WEBVTT - Senate Confirmation Hearings 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:28.640 us live on YouTube from Terry. 0:00:28.440 --> 0:00:33.159 Haynes provides perspective now with peenjea policy definitive on LinkedIn 0:00:33.240 --> 0:00:37.720 with good good summaries of what's going on in Washington. Terry, 0:00:37.760 --> 0:00:40.800 I think we clearly saw these confirmation hearings are different 0:00:41.320 --> 0:00:45.440 with the protests. How different are they when they finally 0:00:45.440 --> 0:00:46.280 get down. 0:00:46.080 --> 0:00:48.159 To a vote? 0:00:48.760 --> 0:00:52.519 They're not very different at all. You know what I 0:00:52.560 --> 0:00:56.120 would take from the hegseeth statement to illustrate this, frankly, 0:00:56.280 --> 0:01:00.480 is him stressing his partnership with the Arm Services Committee 0:01:00.480 --> 0:01:03.560 and with the Senate broadly, because, as you and David 0:01:03.560 --> 0:01:06.200 were pointing out in the previous hour, you're going to 0:01:06.280 --> 0:01:10.880 have a defense budget that increases substantially under Trump. From 0:01:11.319 --> 0:01:13.760 I think you all said eight hundred and fifty billion 0:01:13.920 --> 0:01:18.600 to possibly do a trillion, and I've been predicting that 0:01:18.640 --> 0:01:22.240 for quite some time. You know, the question is his 0:01:22.360 --> 0:01:26.800 ability to partner His question the question is beyond that, 0:01:27.160 --> 0:01:30.160 isn't really so much about his prior life peccadillos or 0:01:30.160 --> 0:01:33.240 anything like that. Is he wants to be a change agent, 0:01:33.280 --> 0:01:36.440 But how does the change agent brief stack up again 0:01:36.560 --> 0:01:39.560 in a time where readiness in a multi front conflict? 0:01:39.880 --> 0:01:44.280 Is the mission an immediate readiness? And that's really what 0:01:44.720 --> 0:01:46.479 I think is going to get probed here more than 0:01:46.480 --> 0:01:47.480 anything else today. 0:01:47.680 --> 0:01:49.960 And David jules that earlier. 0:01:50.120 --> 0:01:52.200 Yeah, and Terry, I'm very curious about the picture of 0:01:52.200 --> 0:01:54.600 the Pentagon at this nominee is painting. So he talked 0:01:54.600 --> 0:01:57.840 about readiness. He talked about the Defense Department's budget, the 0:01:57.920 --> 0:02:01.960 need to implement all kinds of forms. How salient are 0:02:01.960 --> 0:02:04.960 those criticism? How important is it to execute that? When 0:02:04.960 --> 0:02:06.600 you look at the state of the Pentagon today, is 0:02:06.880 --> 0:02:11.240 it suffering from difficulty recruiting? Is it suffering from a 0:02:11.240 --> 0:02:13.120 budget that's not big enough in light of the numbers 0:02:13.120 --> 0:02:14.320 that you just cited a moment ago. 0:02:15.720 --> 0:02:18.880 David, that's a really smart question, and not because that's 0:02:18.919 --> 0:02:23.560 what interviewees say when they're treading water. I'm not treading 0:02:23.600 --> 0:02:27.080 water here, and I say, my impression is I'm not 0:02:27.120 --> 0:02:30.000 going to be an expert on the view of the forces. 0:02:30.200 --> 0:02:32.440 But my impression from talking to a lot of people 0:02:32.440 --> 0:02:35.040 who are in and around the forces is that the 0:02:35.040 --> 0:02:39.120 first couple of paragraphs of hexcess statement are designed to 0:02:39.200 --> 0:02:42.400 appeal directly to those folks, the in service people, the 0:02:42.440 --> 0:02:45.480 people that actually do have dust on their boots. There 0:02:45.560 --> 0:02:50.799 is great concern beyond recruitment about the mission, about what 0:02:50.840 --> 0:02:54.120 the priorities are. And you know whether or not, for example, 0:02:55.000 --> 0:03:00.520 you know, other considerations including diversity, equity and all the rest, 0:03:00.800 --> 0:03:06.679 while important, have subsumed the basic purpose of the fighting forces. 0:03:06.960 --> 0:03:09.320 And that's what Hagsa's really trying to get at. So 0:03:09.800 --> 0:03:13.080 you know, like it or hate it, you know there's 0:03:14.120 --> 0:03:16.080 it's not coded at all. It's right there on the 0:03:16.080 --> 0:03:16.919 front with. 0:03:17.000 --> 0:03:19.360 Us Terry Haynes. And we continue with mister Haynes with 0:03:19.440 --> 0:03:23.800 Pangaea Policy, a special edition of Bloomberg Surveillance David Gurra 0:03:24.000 --> 0:03:28.200 and Tom Keane centering on economics, the finance, the investment. 0:03:28.280 --> 0:03:30.440 The market open now with the Dow up one hundred 0:03:30.440 --> 0:03:33.280 and ninety three points for Global Wall Street. I note 0:03:33.320 --> 0:03:37.200 the ten year real yield, the inflation adjusted yield is 0:03:37.320 --> 0:03:42.800 enjoying two point three three percent. That is a lofty level. 0:03:42.840 --> 0:03:44.800 We continue with David Gura in. 0:03:44.880 --> 0:03:48.160 Mister Haynes Terry, I'm looking at how this hearing is 0:03:48.160 --> 0:03:50.800 being conducted, and there's some bickering back and forth now 0:03:50.800 --> 0:03:53.000 between the chair and the ranking member of this committee. 0:03:53.760 --> 0:03:56.280 Senator Reid of Rhode Island wanted to have multiple rounds 0:03:56.320 --> 0:03:59.600 of questions, Senator Wicker denying that request from his counterpart 0:04:00.080 --> 0:04:03.320 on the dais There have been some criticisms here of 0:04:03.360 --> 0:04:06.560 the deepness or thoroughness of the FBI investigation into the 0:04:06.560 --> 0:04:09.400 nominee into Pete Hegseath. Talk a bit, if you would, 0:04:09.800 --> 0:04:12.800 about how this hearing is colored by the majority of 0:04:12.800 --> 0:04:15.360 the Republicans now have in the Senate and how we're 0:04:15.440 --> 0:04:17.520 likely to see a response to that from from Democrats 0:04:17.560 --> 0:04:19.600 on this committee and Democrats in the Senate more broadly. 0:04:20.600 --> 0:04:22.919 Well, two things. Let me let me talk about the 0:04:22.920 --> 0:04:26.160 process first, and then the substance the Uh, the process 0:04:26.200 --> 0:04:27.919 I think is is kind of standardized. 0:04:27.960 --> 0:04:28.200 Now. 0:04:28.240 --> 0:04:32.400 This is the first hearing in the new Congress with 0:04:32.520 --> 0:04:35.480 the new Republican majority. You know, Wicker and Read are 0:04:35.480 --> 0:04:38.880 both pros. Uh. These are not people who have just 0:04:38.960 --> 0:04:41.760 you know, just come to power, just come to chairmanships. 0:04:42.240 --> 0:04:45.279 And uh, and you know, Wicker and Reader bickering about 0:04:45.360 --> 0:04:47.720 the process and about how things are going to work. 0:04:47.920 --> 0:04:51.200 My understanding of this is based on what I've heard, 0:04:51.800 --> 0:04:53.680 which may be a little bit less than you've heard, 0:04:54.000 --> 0:04:55.839 is that the price, you know, is that he's trying 0:04:55.880 --> 0:04:58.760 to establish he Wicker is trying to establish standard process. 0:04:58.800 --> 0:05:01.760 And you know, the the tradition is you start with 0:05:01.839 --> 0:05:04.760 the chair and the senior member of the minority and 0:05:04.760 --> 0:05:07.400 then you work down the work down the datus on 0:05:07.440 --> 0:05:11.760 both sides. You know, on the substance, I think the 0:05:11.800 --> 0:05:16.920 Senate has insisted upon a pretty standard bureau process all along. 0:05:17.279 --> 0:05:20.240 There is a wrinkle here where the chairman and the 0:05:20.320 --> 0:05:23.720 ranker have are getting to look at more of the 0:05:23.800 --> 0:05:26.800 FBI files than the rank and file and the Senate. 0:05:26.960 --> 0:05:29.680 I think that'll be a little bit controversial with the 0:05:29.760 --> 0:05:32.920 rank and file, but frankly, the reason why that happens 0:05:33.080 --> 0:05:36.440 is to protect against leaks. So I think that's a 0:05:36.480 --> 0:05:39.599 minor wrinkle here. Generally speaking, this is all being done 0:05:39.640 --> 0:05:40.920 by the book terry. 0:05:40.960 --> 0:05:43.000 As you talk to clients, what are they asking you 0:05:43.279 --> 0:05:45.960 about the direction of this pentagon? What that direction would 0:05:46.000 --> 0:05:48.360 be under a secretary? Hegseeth We heard him talking a 0:05:48.400 --> 0:05:51.120 few moments ago about what seems like something we've heard 0:05:51.160 --> 0:05:53.120 in the past, a pivot to China, a new focus 0:05:53.160 --> 0:05:59.600 on potential conflict there, that adversary, potential adversary halfway around 0:05:59.600 --> 0:06:01.719 the world. What do we know about the direction of 0:06:01.720 --> 0:06:04.640 the Pentagon, the direction of military strategy, what that would 0:06:04.680 --> 0:06:06.080 be like under a secretary Hegseth. 0:06:07.080 --> 0:06:09.480 Well, I think two things. One is I think the 0:06:10.000 --> 0:06:14.279 I think markets are not quite ready for the degree 0:06:14.360 --> 0:06:21.800 of refocused from Biden to Trump on geopolitics. The last 0:06:21.800 --> 0:06:25.600 few years, geopolitics from Washington has been soft pedaled a 0:06:25.640 --> 0:06:29.000 little bit, and I think that's going to change greatly 0:06:29.200 --> 0:06:32.200 starting next Monday, and markets should, I think, are ill 0:06:32.240 --> 0:06:36.559 prepared for that. So that's first. Second, I don't think 0:06:36.920 --> 0:06:39.839 we yet know, frankly, and aren't going to know from 0:06:39.880 --> 0:06:45.640 Hegseeth exactly what new forms, the doctrine and the strategies 0:06:45.640 --> 0:06:48.880 are going to take. You know, I think that's frankly, 0:06:49.040 --> 0:06:51.800 because that's largely up in the air. And what these 0:06:51.839 --> 0:06:55.240 folks need to do is get their feet under them 0:06:55.400 --> 0:06:59.120 and get their briefings under them, because they're not fully 0:06:59.120 --> 0:07:01.080 read in. It won't be until next week. 0:07:01.240 --> 0:07:05.360 Terry Ayins I talked to earlier about what President Trump's comments, 0:07:05.360 --> 0:07:08.600 and I'm speaking in a broad sense of his upset 0:07:08.760 --> 0:07:11.680 over generals and admirals at the Pentagon, and I think 0:07:11.720 --> 0:07:15.920 mister Hegseth alluded to that in his opening comments, from 0:07:15.960 --> 0:07:21.280 where you sit, what is the divide between the brass 0:07:21.400 --> 0:07:26.920 of the Pentagon and the enlisted troops? Discuss that divide. 0:07:27.440 --> 0:07:28.840 A lot of what you're hearing, a lot of what 0:07:28.880 --> 0:07:35.120 you hear from from the people below the brass, frankly 0:07:35.440 --> 0:07:40.040 is is concerned about mission and focus. Uh and concerned 0:07:40.080 --> 0:07:44.080 that the brass are being pushed too much to be 0:07:44.800 --> 0:07:49.200 to be politicized, uh fair or not. And uh, but 0:07:49.280 --> 0:07:51.320 that is a that is a real thing out there 0:07:51.520 --> 0:07:54.680 and uh. And what a lot of what Hegseeth is 0:07:54.720 --> 0:07:58.960 saying this morning initially is that he intends to kind 0:07:58.960 --> 0:08:02.200 of get back to basics on that and remove a 0:08:02.280 --> 0:08:06.720 lot of those political filters. So that will be by 0:08:06.800 --> 0:08:10.600 and large, I think thought of very well by a 0:08:10.680 --> 0:08:16.720 group that the enlisted group and beyond who thinks let 0:08:16.960 --> 0:08:20.400 the brass and are concerned about, you know, the politicization. 0:08:20.600 --> 0:08:22.240 If we David wants to get in here, I'm going 0:08:22.280 --> 0:08:23.960 to be quick on this, Terry Aanes. If we go 0:08:24.000 --> 0:08:28.040 from eight hundred billion up over a trillion in Pentagon spending, 0:08:28.440 --> 0:08:30.720 what will the new money be spent on. 0:08:32.400 --> 0:08:34.400 I think it's going to be spent on two things, 0:08:34.440 --> 0:08:37.520 more of the same firstly, and secondly on a I 0:08:37.520 --> 0:08:40.400 think on three things really. Secondly, on a crash basis, 0:08:40.440 --> 0:08:43.000 I think you're going to see kind of additional drones 0:08:43.200 --> 0:08:47.520 and an unconventional warfare. And thirdly, I think you're going 0:08:47.559 --> 0:08:51.120 to see new weapons systems go through the process much 0:08:51.120 --> 0:08:54.680 more quickly than the current very drawn out process that 0:08:54.800 --> 0:08:56.240 really is a relic of the Cold War. 0:08:56.880 --> 0:08:59.199 You're listening to special coverage on Bloomberg surveillance of the 0:08:59.240 --> 0:09:01.320 confirmation hearing for Pete hegg Seth, the nominee to be 0:09:01.360 --> 0:09:03.800 the next Secretary of Defense. Terry Haynes is with us 0:09:03.800 --> 0:09:07.800 and Tery I want to ask you, were I Telsea 0:09:07.880 --> 0:09:11.240 Gabbard or Congressman Doug Collins, who was supposed to testify 0:09:11.240 --> 0:09:14.560 today that hearing has been moved. What am I watching for? 0:09:14.640 --> 0:09:18.160 What does this hearing tell me about the approach from yes, Democrats, 0:09:18.160 --> 0:09:21.280 but Republicans as well to the President of X nominees. 0:09:23.280 --> 0:09:26.080 I think what it. What it really comes down to, David, 0:09:26.160 --> 0:09:30.440 is a test of seriousness. I think there's bipartisan concern, frankly, 0:09:30.559 --> 0:09:34.160 under underneath the kind of partisanship or you know Senator Wicker, 0:09:34.920 --> 0:09:38.679 Senator Wicker's support of heg Seth, for example, there's bipartisan 0:09:38.760 --> 0:09:42.720 concern about the ability of the Trump nominees frankly to 0:09:42.920 --> 0:09:46.000 handle the magnitude of the responsibilities that are in front 0:09:46.000 --> 0:09:48.520 of them. That that is not a that's not a 0:09:48.559 --> 0:09:52.920 dissing of basic competence. What that is is a concern 0:09:53.120 --> 0:09:57.640 that their backgrounds don't haven't yet prepared them for the 0:09:57.800 --> 0:10:00.240 for the depth and breadth of these sorts of job, 0:10:00.679 --> 0:10:04.680 and may undermine the seriousness of what Trump's proposing on 0:10:04.760 --> 0:10:07.840 a defense and national security basis. So you know, these 0:10:07.880 --> 0:10:11.839 are these are hearings that I think are even more serious, 0:10:12.080 --> 0:10:15.160 uh for future direction of the United States national security 0:10:15.200 --> 0:10:17.160 and defense than you might think otherwise. 0:10:18.960 --> 0:10:21.800 I am will just ask you here where you see 0:10:21.800 --> 0:10:23.400 this leading after the Tom and I we were talking 0:10:23.440 --> 0:10:24.840 about when the vote is going to take place. I 0:10:24.840 --> 0:10:28.000 gather it's been scheduled for Monday. Describe the importance of 0:10:28.040 --> 0:10:30.680 this role, yes, to our government, but to the present 0:10:30.760 --> 0:10:33.000 life to get Pete Hegseth confirmed. What that means to 0:10:33.000 --> 0:10:33.760 to Donald Trump? 0:10:35.480 --> 0:10:39.760 You know, I think hag Seth. The conventional Washington answer 0:10:39.960 --> 0:10:43.080 about this is that, you know, all nominees are very important, 0:10:43.160 --> 0:10:46.760 so on and so forth. My sense of Trump is 0:10:46.400 --> 0:10:49.880 is different. My sense of Trump generally is that, uh, 0:10:50.200 --> 0:10:52.400 you know, Plan A doesn't work, then we'll do Plan B, 0:10:52.559 --> 0:10:55.320 and there will be a Plan B. And you can look, no, 0:10:55.520 --> 0:10:57.600 you can look into his first term for this, but 0:10:57.679 --> 0:11:00.559 you can look no farther than how quick League Gates 0:11:00.640 --> 0:11:04.440 was discarded and how quickly the new nominee was was 0:11:04.480 --> 0:11:07.720 put into place, and how much better everybody felt about 0:11:07.720 --> 0:11:10.880 the new nominee. Uh, you know, they've they've committed to 0:11:10.880 --> 0:11:15.480 hag Seth. Hegg Seth hasn't disqualified himself over the last 0:11:15.520 --> 0:11:18.920 two months. That's important, and that's positive for hag Seth frankly. 0:11:19.600 --> 0:11:22.840 But you know, if hagg Seth is confirmed, and my 0:11:22.960 --> 0:11:25.400 sense is this is very much a roll of the dice. 0:11:25.760 --> 0:11:30.600 If he's confirmed, he's confirmed barely and maybe with a 0:11:30.760 --> 0:11:35.440 Republican dissenters or two. And you know what that means 0:11:35.480 --> 0:11:38.320 for Defense and for you know, other contentious nominees like 0:11:38.360 --> 0:11:41.400 Gabbard and maybe Kennedy isn't good. But for the rest 0:11:41.400 --> 0:11:43.120 of the nominees, I don't think it matters a lot. 0:11:43.200 --> 0:11:45.800 Then they proceed to fail on their own merits. 0:11:46.360 --> 0:11:48.560 Terry, thank you so much. Can't say enough about his 0:11:48.640 --> 0:11:50.920 coverage and particularly for us. Go out to LinkedIn and 0:11:50.920 --> 0:11:54.880 see his complete notes. Agree or disagree, just always with 0:11:55.000 --> 0:11:59.800 terrific perspective. Mister Haynes, with a bit of experience in Washington. 0:12:04.400 --> 0:12:08.000 You're listening to the Bloomberg Surveillance Podcast. Catch us Live 0:12:08.040 --> 0:12:11.200 weekday afternoons from seven to ten am Eastern. Listen on 0:12:11.280 --> 0:12:14.960 Applecarplay and Android Otto with the Bloomberg Business app, or 0:12:15.120 --> 0:12:16.760 watch us live on YouTube. 0:12:17.280 --> 0:12:21.080 My knowledge of the cabinet centers around the modern presidency 0:12:21.120 --> 0:12:24.440 of Abraham Lincoln. Of course team of rivals, the political 0:12:24.480 --> 0:12:28.600 genius of Abraham Lincoln. Doris Karines Goodwin is iconic and 0:12:29.160 --> 0:12:33.520 with picking presidents, got Amcondo, got a Maconda looks at 0:12:34.000 --> 0:12:38.200 picking cabinets, got him. How original would this cabinet be? 0:12:40.000 --> 0:12:43.640 It would be original, as with everything Trump, completely unlike 0:12:43.679 --> 0:12:48.040 anything we've seen before. It's just thinking back the history 0:12:48.040 --> 0:12:50.280 of the secondary defense, which goes back to the nineteen 0:12:50.280 --> 0:12:52.920 forty seven National Defense Act. I cannot think of a 0:12:52.920 --> 0:12:56.440 Secretary Defense who is remotely as unqualified as pet Exit. 0:12:56.800 --> 0:12:58.360 There's not even anyone in the same. 0:12:58.200 --> 0:13:03.600 Universe baring that in mind, describe the mammoth undertaking he 0:13:03.640 --> 0:13:05.960 would face if he is he is confirmed. So we 0:13:06.000 --> 0:13:09.079 talk about his unqualifications, and in broad strokes here as 0:13:09.120 --> 0:13:12.000 you bring them up, we see Republicans casting him as 0:13:12.080 --> 0:13:13.640 kind of a change agent in the mold of the 0:13:13.640 --> 0:13:16.800 man who appointed him to this job. What does he 0:13:16.880 --> 0:13:19.120 face as he walks into the Pentagon in day one 0:13:19.120 --> 0:13:20.200 should he be confirmed? 0:13:20.880 --> 0:13:23.280 Yeah, a change agent is desperately needed. 0:13:23.400 --> 0:13:27.000 The you know, the Pentagon needs to change more than 0:13:27.040 --> 0:13:30.000 just about any other government agency. The problem is, as 0:13:30.000 --> 0:13:32.319 we all know, not all changes are for the better, 0:13:32.360 --> 0:13:34.680 and so that's the concern here. But for what he 0:13:34.720 --> 0:13:37.040 wants to do, At a most basic level, the US 0:13:37.120 --> 0:13:41.080 military has to reorient itself, not just from switching from 0:13:41.160 --> 0:13:43.400 focusing on fighting insurgencies in the Middle East to a 0:13:43.480 --> 0:13:47.040 high intensity warfare, the old school World War two style 0:13:47.120 --> 0:13:50.239 high intensity warfare. It also needs to reorient its geographic 0:13:50.320 --> 0:13:53.720 focus to where we're fighting, essentially in Asia as opposed 0:13:53.720 --> 0:13:56.120 to Europe or the Middle East, although obviously Russia's sol 0:13:56.160 --> 0:13:59.360 a threat we need to think about and warfare like 0:13:59.400 --> 0:14:03.360 anything else. Away games are a lot harder than home games. Well, 0:14:03.400 --> 0:14:05.360 if we worked, you know, God forbid, if we were 0:14:05.400 --> 0:14:08.160 to fight a conflict with China over Taiwan, we would 0:14:08.160 --> 0:14:09.680 be doing it in their backyard. 0:14:09.840 --> 0:14:12.559 They would have every conceivable advantage. 0:14:12.679 --> 0:14:16.160 And so it takes a very very differently structured defense 0:14:16.240 --> 0:14:18.880 establishment to make that work. And we have not made 0:14:18.880 --> 0:14:20.840 that transition. We have not even come close to making 0:14:20.840 --> 0:14:21.760 that transition yet. 0:14:22.520 --> 0:14:24.880 We have heard for decades and decades this call to 0:14:24.920 --> 0:14:28.280 audit the Pentagon. It is an impossible task for anyone 0:14:28.400 --> 0:14:30.880 to undertake. But I bring it up with some seriousness 0:14:30.880 --> 0:14:32.760 here because when we talk about reform of the Pentagon, 0:14:32.760 --> 0:14:35.600 it's something that looms large. There is a lot of 0:14:35.680 --> 0:14:37.640 ability for us to kind of pillory the department for 0:14:37.760 --> 0:14:41.480 how it spends money and how it contracts. How difficult 0:14:41.520 --> 0:14:43.440 would it be to change the day to day of 0:14:43.480 --> 0:14:44.520 the Pentagon. 0:14:45.320 --> 0:14:46.960 You know, extraordinarily difficult. 0:14:47.040 --> 0:14:49.240 Many people have tried, and you know, essentially no one 0:14:49.280 --> 0:14:52.440 has succeeded in the largest extent. When I was in 0:14:52.480 --> 0:14:55.920 the Pagon, we're advising the Navy. I remember I used 0:14:55.960 --> 0:14:57.520 to walk around and I in the Army section. That 0:14:57.600 --> 0:14:59.280 was a big sign op saying this was while we 0:14:59.280 --> 0:15:00.840 were in a Amistan in Iraq. 0:15:01.480 --> 0:15:02.760 We are an army at war. 0:15:03.320 --> 0:15:05.400 And I thought this was the most devastating sign you 0:15:05.440 --> 0:15:07.640 could possibly put up, because what it meant was that 0:15:07.680 --> 0:15:11.400 you felt that people in the Pentagon had to be reminded, right, 0:15:11.480 --> 0:15:13.840 that's how different you are, how distant you are, and 0:15:13.840 --> 0:15:18.800 how insulated the Pentagon bureaucracy can be the change that 0:15:18.840 --> 0:15:21.720 we're talking about. The Pentagon has more than two million employees. 0:15:22.120 --> 0:15:24.000 It has a budget, if you roll in sort of 0:15:24.000 --> 0:15:28.280 you know affiliated cost of that, approaching a trillion dollars. 0:15:28.040 --> 0:15:29.920 It covers the entire planet. 0:15:30.000 --> 0:15:32.080 No other institution in the world covers the planet the 0:15:32.120 --> 0:15:36.200 way the US Defense Department does, and it has a 0:15:36.200 --> 0:15:41.800 civilian side sort of defense expertise that has really been eroded. 0:15:41.880 --> 0:15:45.680 One of the central reasons why contracting procurement Indiana in 0:15:45.760 --> 0:15:48.720 the Defense Department is such a catastrophe is that the 0:15:48.800 --> 0:15:51.360 program management skills that used to be part of the 0:15:51.400 --> 0:15:55.360 Senior Executive Service were essentially driven out of the government 0:15:55.480 --> 0:15:59.240 over a couple of generations, where we'd shifted that burden 0:15:59.280 --> 0:16:02.160 onto the defense con tractors who ran wild with it. 0:16:02.680 --> 0:16:04.240 The biggest failure. 0:16:03.920 --> 0:16:06.800 Was a thing called concurrence where we saw the catastrophe 0:16:06.800 --> 0:16:10.760 of the F thirty five and the new aircraft carrier program, 0:16:10.880 --> 0:16:13.480 where they were built at the same time that they 0:16:13.480 --> 0:16:15.960 were essentially tested, and of course when they failed the tests, 0:16:16.320 --> 0:16:19.680 all that building had done and. 0:16:18.760 --> 0:16:22.160 Got something like that just as one story. Do you 0:16:22.200 --> 0:16:24.360 look at that as asymmetric and that it was a 0:16:24.400 --> 0:16:28.040 Republican failure or a democratic failure or is that just 0:16:28.120 --> 0:16:29.680 an institutional failure. 0:16:30.520 --> 0:16:32.120 It is an institutional failure. 0:16:32.200 --> 0:16:35.560 The two sides have failed in different and complementary and 0:16:35.600 --> 0:16:38.880 disastrous ways. Republicans have failed because they did not value 0:16:38.880 --> 0:16:41.680 expertise and they kept slashing away at the civilian at 0:16:41.680 --> 0:16:45.840 the sort of the civilian expertise on contracting, and relied 0:16:45.880 --> 0:16:49.920 on the on and relied on the contractors. Democrats have 0:16:49.960 --> 0:16:53.240 flipped on the other side when Barack Obama was When 0:16:53.280 --> 0:16:55.400 Barack Obama was president in I says, you know, he 0:16:55.440 --> 0:16:57.360 could have made Richard Danzig Sectary of Defense. 0:16:57.400 --> 0:16:59.360 He could have put a real reformer in and he 0:16:59.400 --> 0:17:00.760 did not chew to do that. 0:17:00.880 --> 0:17:02.840 Right like there was a lot of the Defense Department 0:17:03.040 --> 0:17:04.439 just isn't what we pay attention to. 0:17:04.800 --> 0:17:06.080 It's not what we're going to focus on. 0:17:06.160 --> 0:17:08.120 We're gonna let it kind of do its thing without 0:17:08.160 --> 0:17:09.840 going in and getting into the details. 0:17:10.359 --> 0:17:13.879 Senator Shaheen questioning that the nominee now on comments he's 0:17:13.920 --> 0:17:17.720 made in the past, but women in combat. Pete hegxs 0:17:17.800 --> 0:17:19.960 is saying that his main concern here is readiness on 0:17:20.000 --> 0:17:22.320 the battlefield. When you look at all of the things 0:17:22.359 --> 0:17:24.800 that are dogging him or could be potential hurdles to 0:17:24.880 --> 0:17:27.119 him being confirmed, Your god him, how much does this 0:17:27.160 --> 0:17:29.200 loom large? There are many members of this committee women 0:17:29.200 --> 0:17:31.040 who did, in fact serve in the military. 0:17:32.440 --> 0:17:34.919 It's a big one. I feel like Pete Hegsett's. 0:17:35.080 --> 0:17:37.639 The issue with Pete Hegsuth is there are so many 0:17:37.680 --> 0:17:40.639 different issues with him, each one of which is individually 0:17:40.680 --> 0:17:44.359 completely disqualifying, that they're kind of blocking each other, right, Like, 0:17:44.440 --> 0:17:46.600 you don't want someone who has a huge drinking problem. 0:17:46.920 --> 0:17:49.159 You don't want someone who doesn't like women in the military. 0:17:49.200 --> 0:17:52.600 You don't like there's everything compounding all at once. I 0:17:52.640 --> 0:17:55.639 wonder if people were sort of are unsure where to 0:17:55.720 --> 0:17:58.720 target their fire. But if you were a woman in 0:17:58.760 --> 0:18:01.360 the military. Surely having a separate AVENSIS says you shouldn't 0:18:01.359 --> 0:18:02.800 be there seems like a big problem. 0:18:03.560 --> 0:18:05.480 Got him. We're gonna have to leave it there because 0:18:05.480 --> 0:18:07.439 we've got to do a market over here. Thank you 0:18:07.520 --> 0:18:09.720 so much for perspective. I can't say enough about the 0:18:09.760 --> 0:18:13.879 book picking President's got a mccunda Yale University. Thank you 0:18:13.920 --> 0:18:14.560 so much for that. 0:18:19.320 --> 0:18:23.240 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:18:23.280 --> 0:18:26.280 starting at seven am Eastern on Apple Corplay and Android 0:18:26.280 --> 0:18:29.359 Auto with the Bloomberg Business app. You can also listen 0:18:29.440 --> 0:18:32.680 live on Amazon Alexa from our flagship New York station, 0:18:33.240 --> 0:18:36.800 Just say Alexa Play Bloomberg eleven thirty one. 0:18:36.880 --> 0:18:38.879 Christopher Smart just a moment to go, a former special 0:18:38.880 --> 0:18:41.840 assistant to the President who's served from twenty thirteen to 0:18:41.880 --> 0:18:44.920 twenty fifteen, now with the Arbirth Group, and mister Smart, 0:18:44.960 --> 0:18:46.600 great to have you with us, and I'd love to 0:18:46.640 --> 0:18:49.840 just get your thoughts on, yes, how this particular hearing 0:18:49.880 --> 0:18:53.119 has unfolded, but what it tells us about public service 0:18:53.160 --> 0:18:55.680 in this Washington at a moment of transition, The way 0:18:55.680 --> 0:18:58.359 that this nominee has been treated as being treated and 0:18:58.760 --> 0:19:01.320 the way that the President elect transition team are approaching 0:19:01.320 --> 0:19:03.800 this process of advice and consent. 0:19:05.680 --> 0:19:09.480 Well, I think at every new transition, every president faces 0:19:09.520 --> 0:19:15.159 a different environment and a different approach to this advice 0:19:15.200 --> 0:19:19.680 and consent process. I do think, you know, looking at 0:19:19.720 --> 0:19:22.880 this particular nominee, you know, and remembering all the way 0:19:22.920 --> 0:19:26.520 back to when President George H. W. Bush nominated Senator 0:19:26.600 --> 0:19:31.639 John Tower, defense expert and veteran who famously was rejected 0:19:31.720 --> 0:19:36.040 because of accusations over his alcoholism. And again what in 0:19:36.040 --> 0:19:38.919 the day we used to call or was called womanizing. 0:19:39.760 --> 0:19:42.800 This is a nominee, clearly, I think when we saw 0:19:43.160 --> 0:19:47.000 the first opening statement from Senator Ernst who seems to 0:19:47.040 --> 0:19:51.120 be sailing his way through to confirmation, and it's hard 0:19:51.119 --> 0:19:52.800 to see what is going to stand in his way 0:19:52.880 --> 0:19:54.639 right now in spite of what are likely to be 0:19:55.000 --> 0:19:57.679 continued set of short questions and the Democrats. 0:19:57.840 --> 0:20:00.960 Christopher Smart, you're one of the most qual people. I mean, 0:20:01.000 --> 0:20:03.760 the title here is former Special Assistant to the President 0:20:03.800 --> 0:20:07.800 for International Economics, but you've got a sense of geopolitics 0:20:07.840 --> 0:20:12.560 and the defense extension of America with your decades at Bearings. 0:20:12.720 --> 0:20:15.560 And I'm not going to mince words, doctor Smart. It's 0:20:15.560 --> 0:20:18.920 just as simple as this, will the generals and animals 0:20:19.160 --> 0:20:24.360 rally around this secretary of Defense? Oh? 0:20:24.400 --> 0:20:26.399 I think they will. I think most of them, you know, 0:20:26.480 --> 0:20:29.520 wish that these political side shows would go away so 0:20:29.560 --> 0:20:32.879 that they could get on with the business of defending 0:20:32.960 --> 0:20:35.359 our country and ensuring a national security as they have 0:20:35.440 --> 0:20:38.560 always done through one secretary of Defense after another. I mean, 0:20:38.600 --> 0:20:44.640 I think the real secret here is that no single 0:20:44.720 --> 0:20:49.840 secretary of Defense is going to inflict significant change on 0:20:50.480 --> 0:20:53.920 the behemoth that is the Pentagon. One secretary aft another 0:20:54.000 --> 0:20:56.600 has tried to make it more efficient, to make it 0:20:56.760 --> 0:21:02.000 more transparent, to get that audit right. It is not 0:21:02.040 --> 0:21:04.000 an easy and no single person's going. 0:21:03.920 --> 0:21:06.280 To be Chris Wright nails this, David Girl. This is 0:21:06.280 --> 0:21:09.040 the heart of the matter. The fact is the president 0:21:09.160 --> 0:21:12.080 elect feels he can change the Pentagon. 0:21:12.720 --> 0:21:15.119 That's a fact he does. I think the open question is, 0:21:15.119 --> 0:21:17.480 and I'd love for Christopher Smart to chime in here, 0:21:17.920 --> 0:21:19.840 how much does he plan to change it or think 0:21:19.840 --> 0:21:23.080 it can be changed, or force change on it? All 0:21:23.080 --> 0:21:26.240 through the morning, Chris, we've been talking about the degree 0:21:26.240 --> 0:21:28.439 to which there's sort of a script here for this nominee. 0:21:28.440 --> 0:21:32.520 Should he be confirmed to manage this huge institution. Do 0:21:32.560 --> 0:21:34.480 we have a sense from him, from the President elect 0:21:34.480 --> 0:21:37.160 about what actually, notionally would change at the Pentagon were 0:21:37.200 --> 0:21:37.840