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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube from Terry.

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Speaker 2: Haynes provides perspective now with peenjea policy definitive on LinkedIn

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Speaker 2: with good good summaries of what's going on in Washington. Terry,

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Speaker 2: I think we clearly saw these confirmation hearings are different

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Speaker 2: with the protests. How different are they when they finally

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Speaker 2: get down.

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Speaker 3: To a vote?

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Speaker 4: They're not very different at all. You know what I

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Speaker 4: would take from the hegseeth statement to illustrate this, frankly,

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Speaker 4: is him stressing his partnership with the Arm Services Committee

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Speaker 4: and with the Senate broadly, because, as you and David

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Speaker 4: were pointing out in the previous hour, you're going to

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Speaker 4: have a defense budget that increases substantially under Trump. From

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Speaker 4: I think you all said eight hundred and fifty billion

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Speaker 4: to possibly do a trillion, and I've been predicting that

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Speaker 4: for quite some time. You know, the question is his

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Speaker 4: ability to partner His question the question is beyond that,

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Speaker 4: isn't really so much about his prior life peccadillos or

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Speaker 4: anything like that. Is he wants to be a change agent,

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Speaker 4: But how does the change agent brief stack up again

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Speaker 4: in a time where readiness in a multi front conflict?

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Speaker 4: Is the mission an immediate readiness? And that's really what

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Speaker 4: I think is going to get probed here more than

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Speaker 4: anything else today.

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Speaker 2: And David jules that earlier.

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Speaker 5: Yeah, and Terry, I'm very curious about the picture of

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Speaker 5: the Pentagon at this nominee is painting. So he talked

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Speaker 5: about readiness. He talked about the Defense Department's budget, the

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Speaker 5: need to implement all kinds of forms. How salient are

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Speaker 5: those criticism? How important is it to execute that? When

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Speaker 5: you look at the state of the Pentagon today, is

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Speaker 5: it suffering from difficulty recruiting? Is it suffering from a

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Speaker 5: budget that's not big enough in light of the numbers

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Speaker 5: that you just cited a moment ago.

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Speaker 4: David, that's a really smart question, and not because that's

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Speaker 4: what interviewees say when they're treading water. I'm not treading

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Speaker 4: water here, and I say, my impression is I'm not

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Speaker 4: going to be an expert on the view of the forces.

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Speaker 4: But my impression from talking to a lot of people

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Speaker 4: who are in and around the forces is that the

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Speaker 4: first couple of paragraphs of hexcess statement are designed to

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Speaker 4: appeal directly to those folks, the in service people, the

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Speaker 4: people that actually do have dust on their boots. There

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Speaker 4: is great concern beyond recruitment about the mission, about what

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Speaker 4: the priorities are. And you know whether or not, for example,

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Speaker 4: you know, other considerations including diversity, equity and all the rest,

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Speaker 4: while important, have subsumed the basic purpose of the fighting forces.

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Speaker 4: And that's what Hagsa's really trying to get at. So

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Speaker 4: you know, like it or hate it, you know there's

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Speaker 4: it's not coded at all. It's right there on the

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Speaker 4: front with.

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Speaker 2: Us Terry Haynes. And we continue with mister Haynes with

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Speaker 2: Pangaea Policy, a special edition of Bloomberg Surveillance David Gurra

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Speaker 2: and Tom Keane centering on economics, the finance, the investment.

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Speaker 2: The market open now with the Dow up one hundred

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Speaker 2: and ninety three points for Global Wall Street. I note

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Speaker 2: the ten year real yield, the inflation adjusted yield is

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Speaker 2: enjoying two point three three percent. That is a lofty level.

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Speaker 2: We continue with David Gura in.

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Speaker 5: Mister Haynes Terry, I'm looking at how this hearing is

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Speaker 5: being conducted, and there's some bickering back and forth now

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Speaker 5: between the chair and the ranking member of this committee.

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Speaker 5: Senator Reid of Rhode Island wanted to have multiple rounds

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Speaker 5: of questions, Senator Wicker denying that request from his counterpart

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Speaker 5: on the dais There have been some criticisms here of

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Speaker 5: the deepness or thoroughness of the FBI investigation into the

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Speaker 5: nominee into Pete Hegseath. Talk a bit, if you would,

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Speaker 5: about how this hearing is colored by the majority of

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Speaker 5: the Republicans now have in the Senate and how we're

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Speaker 5: likely to see a response to that from from Democrats

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Speaker 5: on this committee and Democrats in the Senate more broadly.

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Speaker 4: Well, two things. Let me let me talk about the

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Speaker 4: process first, and then the substance the Uh, the process

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Speaker 4: I think is is kind of standardized.

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Speaker 6: Now.

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Speaker 4: This is the first hearing in the new Congress with

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Speaker 4: the new Republican majority. You know, Wicker and Read are

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Speaker 4: both pros. Uh. These are not people who have just

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Speaker 4: you know, just come to power, just come to chairmanships.

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Speaker 4: And uh, and you know, Wicker and Reader bickering about

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Speaker 4: the process and about how things are going to work.

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Speaker 4: My understanding of this is based on what I've heard,

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Speaker 4: which may be a little bit less than you've heard,

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Speaker 4: is that the price, you know, is that he's trying

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Speaker 4: to establish he Wicker is trying to establish standard process.

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Speaker 4: And you know, the the tradition is you start with

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Speaker 4: the chair and the senior member of the minority and

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Speaker 4: then you work down the work down the datus on

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Speaker 4: both sides. You know, on the substance, I think the

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Speaker 4: Senate has insisted upon a pretty standard bureau process all along.

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Speaker 4: There is a wrinkle here where the chairman and the

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Speaker 4: ranker have are getting to look at more of the

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Speaker 4: FBI files than the rank and file and the Senate.

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Speaker 4: I think that'll be a little bit controversial with the

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Speaker 4: rank and file, but frankly, the reason why that happens

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Speaker 4: is to protect against leaks. So I think that's a

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Speaker 4: minor wrinkle here. Generally speaking, this is all being done

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Speaker 4: by the book terry.

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Speaker 5: As you talk to clients, what are they asking you

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Speaker 5: about the direction of this pentagon? What that direction would

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Speaker 5: be under a secretary? Hegseeth We heard him talking a

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Speaker 5: few moments ago about what seems like something we've heard

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Speaker 5: in the past, a pivot to China, a new focus

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Speaker 5: on potential conflict there, that adversary, potential adversary halfway around

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Speaker 5: the world. What do we know about the direction of

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Speaker 5: the Pentagon, the direction of military strategy, what that would

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Speaker 5: be like under a secretary Hegseth.

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Speaker 4: Well, I think two things. One is I think the

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Speaker 4: I think markets are not quite ready for the degree

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Speaker 4: of refocused from Biden to Trump on geopolitics. The last

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Speaker 4: few years, geopolitics from Washington has been soft pedaled a

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Speaker 4: little bit, and I think that's going to change greatly

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Speaker 4: starting next Monday, and markets should, I think, are ill

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Speaker 4: prepared for that. So that's first. Second, I don't think

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Speaker 4: we yet know, frankly, and aren't going to know from

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Speaker 4: Hegseeth exactly what new forms, the doctrine and the strategies

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Speaker 4: are going to take. You know, I think that's frankly,

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Speaker 4: because that's largely up in the air. And what these

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Speaker 4: folks need to do is get their feet under them

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Speaker 4: and get their briefings under them, because they're not fully

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Speaker 4: read in. It won't be until next week.

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Speaker 2: Terry Ayins I talked to earlier about what President Trump's comments,

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Speaker 2: and I'm speaking in a broad sense of his upset

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Speaker 2: over generals and admirals at the Pentagon, and I think

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Speaker 2: mister Hegseth alluded to that in his opening comments, from

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Speaker 2: where you sit, what is the divide between the brass

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Speaker 2: of the Pentagon and the enlisted troops? Discuss that divide.

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Speaker 4: A lot of what you're hearing, a lot of what

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Speaker 4: you hear from from the people below the brass, frankly

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Speaker 4: is is concerned about mission and focus. Uh and concerned

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Speaker 4: that the brass are being pushed too much to be

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Speaker 4: to be politicized, uh fair or not. And uh, but

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Speaker 4: that is a that is a real thing out there

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Speaker 4: and uh. And what a lot of what Hegseeth is

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Speaker 4: saying this morning initially is that he intends to kind

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Speaker 4: of get back to basics on that and remove a

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Speaker 4: lot of those political filters. So that will be by

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Speaker 4: and large, I think thought of very well by a

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Speaker 4: group that the enlisted group and beyond who thinks let

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Speaker 4: the brass and are concerned about, you know, the politicization.

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Speaker 2: If we David wants to get in here, I'm going

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Speaker 2: to be quick on this, Terry Aanes. If we go

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Speaker 2: from eight hundred billion up over a trillion in Pentagon spending,

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Speaker 2: what will the new money be spent on.

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Speaker 4: I think it's going to be spent on two things,

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Speaker 4: more of the same firstly, and secondly on a I

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Speaker 4: think on three things really. Secondly, on a crash basis,

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Speaker 4: I think you're going to see kind of additional drones

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Speaker 4: and an unconventional warfare. And thirdly, I think you're going

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Speaker 4: to see new weapons systems go through the process much

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Speaker 4: more quickly than the current very drawn out process that

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Speaker 4: really is a relic of the Cold War.

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Speaker 5: You're listening to special coverage on Bloomberg surveillance of the

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Speaker 5: confirmation hearing for Pete hegg Seth, the nominee to be

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Speaker 5: the next Secretary of Defense. Terry Haynes is with us

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Speaker 5: and Tery I want to ask you, were I Telsea

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Speaker 5: Gabbard or Congressman Doug Collins, who was supposed to testify

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Speaker 5: today that hearing has been moved. What am I watching for?

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Speaker 5: What does this hearing tell me about the approach from yes, Democrats,

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Speaker 5: but Republicans as well to the President of X nominees.

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Speaker 4: I think what it. What it really comes down to, David,

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Speaker 4: is a test of seriousness. I think there's bipartisan concern, frankly,

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Speaker 4: under underneath the kind of partisanship or you know Senator Wicker,

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Speaker 4: Senator Wicker's support of heg Seth, for example, there's bipartisan

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Speaker 4: concern about the ability of the Trump nominees frankly to

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Speaker 4: handle the magnitude of the responsibilities that are in front

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Speaker 4: of them. That that is not a that's not a

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Speaker 4: dissing of basic competence. What that is is a concern

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Speaker 4: that their backgrounds don't haven't yet prepared them for the

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Speaker 4: for the depth and breadth of these sorts of job,

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Speaker 4: and may undermine the seriousness of what Trump's proposing on

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Speaker 4: a defense and national security basis. So you know, these

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Speaker 4: are these are hearings that I think are even more serious,

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Speaker 4: uh for future direction of the United States national security

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Speaker 4: and defense than you might think otherwise.

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Speaker 5: I am will just ask you here where you see

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Speaker 5: this leading after the Tom and I we were talking

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Speaker 5: about when the vote is going to take place. I

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Speaker 5: gather it's been scheduled for Monday. Describe the importance of

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Speaker 5: this role, yes, to our government, but to the present

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Speaker 5: life to get Pete Hegseth confirmed. What that means to

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Speaker 5: to Donald Trump?

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Speaker 4: You know, I think hag Seth. The conventional Washington answer

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Speaker 4: about this is that, you know, all nominees are very important,

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Speaker 4: so on and so forth. My sense of Trump is

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Speaker 4: is different. My sense of Trump generally is that, uh,

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Speaker 4: you know, Plan A doesn't work, then we'll do Plan B,

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Speaker 4: and there will be a Plan B. And you can look, no,

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Speaker 4: you can look into his first term for this, but

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Speaker 4: you can look no farther than how quick League Gates

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Speaker 4: was discarded and how quickly the new nominee was was

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Speaker 4: put into place, and how much better everybody felt about

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Speaker 4: the new nominee. Uh, you know, they've they've committed to

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Speaker 4: hag Seth. Hegg Seth hasn't disqualified himself over the last

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Speaker 4: two months. That's important, and that's positive for hag Seth frankly.

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Speaker 4: But you know, if hagg Seth is confirmed, and my

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Speaker 4: sense is this is very much a roll of the dice.

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Speaker 4: If he's confirmed, he's confirmed barely and maybe with a

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Speaker 4: Republican dissenters or two. And you know what that means

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Speaker 4: for Defense and for you know, other contentious nominees like

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Speaker 4: Gabbard and maybe Kennedy isn't good. But for the rest

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Speaker 4: of the nominees, I don't think it matters a lot.

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Speaker 4: Then they proceed to fail on their own merits.

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Speaker 2: Terry, thank you so much. Can't say enough about his

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Speaker 2: coverage and particularly for us. Go out to LinkedIn and

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Speaker 2: see his complete notes. Agree or disagree, just always with

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Speaker 2: terrific perspective. Mister Haynes, with a bit of experience in Washington.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us Live

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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 2: My knowledge of the cabinet centers around the modern presidency

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Speaker 2: of Abraham Lincoln. Of course team of rivals, the political

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Speaker 2: genius of Abraham Lincoln. Doris Karines Goodwin is iconic and

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Speaker 2: with picking presidents, got Amcondo, got a Maconda looks at

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Speaker 2: picking cabinets, got him. How original would this cabinet be?

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Speaker 7: It would be original, as with everything Trump, completely unlike

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Speaker 7: anything we've seen before. It's just thinking back the history

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Speaker 7: of the secondary defense, which goes back to the nineteen

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Speaker 7: forty seven National Defense Act. I cannot think of a

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Speaker 7: Secretary Defense who is remotely as unqualified as pet Exit.

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Speaker 7: There's not even anyone in the same.

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Speaker 5: Universe baring that in mind, describe the mammoth undertaking he

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Speaker 5: would face if he is he is confirmed. So we

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Speaker 5: talk about his unqualifications, and in broad strokes here as

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Speaker 5: you bring them up, we see Republicans casting him as

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Speaker 5: kind of a change agent in the mold of the

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Speaker 5: man who appointed him to this job. What does he

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Speaker 5: face as he walks into the Pentagon in day one

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Speaker 5: should he be confirmed?

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Speaker 6: Yeah, a change agent is desperately needed.

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Speaker 7: The you know, the Pentagon needs to change more than

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Speaker 7: just about any other government agency. The problem is, as

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Speaker 7: we all know, not all changes are for the better,

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Speaker 7: and so that's the concern here. But for what he

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Speaker 7: wants to do, At a most basic level, the US

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Speaker 7: military has to reorient itself, not just from switching from

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Speaker 7: focusing on fighting insurgencies in the Middle East to a

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Speaker 7: high intensity warfare, the old school World War two style

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Speaker 7: high intensity warfare. It also needs to reorient its geographic

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Speaker 7: focus to where we're fighting, essentially in Asia as opposed

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Speaker 7: to Europe or the Middle East, although obviously Russia's sol

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Speaker 7: a threat we need to think about and warfare like

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Speaker 7: anything else. Away games are a lot harder than home games. Well,

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Speaker 7: if we worked, you know, God forbid, if we were

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Speaker 7: to fight a conflict with China over Taiwan, we would

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Speaker 7: be doing it in their backyard.

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Speaker 6: They would have every conceivable advantage.

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Speaker 7: And so it takes a very very differently structured defense

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Speaker 7: establishment to make that work. And we have not made

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Speaker 7: that transition. We have not even come close to making

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Speaker 7: that transition yet.

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Speaker 5: We have heard for decades and decades this call to

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Speaker 5: audit the Pentagon. It is an impossible task for anyone

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Speaker 5: to undertake. But I bring it up with some seriousness

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Speaker 5: here because when we talk about reform of the Pentagon,

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Speaker 5: it's something that looms large. There is a lot of

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Speaker 5: ability for us to kind of pillory the department for

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Speaker 5: how it spends money and how it contracts. How difficult

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Speaker 5: would it be to change the day to day of

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Speaker 5: the Pentagon.

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Speaker 6: You know, extraordinarily difficult.

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Speaker 7: Many people have tried, and you know, essentially no one

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Speaker 7: has succeeded in the largest extent. When I was in

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Speaker 7: the Pagon, we're advising the Navy. I remember I used

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Speaker 7: to walk around and I in the Army section. That

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Speaker 7: was a big sign op saying this was while we

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Speaker 7: were in a Amistan in Iraq.

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Speaker 6: We are an army at war.

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Speaker 7: And I thought this was the most devastating sign you

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Speaker 7: could possibly put up, because what it meant was that

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Speaker 7: you felt that people in the Pentagon had to be reminded, right,

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Speaker 7: that's how different you are, how distant you are, and

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Speaker 7: how insulated the Pentagon bureaucracy can be the change that

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Speaker 7: we're talking about. The Pentagon has more than two million employees.

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Speaker 7: It has a budget, if you roll in sort of

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Speaker 7: you know affiliated cost of that, approaching a trillion dollars.

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Speaker 6: It covers the entire planet.

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Speaker 7: No other institution in the world covers the planet the

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Speaker 7: way the US Defense Department does, and it has a

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Speaker 7: civilian side sort of defense expertise that has really been eroded.

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Speaker 7: One of the central reasons why contracting procurement Indiana in

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Speaker 7: the Defense Department is such a catastrophe is that the

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Speaker 7: program management skills that used to be part of the

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Speaker 7: Senior Executive Service were essentially driven out of the government

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Speaker 7: over a couple of generations, where we'd shifted that burden

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Speaker 7: onto the defense con tractors who ran wild with it.

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Speaker 6: The biggest failure.

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Speaker 7: Was a thing called concurrence where we saw the catastrophe

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Speaker 7: of the F thirty five and the new aircraft carrier program,

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Speaker 7: where they were built at the same time that they

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Speaker 7: were essentially tested, and of course when they failed the tests,

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Speaker 7: all that building had done and.

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Speaker 2: Got something like that just as one story. Do you

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Speaker 2: look at that as asymmetric and that it was a

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Speaker 2: Republican failure or a democratic failure or is that just

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Speaker 2: an institutional failure.

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Speaker 6: It is an institutional failure.

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Speaker 7: The two sides have failed in different and complementary and

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Speaker 7: disastrous ways. Republicans have failed because they did not value

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Speaker 7: expertise and they kept slashing away at the civilian at

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Speaker 7: the sort of the civilian expertise on contracting, and relied

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Speaker 7: on the on and relied on the contractors. Democrats have

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Speaker 7: flipped on the other side when Barack Obama was When

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Speaker 7: Barack Obama was president in I says, you know, he

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Speaker 7: could have made Richard Danzig Sectary of Defense.

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Speaker 6: He could have put a real reformer in and he

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Speaker 6: did not chew to do that.

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Speaker 7: Right like there was a lot of the Defense Department

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Speaker 7: just isn't what we pay attention to.

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Speaker 6: It's not what we're going to focus on.

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Speaker 7: We're gonna let it kind of do its thing without

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Speaker 7: going in and getting into the details.

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Speaker 5: Senator Shaheen questioning that the nominee now on comments he's

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Speaker 5: made in the past, but women in combat. Pete hegxs

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Speaker 5: is saying that his main concern here is readiness on

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Speaker 5: the battlefield. When you look at all of the things

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Speaker 5: that are dogging him or could be potential hurdles to

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Speaker 5: him being confirmed, Your god him, how much does this

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Speaker 5: loom large? There are many members of this committee women

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Speaker 5: who did, in fact serve in the military.

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Speaker 6: It's a big one. I feel like Pete Hegsett's.

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Speaker 7: The issue with Pete Hegsuth is there are so many

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Speaker 7: different issues with him, each one of which is individually

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Speaker 7: completely disqualifying, that they're kind of blocking each other, right, Like,

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Speaker 7: you don't want someone who has a huge drinking problem.

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Speaker 7: You don't want someone who doesn't like women in the military.

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Speaker 7: You don't like there's everything compounding all at once. I

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Speaker 7: wonder if people were sort of are unsure where to

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Speaker 7: target their fire. But if you were a woman in

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Speaker 7: the military. Surely having a separate AVENSIS says you shouldn't

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Speaker 7: be there seems like a big problem.

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Speaker 2: Got him. We're gonna have to leave it there because

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Speaker 2: we've got to do a market over here. Thank you

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Speaker 2: so much for perspective. I can't say enough about the

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Speaker 2: book picking President's got a mccunda Yale University. Thank you

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Speaker 2: so much for that.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty one.

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Speaker 5: Christopher Smart just a moment to go, a former special

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Speaker 5: assistant to the President who's served from twenty thirteen to

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Speaker 5: twenty fifteen, now with the Arbirth Group, and mister Smart,

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Speaker 5: great to have you with us, and I'd love to

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Speaker 5: just get your thoughts on, yes, how this particular hearing

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Speaker 5: has unfolded, but what it tells us about public service

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Speaker 5: in this Washington at a moment of transition, The way

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Speaker 5: that this nominee has been treated as being treated and

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Speaker 5: the way that the President elect transition team are approaching

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Speaker 5: this process of advice and consent.

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Speaker 3: Well, I think at every new transition, every president faces

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Speaker 3: a different environment and a different approach to this advice

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Speaker 3: and consent process. I do think, you know, looking at

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Speaker 3: this particular nominee, you know, and remembering all the way

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Speaker 3: back to when President George H. W. Bush nominated Senator

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Speaker 3: John Tower, defense expert and veteran who famously was rejected

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Speaker 3: because of accusations over his alcoholism. And again what in

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Speaker 3: the day we used to call or was called womanizing.

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Speaker 3: This is a nominee, clearly, I think when we saw

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Speaker 3: the first opening statement from Senator Ernst who seems to

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Speaker 3: be sailing his way through to confirmation, and it's hard

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Speaker 3: to see what is going to stand in his way

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Speaker 3: right now in spite of what are likely to be

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Speaker 3: continued set of short questions and the Democrats.

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Speaker 2: Christopher Smart, you're one of the most qual people. I mean,

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Speaker 2: the title here is former Special Assistant to the President

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Speaker 2: for International Economics, but you've got a sense of geopolitics

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Speaker 2: and the defense extension of America with your decades at Bearings.

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Speaker 2: And I'm not going to mince words, doctor Smart. It's

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Speaker 2: just as simple as this, will the generals and animals

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Speaker 2: rally around this secretary of Defense? Oh?

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Speaker 3: I think they will. I think most of them, you know,

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Speaker 3: wish that these political side shows would go away so

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Speaker 3: that they could get on with the business of defending

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Speaker 3: our country and ensuring a national security as they have

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Speaker 3: always done through one secretary of Defense after another. I mean,

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Speaker 3: I think the real secret here is that no single

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Speaker 3: secretary of Defense is going to inflict significant change on

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Speaker 3: the behemoth that is the Pentagon. One secretary aft another

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Speaker 3: has tried to make it more efficient, to make it

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Speaker 3: more transparent, to get that audit right. It is not

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Speaker 3: an easy and no single person's going.

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Speaker 2: To be Chris Wright nails this, David Girl. This is

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Speaker 2: the heart of the matter. The fact is the president

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Speaker 2: elect feels he can change the Pentagon.

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Speaker 5: That's a fact he does. I think the open question is,

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Speaker 5: and I'd love for Christopher Smart to chime in here,

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Speaker 5: how much does he plan to change it or think

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Speaker 5: it can be changed, or force change on it? All

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Speaker 5: through the morning, Chris, we've been talking about the degree

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Speaker 5: to which there's sort of a script here for this nominee.

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Speaker 5: Should he be confirmed to manage this huge institution. Do

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Speaker 5: we have a sense from him, from the President elect

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Speaker 5: about what actually, notionally would change at the Pentagon were

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Speaker 5: he to be confirmed.

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Speaker 3: I think that's a very good question. I'm not sure

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Speaker 3: we've had anything other than we're going to make it

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Speaker 3: better from the president at this stage, or from the

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Speaker 3: nominee to be Secretary of Defense. You know, the in finance,

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Speaker 3: you know, the most powerful force in nature is compound interest.

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Speaker 3: In Washington, the most powerful force in nature is bureaucratic inertia.

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Speaker 3: And I think it's very, very hard for a single

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Speaker 3: person at the top to change that without real legislation

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Speaker 3: and a thoughtful plan about how we're going to do

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Speaker 3: these things differently, how we're going to allocate money differently.

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Speaker 3: When everybody wants to have a finger in the pot

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Speaker 3: and everybody wants to have a hand.

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Speaker 5: On the lever, we're back to where we were a

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Speaker 5: few years ago. That is, looking at social media for

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Speaker 5: indications from the President elect about what he might do.

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Speaker 5: A lot of it is bomb basted, some of it

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Speaker 5: are policy pronouncements. Today, he indicates that he wants to

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Speaker 5: create an external revenue service, as he puts it, to

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Speaker 5: collect our tariff's duties and all revenue that come from

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Speaker 5: foreign sources. We've been charging those that make money off

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Speaker 5: us with trade, and they will start paying finally their

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Speaker 5: fair share. Drawing from your experience at the Treasury Department,

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Speaker 5: we've talked a lot about the Defense Department, the direction

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Speaker 5: that it might take. Your sense of what that looks

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Speaker 5: like under a Scott Bess and should he be confirmed

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Speaker 5: here a little later in the week. I'm struck by

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Speaker 5: how motley a crue it is when you look at

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Speaker 5: the economic team that the President elect has put together,

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Speaker 5: your sense of the direction when it comes to yes,

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Speaker 5: the irs, perhaps the External Revenue Service, should it be

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Speaker 5: created here by this President elect and the Treasury Department

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Speaker 5: More broadly, well.

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Speaker 3: The Treasury Department, as you may know, used to be

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Speaker 3: in charge of the coast Guard, because the coast Guard

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Speaker 3: would collect a lot of these tariffs as ships would

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00:23:21,440 --> 00:23:25,080
Speaker 3: come into our ports, and tariffs were a more important

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00:23:25,119 --> 00:23:27,600
Speaker 3: part of our revenue mix. I don't think anybody who

439
00:23:27,600 --> 00:23:30,440
Speaker 3: seriously looks at this issue believes that tariffs are going

440
00:23:30,480 --> 00:23:33,720
Speaker 3: to represent a large part of our new revenue stream

441
00:23:33,800 --> 00:23:36,080
Speaker 3: to cover any deficits that we have. First of all,

442
00:23:36,080 --> 00:23:38,960
Speaker 3: if there is a tariff that is inflicted, that is

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00:23:39,000 --> 00:23:41,400
Speaker 3: imposed on a particular good people are going to find

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00:23:41,400 --> 00:23:45,240
Speaker 3: ways to find an alternative. And so, you know, I'm

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00:23:45,240 --> 00:23:47,280
Speaker 3: not sure what the President elect has in mind by

446
00:23:47,320 --> 00:23:50,639
Speaker 3: creating this new service. Whatever it is, probably isn't going

447
00:23:50,680 --> 00:23:51,640
Speaker 3: to move the needle very much.

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00:23:52,359 --> 00:23:56,119
Speaker 2: Christopher Smart, you have parchment in history from yl I

449
00:23:56,160 --> 00:23:59,320
Speaker 2: assume you had the honor of lectures with Jonathan Spence

450
00:23:59,359 --> 00:24:02,160
Speaker 2: that Giana, China and then a Columbia.

451
00:24:02,200 --> 00:24:03,919
Speaker 3: I had the book right behind me, one of his.

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00:24:04,119 --> 00:24:06,640
Speaker 2: Yeah, I'm sure one of him, and you're the only

453
00:24:06,720 --> 00:24:09,679
Speaker 2: person you know. I had the honor of interviewing him

454
00:24:09,680 --> 00:24:13,239
Speaker 2: once with Orbal's Shell years ago, and I said to him,

455
00:24:13,280 --> 00:24:15,680
Speaker 2: I said, I've actually read the book cover to cover,

456
00:24:15,760 --> 00:24:18,159
Speaker 2: and he said, there's only like twelve people that have

457
00:24:18,440 --> 00:24:20,840
Speaker 2: it was like eight hundred and fifty books. This is

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00:24:20,840 --> 00:24:25,680
Speaker 2: the giant Jonathan Spence on China. Christopher Smart, is Nick

459
00:24:25,720 --> 00:24:31,159
Speaker 2: Burns steps aside as ambassador in China, your thoughts and

460
00:24:31,280 --> 00:24:34,600
Speaker 2: how President Trump must address Beijing.

461
00:24:36,400 --> 00:24:39,480
Speaker 3: Well must or what he will do or it's hard

462
00:24:39,520 --> 00:24:41,159
Speaker 3: to kind of differentiate between the two. I mean, I

463
00:24:41,160 --> 00:24:45,880
Speaker 3: think we in the United States and the Chinese government

464
00:24:46,560 --> 00:24:49,840
Speaker 3: clearly have to figure out a new kind of rule,

465
00:24:50,040 --> 00:24:53,480
Speaker 3: set of rules for this super pile rivalry that is

466
00:24:53,480 --> 00:24:55,480
Speaker 3: not going to go away anytime soon. And sort of

467
00:24:55,520 --> 00:24:57,840
Speaker 3: as the you, as the United States and the Soviet

468
00:24:57,920 --> 00:25:01,159
Speaker 3: Union did over the course of several decks, there were

469
00:25:01,240 --> 00:25:03,680
Speaker 3: kind of rules of engagement, things we would argue about,

470
00:25:03,720 --> 00:25:06,400
Speaker 3: things we would not argue about. That we haven't really

471
00:25:06,440 --> 00:25:09,919
Speaker 3: set forth with the Chinese government yet. Unfortunately, it's not

472
00:25:10,040 --> 00:25:14,240
Speaker 3: clear from the current incoming administration what kind of a

473
00:25:14,280 --> 00:25:17,960
Speaker 3: relationship they want. I mean, appears to be very confrontational,

474
00:25:18,320 --> 00:25:21,919
Speaker 3: and yet there's this personal wooing of Jijinping that Presidentyle

475
00:25:21,920 --> 00:25:24,960
Speaker 3: like Trump seems in you to pursue. So I'm not

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Speaker 3: sure what they have in mind. As a country, we're

477
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Speaker 3: still in a stage of really wanting to kind of

478
00:25:29,400 --> 00:25:31,879
Speaker 3: wrap the Chinese on the nose with a newspaper and

479
00:25:31,920 --> 00:25:34,320
Speaker 3: hoping they'll change their ways. What we really need to

480
00:25:34,400 --> 00:25:37,080
Speaker 3: accept is that they're going to have a big part

481
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Speaker 3: to play in our new global system, and we have

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Speaker 3: to figure out ways to work with that.

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Speaker 2: We've got to get you back on, Christopher Smart. It has

484
00:25:45,040 --> 00:25:47,040
Speaker 2: been way too Thank you. Thank you so much for

485
00:25:47,160 --> 00:25:50,119
Speaker 2: joining a special edition of Bloomberg Surveillance.

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Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

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490
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