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Speaker 2: I'm joined now on Bloomberg Television and Radio for an
Speaker 2: exclusive interview with a Democratic Senator from Georgia, Rafael Warnock.
Speaker 2: His first time on Bloomberg TV and radio. He sits
Speaker 2: on a key committee that is in focus this week,
Speaker 2: the Senate Commerce, Science, and Transportation Committee, which is leading
Speaker 2: the fight on the FAA reauthorization bill. Senator, thank you
Speaker 2: so much for being here on Bloomberg. Of course, you
Speaker 2: and your colleagues are up against a deadline this week,
Speaker 2: Friday May tenth is when this reoff has to happen.
Speaker 2: There needs to be an amendment agreement to have it
Speaker 2: happen quickly. Where exactly do things stand, What amendments deserve
Speaker 2: to get a vote?
Speaker 3: Well, thank you so very much. It's wonderful to be
Speaker 3: here with you. Kaylee. Listen, our aviation industry is so
Speaker 3: very important to the American economy and of course, we
Speaker 3: want to make sure that consumers that flyers are safe,
Speaker 3: and that our airlines operate in an efficient manner. So
Speaker 3: this comes up every five years. I'm on the Commerce Committee.
Speaker 3: We've been working on this bill for more than a year.
Speaker 3: I have been especially focused on the issue of boastering
Speaker 3: our workforce pipeline. We have a shortage of pilots, aviation mechanics,
Speaker 3: other people who work in the industry, and we are
Speaker 3: barely pulling from all of our human talent. So I
Speaker 3: have provisions in the bill that address that along with
Speaker 3: other things, and I remain very hopeful that we'll get
Speaker 3: all of this over the finish line before the deadline
Speaker 3: come Fridate.
Speaker 2: Okay, so, Senator, in your mind, there is not a
Speaker 2: chance that a short term authorization may need to happen,
Speaker 2: considering this doesn't just need to make through your chamber,
Speaker 2: but the House as well.
Speaker 3: Listen, we are in the midst of the sausage making
Speaker 3: that happens in Congress. But I think there is a commitment,
Speaker 3: a large consensus that we need to try to get
Speaker 3: this over the finish line, and I remain hopeful that
Speaker 3: we will.
Speaker 2: Well, Senator, there is some disagreement even between you and
Speaker 2: some of your other Democratic colleagues, around certain provisions, including
Speaker 2: more flights out of DCA, the airport just down the
Speaker 2: road from where you and I are. It's staunchly opposed
Speaker 2: by senators and neighboring state Senator Warner, Kate van holland Cardon,
Speaker 2: to name a few, are all opposed to this. I
Speaker 2: know you're for it. What do you say to those though,
Speaker 2: who suggest that adding slots at Reagan could potentially lead
Speaker 2: to further delays or even safety risks.
Speaker 3: Well, have great respect and really affection for my colleagues
Speaker 3: in Maryland and Virginia, but they are wrong on this issue.
Speaker 3: To put it bluntly, they're just wrong. This will not
Speaker 3: compromise safety in any way. We have addressed this issue
Speaker 3: with the FAA. Basically, we want to make sure that
Speaker 3: flyers throughout our country have access to the nation's capital.
Speaker 3: This is the seat of government. And basically this is
Speaker 3: a modest proposal that will add about one percent to
Speaker 3: DCA's daily operations. I think that my colleagues respectfully have
Speaker 3: certain interests that they're trying to protect. Their safety issue
Speaker 3: simply does not hold water. And I'm hopeful that at
Speaker 3: the end of the day we'll be able to have
Speaker 3: some more flights. Really, it's just a handful of more
Speaker 3: flights coming in and out of the airport that serves
Speaker 3: the nation's capital, and certainly people west of the Mississippi
Speaker 3: should have access as well as folks on this side
Speaker 3: who go back and forth every single day.
Speaker 2: Well, Senator, in addition to serving on the Commerce, Science,
Speaker 2: and Transportation Committee, you also serve on a few other
Speaker 2: key committees, including the Senate Banking Committee, And I'd like
Speaker 2: to lean on that expertise you have for a moment,
Speaker 2: if you will. We got to report out yesterday an
Speaker 2: independent third party probe into a toxic workplace culture at
Speaker 2: the FDIC. There are some Republicans who are now calling
Speaker 2: for the resignation of the FDIC chair Marty Gruenberg. Do
Speaker 2: you think he should resign?
Speaker 3: Well, let me say that I am still reviewing the report.
Speaker 3: What I am seeing there. Some of the things that
Speaker 3: I see there are concerning, even disturbing. But we will
Speaker 3: hear from the chairman. In just a few days, he
Speaker 3: will appear before my committee and we'll get a chance
Speaker 3: to hear from him directly, and we'll see where we
Speaker 3: go from there.
Speaker 4: But let me just fair enough, Senator.
Speaker 3: Clear, let me be clear that an abusive and toxic
Speaker 3: workplace environment where people feel that they are being abused
Speaker 3: in some way that is hostile to the work environment,
Speaker 3: is intolerable, and one way or the other, it will
Speaker 3: have to be addressed, and we will make sure that
Speaker 3: that happens well.
Speaker 2: And Senator will look forward to that testimony before the
Speaker 2: Banking Committee in just a few days. There, of course,
Speaker 2: is a lot still happening that is getting attention outside
Speaker 2: of Washington, including Israel, where there have been moves into Rafa,
Speaker 2: the Gaza city in which more than a million Palestinians
Speaker 2: are taking yef region. We have now gotten confirmation from
Speaker 2: the Defense Department, from the Secretary Lloyd Austin that the
Speaker 2: US has withheld pause for now a shipment of bombs
Speaker 2: to Israel overconcerned about how they may be used in Rafa.
Speaker 2: Is this appropriate for the administration to be doing at
Speaker 2: this time, Sir, I'm very.
Speaker 3: Concerned about what's going on in Gaza, and I'm already
Speaker 3: on the record I said many weeks ago that I'm
Speaker 3: very concerned about any incursion in Tarrafa. I pray for
Speaker 3: a day where Israeli mothers and fathers and Palestinian mothers
Speaker 3: and fathers can do what all of us parents want.
Speaker 3: I have two young children myself. Put your children to
Speaker 3: bed at night in peace and awake into a world
Speaker 3: that embraces all of them. And so we intend to
Speaker 3: make sure that we keep an eye on this situation.
Speaker 3: But we need a ceasefire. In this situation, Israel has
Speaker 3: a right to defend itself. I am deeply offended and
Speaker 3: hurt by what happened on October seventh, where we saw
Speaker 3: this attack, where we saw rape and sexual assault used
Speaker 3: as a weapon of war. But I'm also very concerned
Speaker 3: about over thirty thousand Palestinian lives that have been lost
Speaker 3: in this conflict, the majority of them being women and children.
Speaker 3: So I'm hopeful that at the end of the day day,
Speaker 3: we will recognize that the answer to death and destruction
Speaker 3: is not more death and destruction.
Speaker 2: Well, and Senator, of course, your Chamber, together with the House,
Speaker 2: did ultimately advance supplemental funding not just for Israel but
Speaker 2: other allies as well, And of course you're still doing
Speaker 2: the work to finish the job of further efforts that
Speaker 2: need more immediate attention, including the FAA reauthorization that we
Speaker 2: began this conversation with just finally, Senator, there are things
Speaker 2: that may not be attached to that FAA legislation because
Speaker 2: not all of the amendments can get a vote. Is
Speaker 2: there going to be any other major vehicle with which
Speaker 2: legislation can get done for the remainder of this Congress, Look.
Speaker 3: That remains to be seen. We remain engaged. There are
Speaker 3: a lot of issues to address. I'm glad that it's
Speaker 3: part of the FAA. Part of what will happen is
Speaker 3: that we will also reauthorize the National Transportation Safety Board.
Speaker 3: That's important when you look at issue like what happened
Speaker 3: with Alaska Airlines, the trained derailment in Palestine, Ohio, the
Speaker 3: bridge in Baltimore, a bridge that I know well. I
Speaker 3: pastored in Baltimore, and we're rooting for our friends there,
Speaker 3: and I think the Congress understands on both sides of
Speaker 3: the isle that that's important to the national economy. So
Speaker 3: we'll remain focused on these issues. I'm proud of Georgia.
Speaker 3: Georgia is a great aviation state. It holds the world's busiest,
Speaker 3: most efficient airport Hartsville, Jackson, And again, I hope that
Speaker 3: by the end of the week we'll be able to
Speaker 3: say to our constituents that we got this done all right.
Speaker 2: Senator Rafael Warnock, the Democrat from Georgia, thank you so
Speaker 2: much for joining me in this exclusive conversation on Bloomberg
Speaker 2: Television and Radio. Now, we'd like to keep the focus
Speaker 2: on the goings on on Capitol Hill because, of course,
Speaker 2: while immediately they do have to deal with issues like
Speaker 2: the FAA reauthorization, technically there also needs to be more
Speaker 2: appropriations bills passed between now and the end of the
Speaker 2: fiscal year on September thirtieth, although they could very well
Speaker 2: punt until after the election to solve those issues, but
Speaker 2: we still are think it's worth checking in on the
Speaker 2: fiscal outlook for the United States as we look forward
Speaker 2: to the work that is ahead. And I'm pleased to
Speaker 2: say joining me now in studio is someone who has
Speaker 2: an up close and personal view of that. Phillips Weigel
Speaker 2: is with me, Director of the Congressional Budget Office. It's
Speaker 2: great to see you here in our Washington, DC studio.
Speaker 2: Thank you so much for joining me. I know that
Speaker 2: you're set to give updated forecasts for the ten year
Speaker 2: budget and economic outlook pretty soon. Can you just give
Speaker 2: us a broad overview of how that's likely to change
Speaker 2: now compared to the last time you issued a forecast
Speaker 2: like this.
Speaker 5: Yeah, thanks so much, and we'll have that updated ten
Speaker 5: year outlook later in the spring, so sometimes before the
Speaker 5: end of the spring, which is June twentieth. The early
Speaker 5: indications for twenty twenty four are that outlays a rising
Speaker 5: by more more than we expected in our February twenty
Speaker 5: twenty four update. And we see that in a variety
Speaker 5: of ways.
Speaker 6: You know, one is.
Speaker 5: Outlays for student loans and for SBA loans. Those are
Speaker 5: credit re estimates that the administration has said that the
Speaker 5: instance is the money coming in for student loans and
Speaker 5: the money coming in for SBA loans is going to
Speaker 5: be less than they had booked in the budget before,
Speaker 5: so that will increase the deficit. There's a security supplemental
Speaker 5: of ninety five billion dollars that's new legislation since our
Speaker 5: February update. That will also mean an increased deficit. So
Speaker 5: there's a variety of other things, many of those pointing
Speaker 5: in the direction of a wider deficit.
Speaker 2: Deficit well, of course, when we think about deficit reduction,
Speaker 2: there's kind of two things that factor in. One you
Speaker 2: could spend less, the other you could raise revenue. Obviously,
Speaker 2: all of that has difficulties, especially in that spending less.
Speaker 2: In large part, there's only so much you can do
Speaker 2: in terms of spending cuts when you have mandatory spending
Speaker 2: like social Security and medicare. Is it easier for lawmakers
Speaker 2: to act now on those issues rather than waiting for
Speaker 2: it and pretense potentially exacerbating the deficit in the interim period.
Speaker 1: Yeah, it is.
Speaker 5: One of the challenges of looking at the deficit is
Speaker 5: that we know that the current situation is not sustainable,
Speaker 5: but we don't know when that moment will come.
Speaker 1: When in succesfull.
Speaker 5: Market is to lose faith in the willingness of the
Speaker 5: United States to take on the job of deficit reduction,
Speaker 5: and so acting sooner makes it easier in a sense
Speaker 5: that the changes, whether on the spending side or on
Speaker 5: the revenue side, those changes are smaller the sooner that
Speaker 5: we act. But as you said, it's difficult at any
Speaker 5: one moment to act.
Speaker 2: Well, something else that makes fiscal sustainability more difficult is
Speaker 2: that the cost of borrowing. Right when we are now
Speaker 2: here at Bloomberg talking each and every day about this
Speaker 2: idea that interest rates may stay higher for longer, how
Speaker 2: do you think about that in terms of the fiscal outlook?
Speaker 2: What are the implications of that.
Speaker 5: There's an important implication of rising debt on interest costs. Now,
Speaker 5: net interest outlays for the US government this year are
Speaker 5: already set to be more than defense spending, and soon
Speaker 5: there'll be more than non defense spending. This is the
Speaker 5: discretionary spending. So net interest outlays have risen and are
Speaker 5: becoming important as our debt gets larger. Well, that means
Speaker 5: that we're more vulnerable to higher interest rates. And so
Speaker 5: as an example, if interest rates are fifty basis points
Speaker 5: higher than we had in our budgetary projections, well, net
Speaker 5: interest outlays will be about two trillion dollars higher over
Speaker 5: ten years. So it's an increasing and important vulnerability.
Speaker 2: Well, and there also is kind of this circular effect
Speaker 2: here right where you have to consider that higher interest
Speaker 2: rates are a product of higher inflation. But there's an
Speaker 2: argument that the deficit can cause inflation. That you know,
Speaker 2: fiscal spending as a whole can be inflationary. How do
Speaker 2: you think about that kind of feedback loop.
Speaker 5: No, it's an important feedback, and in some sense it
Speaker 5: means that the US is yet more vulnerable. So if
Speaker 5: higher deficits feed into higher inflation, as they clearly did
Speaker 5: over the past several years, well, then that means higher
Speaker 5: interest rates and more net interest outlays. Now, inflation has
Speaker 5: come down over where it was, say, two years ago.
Speaker 5: There's been an uptick of inflation early this year, but
Speaker 5: we still expect inflation to moderate through the rest of
Speaker 5: this year and then into next year. The challenge is
Speaker 5: the pace at which that happens, the impact on interest rates,
Speaker 5: and then how those changes interact with our debt.
Speaker 2: Yeah, who knows what will be on interest rate levels
Speaker 2: or inflation levels by next year twenty twenty five. Something
Speaker 2: else I wanted to ask you about twenty twenty five is,
Speaker 2: of course, that is when we're going to have to
Speaker 2: be dealing with the tax cut question that was passed
Speaker 2: during the Trump administration back in twenty seventeen. In twenty
Speaker 2: twenty five is when they expire. How much would it
Speaker 2: cost if Congress were to renew that at a time
Speaker 2: when we're talking here about high deficits, and again this
Speaker 2: would be less revenue coming in.
Speaker 5: No, that's right, that important parts of the twenty seventeen
Speaker 5: tax Act expire at the end of next year, at
Speaker 5: the end of twenty twenty five. Those are not in
Speaker 5: our physical projections in the sense of the taxes revert
Speaker 5: to the pre December twenty seventeen law and is more revenue.
Speaker 5: So extending the parts of the tax act that expire
Speaker 5: would cost upwards of three trillion dollars over ten years,
Speaker 5: and really closer to four trillion dollars including the interest service.
Speaker 2: Okay, So when we were considering this back in twenty seventeen,
Speaker 2: the CBO did find that the economic benefits of that
Speaker 2: legislation wouldn't outweigh the costs of the higher deficit, so
Speaker 2: they didn't pay for themselves. Given how much has changed
Speaker 2: in the interim period, though that was twenty seventeen, we're
Speaker 2: here seven and eight years later. Have you changed the
Speaker 2: way you might think about the economic value of lower taxes?
Speaker 5: You know, it's something that we look at all the time,
Speaker 5: and we revisit our analysis of the twenty seventeen tax Act.
Speaker 5: In April twenty eighteen, CBO put out analysis saying that
Speaker 5: the twenty seventeen tax Act had a positive impact on
Speaker 5: business investment and from there to economic growth and job creation,
Speaker 5: and we saw that in the beginning of twenty eighteen.
Speaker 5: The challenge is that in the middle of twenty eighteen
Speaker 5: there is a slew of tariffs and other trade actions.
Speaker 5: Then since it has had a negative effect on business investment.
Speaker 5: So that's the sort of analysis we would do again
Speaker 5: with whatever Congress is considering extending some or all the
Speaker 5: tax cuts or none of them, we would look at
Speaker 5: those impacts on the economy and then on the budget.
Speaker 2: All right, Phil Swegel, the Director of the Congressional Budget Office,
Speaker 2: thank you so much for joining me here in our Washington,
Speaker 2: DC studio. Great to talk with you, and we'll look
Speaker 2: forward later this spring to getting your updated ten year
Speaker 2: budget and economic outlook.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast kens
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Speaker 1: Alexa playing Bloomberg eleven thirty.
Speaker 2: I'm pleased to say that joining me is Republican Congressman
Speaker 2: Andy Barr of Kentucky. He is a member of the
Speaker 2: House Foreign Affairs Committee. Congressman, welcome back to Bloomberg. Thank
Speaker 2: you so much for being with me. I would love
Speaker 2: to get your reaction to the news the confirmation we
Speaker 2: have gotten from the administration today that they have in
Speaker 2: fact paused the shipment of these large bombs to Israel
Speaker 2: overconcern of how they may be used in Rafa. The
Speaker 2: high civilian death toll potentially that could could result from them,
Speaker 2: is that appropriate in your mind?
Speaker 7: It's a direct abrogation of their responsibility under the Constitution
Speaker 7: to take care that the laws are faithfully executed. Congress,
Speaker 7: on a bipartisan, bi cameral basis, directed the administration to
Speaker 7: provide this military assistance to Israel to defend itself against terrorists,
Speaker 7: and the administration does not have the legal authority to
Speaker 7: just ignore and disregard the will of the American people,
Speaker 7: through their elected representatives in Congress.
Speaker 6: We passed the assistance package.
Speaker 7: We did not authorize the administration to pause these shipments,
Speaker 7: and this is an affront to the relationship between our
Speaker 7: two countries. The fact that this administration is rejecting an
Speaker 7: Act of Congress and turning its back on our key
Speaker 7: ally in the Middle East is obnoxious, and Congress will
Speaker 7: certainly be asking searching questions about number one, the lack
Speaker 7: of authority for the administration to do this, and number two,
Speaker 7: why on earth this administration would put domestic politics ahead
Speaker 7: of our own national security and the security of our allies.
Speaker 2: Well, Congressman, the counter argument would perhaps be that this
Speaker 2: isn't even so much about what's happening domestically as the
Speaker 2: idea that in Rafa there are more than a million
Speaker 2: Palestinian civilians who are taking refuge and they want to
Speaker 2: make sure that the civilian death toll does not go higher.
Speaker 2: Is there nothing Israel could do, no level at which
Speaker 2: that death toll could rise to that would alter your
Speaker 2: view of how the US should be approaching Israeli policy.
Speaker 7: Well, this argument is based on the faulty presumption that
Speaker 7: it is somehow the Israeli Defense Force's fault. Hamas terras
Speaker 7: use innocent men, women and children Palestinian innocent Palestinians as
Speaker 7: human shields.
Speaker 6: The problem is not the Israeli defense forces.
Speaker 7: The problem are is the cancer of hamas terras embedded
Speaker 7: in Rafa.
Speaker 6: That is the problem.
Speaker 7: We need to give Israel the time and space to
Speaker 7: do what needs to be done to prevent October seventh
Speaker 7: from ever happening again and to rid Gaza of radical
Speaker 7: Islamic terrorists. Until Israel is able to deradical and demilitarize Gaza,
Speaker 7: we will continue to see this kind of outrageous terrorist
Speaker 7: activity perpetrated against our key allies.
Speaker 2: Well, Congressman, it's great to have you weigh in on
Speaker 2: this matter. As a member of the House Foreign Affairs Committee.
Speaker 2: You also are a member of the House Financial Services Committee.
Speaker 2: In fact, you would like to be the next chair
Speaker 2: of that committee, and I want to ask you on
Speaker 2: an issue relevant to your role there. We got a
Speaker 2: third party independent report yesterday about a toxic workplace culture
Speaker 2: at the FDIC. We have had a lot of calls
Speaker 2: for the chair of the FDICE, Marty Greenberg, to resign.
Speaker 2: Would that really, though, solve these deep rooted problems in
Speaker 2: your mind?
Speaker 7: Well, the report found that Chairman Gruenberg would be particularly
Speaker 7: challenged to fix these problems, and I certainly agree. That's
Speaker 7: why I called for Chairman Gruenberg's resignation, which is overdue
Speaker 7: here and really, the question you have to ask yourself
Speaker 7: is if this toxic work workplace. If this culture of
Speaker 7: harassment and misconduct, it's that existed in a regulatory, regulated
Speaker 7: financial institution and ensured depository institution that the FDIC oversaw.
Speaker 7: Do you think for one minute the regulators the bank
Speaker 7: examiners would say that we should keep management in place.
Speaker 6: The answer is, of course not.
Speaker 7: And so we need to hold the FDIC to the
Speaker 7: same standards that they would hold their regulated banks to.
Speaker 7: And in this case, it's very clear that the only
Speaker 7: way to start to clean up the mess at the
Speaker 7: FDIC is to hold the leadership to account, and that
Speaker 7: means that Chairman Gruenberg should go. The other point here
Speaker 7: is that it's more than just a toxic work environment.
Speaker 7: It is actually threatening safety and soundness of our financial system.
Speaker 7: Because we know the fdi C, because of these problems,
Speaker 7: has had a employee retention problem.
Speaker 6: Bank examiners have left. There is a shortage.
Speaker 7: Of talented and capable UH and UH and and well
Speaker 7: trained UH bank examiners at.
Speaker 1: The fdi C.
Speaker 7: This is directly attributable to the toxic workplace. And you
Speaker 7: know the you know this is this is this is
Speaker 7: a threat to safety and soundness of the banking system.
Speaker 7: So I think this is a this is a damning report,
Speaker 7: and we have to see some accountability.
Speaker 2: Another banking related matters, sir. There was talk that this
Speaker 2: FAA reauthorization bill that technically needs to be done by
Speaker 2: Congress this week might have some things attached to it,
Speaker 2: including safe banking for marijuana companies, potentially even stable coin legislation.
Speaker 2: It seems less likely now that those things will ultimately
Speaker 2: get passed through this vehicle. Do you see another vehicle
Speaker 2: with which they could in this Congress?
Speaker 8: I do.
Speaker 7: I think another must pass piece of legislation that could
Speaker 7: be a vehicle would be the National Defense Authorization Act at.
Speaker 6: The end of the year.
Speaker 7: Maybe it might be politically more achievable in a lane
Speaker 7: duck after the election to do this. But as a
Speaker 7: supporter of both the stable coin legislation that we marked
Speaker 7: up and the Market Structure Bill for digital assets, I
Speaker 7: think this.
Speaker 6: Is very important.
Speaker 7: I think it's connected to national security. When you think
Speaker 7: about stable coins. The United States needs to promote dollar
Speaker 7: denominated stable coins in the global economy to protect and
Speaker 7: advance the dollar's dominance, and the dollar is the.
Speaker 6: World's reserve currency.
Speaker 7: Blockchain is coming, digital assets are coming, stable coins are coming.
Speaker 7: We need to make sure that we provide regulatory certainty
Speaker 7: and clarity for investors in crypto and in digital assets,
Speaker 7: to make sure that stable coins which are coming to
Speaker 7: reduce friction, to increase the speed with which transactions occur,
Speaker 7: to to find, you know, innovation in our financial system,
Speaker 7: we need to make sure that those stable coins are
Speaker 7: denominated in dollars. That's why this is so important, and
Speaker 7: it is connected to national security. So I'm hopeful that
Speaker 7: if we can't move it as a standalone before the
Speaker 7: end of this Congress, that we can attach some version
Speaker 7: of this to the National Defense Authorization Act.
Speaker 2: Congressman, finally, I literally have thirty seconds left with you,
Speaker 2: but I can't let you go without asking. As you understand,
Speaker 2: it is Marjorie Taylor Green's motion to vacate the speaker
Speaker 2: effort dead at this point.
Speaker 6: Certainly on pause and mercifully so.
Speaker 7: The last thing that any conservative, self described conservative should
Speaker 7: do six months ahead of a very consequential presidential election
Speaker 7: is to vacate the Speaker's office. That would be so
Speaker 7: counterproductive and certainly not good for the country.
Speaker 2: All right, Congressman Andy Barr, the Republican from Kentucky, thank
Speaker 2: you so much for joining me live today from Capitol Hill.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast kens
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Speaker 2: I am, indeed Kaylee Lines in Washington, where President Biden
Speaker 2: is not today. He is instead in Wisconsin, a critical
Speaker 2: swing status he campaigns for reelection, and he's there for
Speaker 2: a very specific reason, together with Brad Smith and Microsoft,
Speaker 2: announcing a three point three billion dollar investment the company
Speaker 2: plans to make in Wisconsin. Coincidentally, on the exact same
Speaker 2: site where fox Con was originally supposed to build out,
Speaker 2: a project that was announced and heralded under the Trump
Speaker 2: administration that ultimately never came to fruition. The President just
Speaker 2: wrapping up remarks in Wisconsin on his Investing and America agenda.
Speaker 2: All of this, of course, meant to highlight the manufacturing
Speaker 2: renaissance that this president has tried to claim credit for
Speaker 2: bringing about through his various pieces of legislation. And it's
Speaker 2: on that note we bring in now our political panel.
Speaker 2: Morrig Gillespie is with me from New York. She's founder
Speaker 2: of Bluestack Strategies, alongside Brad Howard, a Democratic strategists and
Speaker 2: Corcoran Street Group founder, is.
Speaker 4: With me now.
Speaker 2: So Brad, just to begin with you, as we've seen
Speaker 2: the President making a number of trips like this to
Speaker 2: swing states, specifically to areas in which we are seeing
Speaker 2: companies lawed plans for investment and for job growth. All
Speaker 2: of it, though, are about projects that are sure going
Speaker 2: to start, but aren't necessarily going to be completed between
Speaker 2: now and the time voters actually go cast a vote
Speaker 2: for Biden or not in November. How big of a
Speaker 2: struggle is this for President Biden to be talking about
Speaker 2: things that voters can't actually see tangibly. Yet in many cases.
Speaker 8: Well, I would disagree, because that what the voters can
Speaker 8: see of the jobs these projects are creating, and these
Speaker 8: are good pay union jobs that can't be exported.
Speaker 1: Right.
Speaker 8: So this is part of the President's commitment to being
Speaker 8: the most pro labor president in American history. In addition,
Speaker 8: this is a constant, a direct consequence of the President's
Speaker 8: economic package that he past and some of the more
Speaker 8: historic investments in infrastructure, in chips manufacturing, that he has
Speaker 8: been promoting since. And so I'm glad to see the
Speaker 8: White House going out and telling this story and showcasing
Speaker 8: and taking legislation that's a very abstract thing and turning
Speaker 8: it into real life jobs in these swing states. And
Speaker 8: so I think he's smart to point out the kind
Speaker 8: of fake facade of the GOP of the President Trump record,
Speaker 8: which was a disasters for in terms of jobs, and
Speaker 8: you're looking at the president who's focusing on not just
Speaker 8: making the wealth like the president. The President Trump had
Speaker 8: a tax plan that made the wealthy wealthier, and we're
Speaker 8: seeing the wealth Actually there's a study out this past
Speaker 8: week that the wealthier paying less taxes effectively than average
Speaker 8: hardworking American families. That is messed up, and that's a
Speaker 8: result of the Trump tax code of reforms that he
Speaker 8: made when he was president. Biden has focused like a
Speaker 8: laser in the middle class, and I'm excited to see
Speaker 8: that he's in the rust belt, going back to some
Speaker 8: of these states where jobs have left to come back
Speaker 8: in and really focus on rebuilding with good labor jobs.
Speaker 2: Well, as we talk about the contrast between Biden and
Speaker 2: Trump here specifically more again this facility where Microsoft is
Speaker 2: going to be building is the same site where Fox
Speaker 2: Cone originally was going to when it was announced under
Speaker 2: the Trump administration years ago, and ultimately that didn't really
Speaker 2: come together. How stark is that contrast for Biden? Is
Speaker 2: this just an opportunity to kind of flex on Donald
Speaker 2: Trump in some sense?
Speaker 9: It's certainly not a coincidence that they're doing it this way,
Speaker 9: and it is a strategic move by the Biden administration
Speaker 9: that is a good opportunity for them to tellt what
Speaker 9: Biden has sought to do for the economy. I would
Speaker 9: say that to your point in how you questioned things
Speaker 9: about has Biden really delivered on those promises? And I
Speaker 9: think that that's where the American people need to be
Speaker 9: reminded that's what Biden's team should be doing, because they
Speaker 9: don't feel it. They don't feel as though the economy
Speaker 9: is in their favor and that things are going well
Speaker 9: for them, and MP is hitting on that. He is
Speaker 9: constantly reminding them that are telling them that the economy
Speaker 9: is better under his presidency. So it's definitely going to
Speaker 9: be a factor that continues to be part of the
Speaker 9: conversation as we go towards November. But I think this
Speaker 9: is an opportunity to hit on Trump that Biden is
Speaker 9: certainly taking advantage of here.
Speaker 2: On the subject of former President Donald Trump, he also
Speaker 2: has been in the news in the last twenty four hours.
Speaker 2: He of course, was in court in New York yesterday
Speaker 2: and his ongoing hush money trial. Stormy Daniels took the
Speaker 2: stand with at times salacious testimony about her sexual encounter
Speaker 2: with Donald Trump. Court, of course in that case is
Speaker 2: on a break today. But we also learned yesterday, perhaps
Speaker 2: more in favor of the former president than the Stormy
Speaker 2: Daniels testimony, that the Florida case, the Document's case in
Speaker 2: which Judge Aileen Cannon is overseeing it, has been postponed
Speaker 2: indefinitely the trial that is, because of a bunch of
Speaker 2: motions and pre trial hearings that she says need to
Speaker 2: take place between now and July. Brad, How consequential will
Speaker 2: it be if the only time we see Donald Trump
Speaker 2: in court between now in November is in New York,
Speaker 2: where we've seen him now four weeks and to this
Speaker 2: point there has been no real indication that it is
Speaker 2: changing his standing in polls.
Speaker 8: Yeah, and I think, like I agree with most most
Speaker 8: folks who analyze this and say, you know, you know,
Speaker 8: I think there was an Axios article out this week
Speaker 8: that said, the only people that really matter in this
Speaker 8: selection are six percent of voters in six swing states.
Speaker 8: Most most folks have their mind made up whether they
Speaker 8: think Trump has committed crimes or not. I don't think
Speaker 8: the outcome of this trial is going to change that
Speaker 8: in any dramatic way, though we have no data to suggest,
Speaker 8: because he's the first indicted candidate we've ever had from
Speaker 8: president of the major party nominee. So you know, we'll
Speaker 8: see how that plays out. But what I do think
Speaker 8: the consequences of him being forced to stay in the
Speaker 8: courtroom are that it allows President Biden to have the
Speaker 8: campaign trail to himself right now. You know, Biden's out
Speaker 8: touting the economy, he's out talking about what he believes in,
Speaker 8: and he's fundraising to pour money into these swing states
Speaker 8: so they can build up operations. Trump the money he
Speaker 8: raises is going to his legal defense funds, So you know,
Speaker 8: I think there's a multitude of factors here that make
Speaker 8: this at the end of the day, I think a
Speaker 8: net loss for Trump. I don't think it's going to
Speaker 8: necessarily change too many voters' minds. We'll see what happens
Speaker 8: if he is convicted, you know, if he's if he
Speaker 8: has proven innocent, that could be that could give him
Speaker 8: a big boost. Who knows, because it may put some
Speaker 8: validation to the attacks that this was just a part
Speaker 8: of an endeavor. I'm a little frustrated because I do
Speaker 8: think this is kind of the weakest case, uh that
Speaker 8: that we have again, that that the prosecution has against
Speaker 8: done in trump of all the trials. It's unfortunate this
Speaker 8: is going first because it has paused what I think
Speaker 8: is the real concern, which is the Florida case about
Speaker 8: his mishandling and classified documents. So you know, we're this
Speaker 8: this is this is like a TV soap opera play
Speaker 8: out at the moment, no one really knows how it's
Speaker 8: gonna ends. Probably gonna be some twist and turns like
Speaker 8: you see the soap opera. So grab the popcorn watch
Speaker 8: and let's see how this plays out.
Speaker 2: Ah, the drama, there is never a shortage of it,
Speaker 2: and Maura I would also point out there didn't seem
Speaker 2: to be a shortage of drama in the Indiana primary yesterday.
Speaker 2: All of us seem to have forgotten that primaries are
Speaker 2: still ongoing because at this point we already have our
Speaker 2: presumptive Democratic and Republican nominee. So in theory, what do
Speaker 2: they matter, except perhaps in a situation in which Nikki Hayley,
Speaker 2: a former Republican presidential candidate who ended her campaign two
Speaker 2: months ago, drew twenty two percent of the vote in
Speaker 2: the Indiana primary. More if you're the Trump campaign, how
Speaker 2: do you look at a number like that?
Speaker 9: They should be concerned because that is a choice that
Speaker 9: twenty two percent of the you know, those who voted
Speaker 9: and made to not vote for Donald Trump, knowing that
Speaker 9: he's a presentative dominee. And to me, it is just
Speaker 9: a reminder of what makes the fundamentals of our democracy
Speaker 9: is that we have a choice, and if we don't
Speaker 9: like the top two choices, we have an opportunity to
Speaker 9: vote for somebody else, and in this case is still
Speaker 9: in the ballot, to vote in the primary, and the
Speaker 9: primary is an opportunity that we've seen that in other
Speaker 9: states on the Democratic side as well, or they're doing
Speaker 9: protest votes, and I think in this way, Republicans are
Speaker 9: reminding Donald Trump that he does not have all of us,
Speaker 9: and it's an important opportunity to try and reach out
Speaker 9: to those voters.
Speaker 6: Well.
Speaker 2: Brad as Mora raises the protest votes we have seen
Speaker 2: in Democratic primaries and states like Michigan elsewhere where voters
Speaker 2: were basically choosing different variations of not voting for Biden
Speaker 2: in the primary, whatever language the specific ballot was, using
Speaker 2: some protest on his policy toward Israel. There was a
Speaker 2: lot of conversation about how that may not actually translate
Speaker 2: into the general election, that the primary vote was kind
Speaker 2: of more of a throwaway when you knew that Biden
Speaker 2: was going to get the nomination, no matter what. Should
Speaker 2: we be thinking the same way about those who are
Speaker 2: selecting to vote for Nicki Haley in the Republican primary
Speaker 2: or these situations different.
Speaker 8: Very different, And here's why. When you look at the
Speaker 8: Democratic primary, these are protest votes from the left, which
Speaker 8: means in November, when the ballot you have the two
Speaker 8: party candidates, there is no option to go further left right,
Speaker 8: and so President Biden is who they're going to come
Speaker 8: home to in November. This is very typical, even in Michigan,
Speaker 8: and you go back and look at Barack Obama in
Speaker 8: twenty twelve, he had a protest vote of twelve percent,
Speaker 8: Joe Biden was only fourteen percent, and Barack Obama went
Speaker 8: to defeat at Romney. So it's kind of a proof
Speaker 8: point of what I'm talking about here. The difference with
Speaker 8: these vote protest votes you're seeing in the red states.
Speaker 8: In the Indiana, for example, are people that are in
Speaker 8: the middle. They think Donald Trump has gone too far
Speaker 8: to the right, particularly on the issues of abortion, and
Speaker 8: then of course all the legal trouble he's having. So
Speaker 8: they have a place to go, and that's Joe Biden,
Speaker 8: who's a good, decent human being who they may disagree
Speaker 8: with on some policies, but at the end of the day,
Speaker 8: they think he's going to protect democracy and make America proud,
Speaker 8: and so they do have an option here, and the
Speaker 8: Biden campaign knows that realizes that they're making an all
Speaker 8: out effort to get some of those disenfranchised Republican voters,
Speaker 8: the Hayley voters, to come into the Biden column, and
Speaker 8: we oddly the Trump campaign is insulting those same voters.
Speaker 8: So we'll see where they land at the end of
Speaker 8: the day. I suspect most will come home to Trump,
Speaker 8: but we only need you to go to Joe Biden.
Speaker 2: All right. Brad Howard, Democratic strategists and founder of the
Speaker 2: Quirkoran Street Group, alongside Mara Gillespie, the founder over at
Speaker 2: Blue Stack Strategies, our wonderful political panel today. Thank you
Speaker 2: so much.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast Ken
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Speaker 2: We have spent a good deal of time this hour
Speaker 2: talking about President Biden's trip to Wisconsin today, highlighting his
Speaker 2: efforts to revitalize manufacturing in the US, but of course
Speaker 2: the efforts of this administration have not and did just there.
Speaker 2: We've seen a lot of other effort underway, including a
Speaker 2: focus on competition and an effort to strengthen enforcement of
Speaker 2: antitrust law. And that is where our next guest comes
Speaker 2: in Doha. Mechi is here with me in the studio
Speaker 2: from the Department of Justice or she is the Principal
Speaker 2: Deputy Assistant Attorney General for the Antitrust Division Doha. Welcome
Speaker 2: to Bloomberg. Thank you so much for being here. If
Speaker 2: we could just begin with very high level. Obviously, this
Speaker 2: administration has focused immensely on competition. We have seen a
Speaker 2: lot of antitrust action from the DOJ and from other
Speaker 2: regulators as well. What effect, broadly do you think it
Speaker 2: has had on actual deal activity? Have you discouraged it
Speaker 2: from happening?
Speaker 6: Sure?
Speaker 4: Broadly speaking, anti trust is about opening up free markets,
Speaker 4: and I think that our approach to antitrust enforcement, which
Speaker 4: has been focused on understanding business and the facts and
Speaker 4: the way anti trust law applies to those facts, means
Speaker 4: that we have spotted and appropriately challenged deals that harm
Speaker 4: consumers or harm workers. But as a general matter, they're
Speaker 4: still deal making activity. The vast majority of deals don't
Speaker 4: even get so much as a phone call from the
Speaker 4: Justice Department. Some ninety eight percent of deals are still
Speaker 4: getting through without so much as a question. For the
Speaker 4: small percentage of M and A that raises questions about competition,
Speaker 4: we are investigating thoroughly, and when appropriate, we are going
Speaker 4: to court to challenge those transactions, and we're having success
Speaker 4: and often we are seeing that when we are concerned
Speaker 4: about competition in certain kinds of mergers and acquisitions, parties
Speaker 4: are often abandoning transactions then face the threat of litigation
Speaker 4: from the Justice Department. Well, certainly we've seen that, for
Speaker 4: example in the airline space in a case I know
Speaker 4: that you were involved in, but in that case is
Speaker 4: with many others we have seen that have gotten a
Speaker 4: great deal of attention. We're talking about public companies. We've
Speaker 4: seen increasingly, though, a lot of activity in the private
Speaker 4: sector in private equity.
Speaker 2: How are you thinking about deals in that perhaps less
Speaker 2: transparent space, if you will, considering we have seen so
Speaker 2: much activity happening specifically in private markets.
Speaker 4: To appreciate our approach, our approach to private equity, you
Speaker 4: really have to understand where we've been. And for years
Speaker 4: before the Biden administration, there was a sort of normative
Speaker 4: assumption that private equity transactions tended to be competitively neutral
Speaker 4: or beneficial. And what we've done is actually bring private
Speaker 4: equity to the same level of analysis and scrutiny as
Speaker 4: any other kind of transaction. And so there we're thinking
Speaker 4: about not only whether a private equity deal changes concentration
Speaker 4: in a market right, whether it allows a company to
Speaker 4: have very high shares for example, But we're also thinking
Speaker 4: about the type of transaction. Is it a serial transaction,
Speaker 4: right where a private equity firm is buying a number
Speaker 4: of firms in a market or perhaps even an adjacent market.
Speaker 4: Is it a tock in transaction. Is it a transaction
Speaker 4: that is premised on dropping quality or increasing take rate
Speaker 4: or raising prices. And so we're thinking about private equity
Speaker 4: just as we would any other kind of company.
Speaker 2: Is there a specific market or industry in which private
Speaker 2: equity involvement is getting more scrutiny from the Department of
Speaker 2: Justice that you feel is perhaps more problematic.
Speaker 4: You know, one of the great privileges of working at
Speaker 4: the Justice Department is that we are tasked with policing
Speaker 4: the entire US economy. And it turns out that private
Speaker 4: equity also is active across the entire US economy. And
Speaker 4: so we're taking our facts as we find them. Certainly,
Speaker 4: there's been a lot of writing about private equity and healthcare.
Speaker 4: There's been writing about private equity in real estate. I
Speaker 4: was recently reading something that suggested that certain pe firms
Speaker 4: are acquiring more than one thousand homes per day, and
Speaker 4: if they continue at the current rate of buying housing
Speaker 4: stock that private equity firms may own a substantial percentage
Speaker 4: of all homes in the United States. And of course
Speaker 4: we know that housing is a important vehicle for wealth building,
Speaker 4: and so that should raise some questions if we are
Speaker 4: concerned about the exercise of power and housing, for example.
Speaker 4: And there are many other industries where we see a
Speaker 4: lot of private equity activity, enterprise software, We're seeing it
Speaker 4: in food and beverages, We're seeing it in hospitals, and
Speaker 4: so there it's our job to just ask questions and
Speaker 4: make sure that we are appropriately scrutinizing those transactions.
Speaker 2: Well, it's interesting to hear you bring up housing because,
Speaker 2: of course, is we're in this twenty twenty four election cycle.
Speaker 2: Housing policy and housing costs affordability certainly is something that
Speaker 2: continually comes up. We've obviously seen the administration outlining a
Speaker 2: lot that they would like to see done in housing.
Speaker 2: Unclear how much of that can be accomplished and how
Speaker 2: much you would need another years for if President Biden
Speaker 2: does get another four years, what should we expect from
Speaker 2: the Anti Trust Division at the DOJ? Would would policy
Speaker 2: largely continue as has had been during this first term.
Speaker 4: So I'll say that we've used the full complement of
Speaker 4: tools to address housing problems. So whether it's an amicus
Speaker 4: brief that addresses commissions, for example, that realtors can make
Speaker 4: in housing transactions or rental pricing software, we take this
Speaker 4: really seriously because housing is important, and we also know
Speaker 4: that buying a home is a really important part of
Speaker 4: the American dream. But pivoting to the reality that it's
Speaker 4: an election year, you know, it's business as usual for us.
Speaker 4: We have a visionary Assistant Attorney General and Jonathan Cantor,
Speaker 4: and a wonderful Attorney General who is himself an antitrust
Speaker 4: lover who came in with a vision for vigorous enforcement,
Speaker 4: and for years we've been executing on that vision, and
Speaker 4: I expect that to continue.
Speaker 2: I'd like to ask you about something. And I realized
Speaker 2: that this is a hypothetical scenario at this point because
Speaker 2: Byteedance does not seem interested in divesting TikTok here in
Speaker 2: the US, despite legislation that has passed and been signed
Speaker 2: into law by President Biden that would require them to
Speaker 2: do so basically within the year or else face a
Speaker 2: ban in the US. But even if by Dance were
Speaker 2: to say, okay, you know what we will be selling TikTok.
Speaker 2: How easily could that run into antitrust concerns? Is there
Speaker 2: any tech or media company in the US that could
Speaker 2: acquire an operation that big without it raising a competition
Speaker 2: flag for you?
Speaker 4: You know, as a department official, I can't really respond
Speaker 4: to hypotheticals, but I'll say that any transaction really goes
Speaker 4: through the same kind of inquiry you had, ask the
Speaker 4: same questions about whether a transaction raises concentration concerns, whether
Speaker 4: it increases the power of the acquiring firm, and so
Speaker 4: I would expect that that kind of analysis is no different.
Speaker 4: There's no special consideration for any one company, no matter
Speaker 4: its size or or prominence.
Speaker 2: All right, Dohal, great to have you here on Ballance
Speaker 2: of Power. Thank you so much for joining me in studio.
Speaker 2: Doha Mechi is from the Department of Justice, where she
Speaker 2: is the Principal Deputy Assistant Attorney General for the Antitrust Division.
Speaker 2: Great to have her here today.
Speaker 6: Thanks for listening to the Balance of Power podcast.
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