: no to almost anything, because why would you want to

849
00:45:25,040 --> 00:45:27,200
Speaker 1: go back to Obamacare one point oh if you can

850
00:45:27,239 --> 00:45:29,799
Speaker 1: have two point oh or one point eight or one

851
00:45:29,840 --> 00:45:32,279
Speaker 1: point five or anything that in their minds is better

852
00:45:32,320 --> 00:45:34,919
Speaker 1: than one point oh. But you know, the broader point

853
00:45:35,000 --> 00:45:37,400
Speaker 1: that we should keep in mind about both healthcare and

854
00:45:37,440 --> 00:45:41,080
Speaker 1: the budget is the dramatic way in which the president

855
00:45:41,160 --> 00:45:45,200
Speaker 1: is reshaping priorities and spending away from the very people

856
00:45:45,200 --> 00:45:49,640
Speaker 1: who elected him. His healthcare proposal would cut one net

857
00:45:49,640 --> 00:45:52,759
Speaker 1: one point one trillion dollars of benefits that go to

858
00:45:52,840 --> 00:45:55,480
Speaker 1: lower income Americans, many of them voted for him, and

859
00:45:55,480 --> 00:45:58,640
Speaker 1: they would give people like me six hundred million dollars

860
00:45:58,680 --> 00:46:01,319
Speaker 1: of tax cuts, which and I didn't vote for him,

861
00:46:01,360 --> 00:46:03,160
Speaker 1: and I don't need those tax cuts. And then on

862
00:46:03,200 --> 00:46:06,560
Speaker 1: the spending side, the budget obviously would eviscerate a lot

863
00:46:06,560 --> 00:46:08,640
Speaker 1: of programs that help people at the lower end of

864
00:46:08,640 --> 00:46:11,840
Speaker 1: the income spectrum. So this is really the most traumatic

865
00:46:11,880 --> 00:46:16,000
Speaker 1: reshaping of government priorities I've ever seen. The last question here,

866
00:46:16,040 --> 00:46:17,799
Speaker 1: you look at the Affordable Care Act and you can

867
00:46:17,800 --> 00:46:20,359
Speaker 1: see some deficits there. You've see these insurance companies pulling

868
00:46:20,360 --> 00:46:23,759
Speaker 1: out of some markets and all that's associated with that.

869
00:46:24,040 --> 00:46:27,560
Speaker 1: Why does it seem so difficult to have a smart,

870
00:46:27,640 --> 00:46:31,000
Speaker 1: measured conversation about healthcare policy in this country? Here from

871
00:46:31,040 --> 00:46:33,959
Speaker 1: the House speaker that this isn't being rushed through the House. Indeed,

872
00:46:34,000 --> 00:46:35,560
Speaker 1: they've been thinking about it for a long time, They've

873
00:46:35,640 --> 00:46:39,080
Speaker 1: run on it for several cycles now, and yet it's

874
00:46:39,239 --> 00:46:41,919
Speaker 1: very hard to find outside groups that support this piece

875
00:46:41,960 --> 00:46:44,480
Speaker 1: of legislation, the changes that are that are proposed here.

876
00:46:44,640 --> 00:46:47,719
Speaker 1: What makes healthcare in particular so difficult so thorny a

877
00:46:47,760 --> 00:46:50,160
Speaker 1: political issue. First of all, it's a huge part of

878
00:46:50,160 --> 00:46:52,560
Speaker 1: our GDP, It's around eighteen percent or something like that.

879
00:46:52,760 --> 00:46:55,600
Speaker 1: And secondly, you're dealing with moral questions. You're dealing with

880
00:46:56,360 --> 00:46:59,920
Speaker 1: rationally healthcare. How much healthcare are people entitled to as

881
00:47:00,000 --> 00:47:02,479
Speaker 1: a matter of just being a citizen versus having any

882
00:47:02,480 --> 00:47:04,759
Speaker 1: other commodity, anything else you use in your life, you're

883
00:47:04,760 --> 00:47:07,759
Speaker 1: expected to pay for it. Why healthcare is just different? Uh,

884
00:47:08,080 --> 00:47:11,080
Speaker 1: it's just different in that respect. And I thought we

885
00:47:11,080 --> 00:47:12,960
Speaker 1: were going with the question those I'll answer the questions

886
00:47:12,960 --> 00:47:16,400
Speaker 1: you didn't ask fair enough. Is what's also not being discussed,

887
00:47:16,400 --> 00:47:19,880
Speaker 1: And politically it's impossible. But the problems of like insurers

888
00:47:19,880 --> 00:47:22,360
Speaker 1: pulling out of the marketplaces, this could have been fixed.

889
00:47:23,160 --> 00:47:25,960
Speaker 1: Nobody expected that Obamacare would get it all right on

890
00:47:26,000 --> 00:47:28,680
Speaker 1: the first get go, And in a rational world you

891
00:47:28,719 --> 00:47:31,480
Speaker 1: could have gone back in and change things. For example,

892
00:47:31,520 --> 00:47:34,000
Speaker 1: the cap of three to one on the ratio between

893
00:47:34,000 --> 00:47:36,600
Speaker 1: where older people paying what younger people pay in retrospect

894
00:47:36,719 --> 00:47:38,920
Speaker 1: was a mistake. You could fix that kind of stuff.

895
00:47:39,000 --> 00:47:42,600
Speaker 1: Obviously not in this political environment. Steve Wrett, thank you

896
00:47:42,640 --> 00:47:59,759
Speaker 1: so much. Little Advisors Orthopedic hand surgeon from Holidays Burg,

897
00:47:59,800 --> 00:48:02,799
Speaker 1: pen Sylvania. The president of the American Medical Association. That's

898
00:48:02,840 --> 00:48:05,640
Speaker 1: Andrew German, who joins us. Now, I know that the

899
00:48:05,680 --> 00:48:07,640
Speaker 1: a m A has come out against the American Health

900
00:48:07,680 --> 00:48:10,440
Speaker 1: Care Act, the plan proposed and championed by many members

901
00:48:10,480 --> 00:48:13,080
Speaker 1: of the Republican Republican members of the House of Representative,

902
00:48:13,400 --> 00:48:15,120
Speaker 1: Dr Gi, give us a sense here of what you

903
00:48:15,160 --> 00:48:19,759
Speaker 1: and your organization don't like about the plan. Good morning. Well,

904
00:48:19,760 --> 00:48:23,840
Speaker 1: first of all, thank you for having me on your show. Um,

905
00:48:23,960 --> 00:48:26,560
Speaker 1: we know that people who don't have health insurance live

906
00:48:26,640 --> 00:48:29,920
Speaker 1: sicker and die younger. The data are incontrovertibly clear on

907
00:48:30,000 --> 00:48:33,279
Speaker 1: that point. So when we see a piece of legislation

908
00:48:33,320 --> 00:48:37,960
Speaker 1: that that, by everybody's estimates, will take somewhere between fourteen

909
00:48:37,960 --> 00:48:41,600
Speaker 1: and twenty five million people off the insurance roles, we

910
00:48:41,680 --> 00:48:43,960
Speaker 1: think that that is condemning them to living sicker and

911
00:48:44,040 --> 00:48:46,680
Speaker 1: dying younger. And a physicians, we felt obligated to point

912
00:48:46,719 --> 00:48:49,560
Speaker 1: that out. How much input did you at the a

913
00:48:49,760 --> 00:48:51,840
Speaker 1: m A and how much input to doctors in particular

914
00:48:51,920 --> 00:48:55,520
Speaker 1: have in crafting this legislation. Did Republicans on the Hill

915
00:48:55,560 --> 00:49:00,640
Speaker 1: seek out your counsel? Well, we uh informed every member

916
00:49:00,640 --> 00:49:03,520
Speaker 1: of Congress on I think the second day of the

917
00:49:03,640 --> 00:49:07,840
Speaker 1: of the congressional session. What our principles were, that people

918
00:49:07,840 --> 00:49:10,319
Speaker 1: who had insurance shouldn't lose it, that people who don't

919
00:49:10,360 --> 00:49:12,560
Speaker 1: have insurance should get it, That there needs to be

920
00:49:12,600 --> 00:49:17,239
Speaker 1: adequate funding for safety net programs CHIP UH and medicaid.

921
00:49:17,960 --> 00:49:21,919
Speaker 1: That there needs to be an unremitting commitment to quality UH,

922
00:49:21,920 --> 00:49:25,560
Speaker 1: and that insurance needs to be affordable, affordable, and provide

923
00:49:25,560 --> 00:49:30,400
Speaker 1: meaningful coverage. So we've we've communicated those principles to UH,

924
00:49:30,440 --> 00:49:32,840
Speaker 1: to everyone in Congress, and we have met with leadership

925
00:49:32,880 --> 00:49:35,319
Speaker 1: on both sides of the aisle. We've talked with with

926
00:49:35,360 --> 00:49:37,160
Speaker 1: folks in the insurance industry who say, you know, there

927
00:49:37,160 --> 00:49:40,120
Speaker 1: were problems with competition and a number of market places.

928
00:49:42,200 --> 00:49:44,440
Speaker 1: How much of a mess is the Affordable Care Act

929
00:49:44,480 --> 00:49:45,879
Speaker 1: to you when you're looking at it, when you see

930
00:49:45,920 --> 00:49:47,799
Speaker 1: problems with the things that need to be fixed, what

931
00:49:47,880 --> 00:49:51,640
Speaker 1: stands out to you as a doctor, Well, the biggest

932
00:49:51,640 --> 00:49:54,080
Speaker 1: thing that needs to be fixed in the Affordable Care

933
00:49:54,120 --> 00:49:58,880
Speaker 1: Act is stabilizing the individual insurance markets. There's great uncertainty UM,

934
00:49:58,920 --> 00:50:01,239
Speaker 1: and I think people on both sides of the I'll

935
00:50:01,280 --> 00:50:04,319
Speaker 1: agree about that. The question is do you fix what's there,

936
00:50:04,400 --> 00:50:09,160
Speaker 1: or do you replace um UH with something else. We're

937
00:50:09,160 --> 00:50:12,400
Speaker 1: not philosophically opposed to replacement. We just need to know

938
00:50:12,480 --> 00:50:16,040
Speaker 1: what it is before you you repeal what's here. If

939
00:50:16,040 --> 00:50:18,480
Speaker 1: your with us, folks. Andrew German, he is to have

940
00:50:18,560 --> 00:50:22,880
Speaker 1: the American Medical Association and out of Upstate Syracuse UH

941
00:50:23,160 --> 00:50:26,600
Speaker 1: DR I went back and forth yesterday with Peter Hotez, A. Baylor,

942
00:50:27,160 --> 00:50:31,600
Speaker 1: and I think at Upstate UH Syracuse UH, Timothy n

943
00:50:31,680 --> 00:50:34,800
Speaker 1: d E n d Y, Timothy Dy and their courage

944
00:50:35,160 --> 00:50:38,640
Speaker 1: in really tough parts of the world on vaccines. They

945
00:50:38,640 --> 00:50:40,680
Speaker 1: now have to bring that courage back to the United

946
00:50:40,719 --> 00:50:43,040
Speaker 1: States where whether it's mumps or measles. We're having this

947
00:50:43,680 --> 00:50:47,960
Speaker 1: discussion about vaccines, which was carried for carried forward a

948
00:50:48,000 --> 00:50:52,319
Speaker 1: few days ago by our newly minted UH Secretary of

949
00:50:52,000 --> 00:50:56,880
Speaker 1: of of Human Health and Human Services, Mr Price. Dr Price.

950
00:50:57,160 --> 00:50:59,799
Speaker 1: Can you help us here with a vaccine debate? How

951
00:50:59,800 --> 00:51:06,200
Speaker 1: does the A m A shift this debate back to science? Well,

952
00:51:05,960 --> 00:51:10,160
Speaker 1: we there is no debate, but the science about vaccines

953
00:51:10,320 --> 00:51:15,120
Speaker 1: is again incontrovertibly clear UM that we need to protect ourselves,

954
00:51:15,120 --> 00:51:19,240
Speaker 1: our children, and our communities UH. And the science speaks

955
00:51:19,280 --> 00:51:23,440
Speaker 1: for itself. So there's there's to my mind, no controversy there. Um,

956
00:51:23,520 --> 00:51:27,120
Speaker 1: people need to get vaccines, they're safe. The controversy seems

957
00:51:27,160 --> 00:51:31,360
Speaker 1: to be a select group of medical types who have

958
00:51:31,640 --> 00:51:36,600
Speaker 1: succumbed to almost the state's rights debate on basic science.

959
00:51:36,640 --> 00:51:40,719
Speaker 1: Back to Louis Pasteur. How do we address that as

960
00:51:40,760 --> 00:51:46,240
Speaker 1: a nation when we see expanded illnesses and illnesses coming

961
00:51:46,280 --> 00:51:50,719
Speaker 1: back from our childhoods. Well, again, I think we have

962
00:51:50,800 --> 00:51:53,440
Speaker 1: to focus on the science. Science is not a state's

963
00:51:53,520 --> 00:51:57,560
Speaker 1: right issue, states rights issue. Science is not a Democrat,

964
00:51:57,640 --> 00:52:02,080
Speaker 1: Capital D or Republican uh shoes. Science is science, and

965
00:52:02,600 --> 00:52:06,160
Speaker 1: uh that's what what allows us to take good care

966
00:52:06,160 --> 00:52:09,920
Speaker 1: of people. Um. We we try to do evidence based

967
00:52:09,960 --> 00:52:13,880
Speaker 1: medicine based on science that is rigorous, that is reproducible,

968
00:52:14,040 --> 00:52:17,279
Speaker 1: and adheres to basic scientific principles that go back to

969
00:52:17,360 --> 00:52:21,040
Speaker 1: Louis Pastor you sited before. That's Kevin, let me go

970
00:52:21,040 --> 00:52:23,239
Speaker 1: back to this legislation on the Hill right now, the

971
00:52:23,239 --> 00:52:26,719
Speaker 1: timetable that we have before us, how Speaker Paul Ryan

972
00:52:26,719 --> 00:52:28,960
Speaker 1: and others hoping to get this done as quickly as possible.

973
00:52:29,239 --> 00:52:31,239
Speaker 1: What are your next steps? You mentioned sending a letter

974
00:52:31,280 --> 00:52:34,520
Speaker 1: sending your point of view to two congressmen on Capitol Hill.

975
00:52:34,880 --> 00:52:37,080
Speaker 1: Where do you plan to go next? Is this debate

976
00:52:37,120 --> 00:52:42,359
Speaker 1: continues in Washington. Well after the legislation was dropped, we

977
00:52:43,000 --> 00:52:48,799
Speaker 1: reiterated our concerns. UM we have made our our principles

978
00:52:48,840 --> 00:52:51,960
Speaker 1: again known. We've reiterated them and made it clear what

979
00:52:52,040 --> 00:52:54,920
Speaker 1: our our problems are with the current legislation and why

980
00:52:55,000 --> 00:52:58,320
Speaker 1: we can't support it as written. We have a patience

981
00:52:58,680 --> 00:53:03,440
Speaker 1: UH action net work and a physicians grassroots network and

982
00:53:03,520 --> 00:53:05,880
Speaker 1: both of those will be activated. And I don't know

983
00:53:06,080 --> 00:53:08,640
Speaker 1: what else we will we will do, but weill. The

984
00:53:08,680 --> 00:53:11,400
Speaker 1: important thing is that we are we are communicating to

985
00:53:11,480 --> 00:53:14,200
Speaker 1: Congress that we want to work with them. We want

986
00:53:14,239 --> 00:53:18,000
Speaker 1: to be helpful partners in crafting legislation that will accomplish

987
00:53:18,480 --> 00:53:21,399
Speaker 1: the goals of meeting the principles that we've laid out.

988
00:53:21,560 --> 00:53:25,640
Speaker 1: Do you feel that Washington is listening to our nurses

989
00:53:25,760 --> 00:53:31,120
Speaker 1: and our doctors? I hope so well. I know hope

990
00:53:31,120 --> 00:53:34,680
Speaker 1: and audacity would help out here. But but do you feel,

991
00:53:35,040 --> 00:53:37,080
Speaker 1: you know, within the scope of your career, back to

992
00:53:37,160 --> 00:53:40,160
Speaker 1: your days at Upstate and Syracuse, do you feel like

993
00:53:40,200 --> 00:53:42,680
Speaker 1: you've got a voice in Washington with the A M A.

994
00:53:44,719 --> 00:53:48,279
Speaker 1: I absolutely and honestly do. Otherwise I wouldn't have spent

995
00:53:49,239 --> 00:53:51,680
Speaker 1: thirty years of my medical career being active in it.

996
00:53:52,440 --> 00:53:56,759
Speaker 1: I think that advocating for our profession uh and for

997
00:53:56,800 --> 00:53:59,960
Speaker 1: our patients is a professional responsibility. I think it is

998
00:54:00,160 --> 00:54:03,600
Speaker 1: as on a par with with keeping current with trying

999
00:54:03,640 --> 00:54:07,960
Speaker 1: to do good medicine because we um doctors, nurses, and

1000
00:54:08,000 --> 00:54:11,120
Speaker 1: patients are the ones who can tell our stories uh

1001
00:54:11,120 --> 00:54:13,000
Speaker 1: and Congress needs to hear them. So that's why I

1002
00:54:13,040 --> 00:54:14,560
Speaker 1: do the work that I do, and it's it's a

1003
00:54:14,600 --> 00:54:17,600
Speaker 1: privilege to do it. Oh, thank you so much, Dr German,

1004
00:54:17,680 --> 00:54:20,879
Speaker 1: greatly appreciate. We'd love to have you back on back

1005
00:54:20,920 --> 00:54:24,640
Speaker 1: with Bloomberg Surveillance again on the medicine of the nation.

1006
00:54:32,239 --> 00:54:36,600
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

1007
00:54:36,680 --> 00:54:41,719
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform

1008
00:54:41,880 --> 00:54:45,400
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David

1009
00:54:45,440 --> 00:54:49,120
Speaker 1: Gura is at David Gura. Before the podcast, you can

1010
00:54:49,239 --> 00:55:05,239
Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Yeah, brought you

1011
00:55:05,280 --> 00:55:08,960
Speaker 1: by Bank of America Mary Lynch. Dedicated to bringing our

1012
00:55:09,000 --> 00:55:12,600
Speaker 1: clients insights and solutions to meet the challenges of a

1013
00:55:12,600 --> 00:55:17,520
Speaker 1: transforming world. That's the power of Global Connections, Mary Lynch, Pierce,

1014
00:55:17,600 --> 00:55:21,440
Speaker 1: Fenner and Smith Incorporated, Member s i p C,