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Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen

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Speaker 1: with David Gura. Daily we bring you insight from the

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Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg

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Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,

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Speaker 1: on the Bloomberg and North Korea's foreign minister has ridiculed

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Speaker 1: President Trump's threats to annihilate his isolated states well. He

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Speaker 1: told reporters at the United Nations General Assembly that Trump's

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Speaker 1: threat is akin to the sound of a dog barking.

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Speaker 1: His comments came a day after President Trump threatened to

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Speaker 1: wipe out North Korea while joining US now from brilliant

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Speaker 1: Ischinger Munich Security Conference Chairman, Chairman, thank you so much

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Speaker 1: for joining us We're delighted to have you on air

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Speaker 1: on this important important Let me actually kick off with Iran.

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Speaker 1: If Donald Trump and the US do decide to abandon

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Speaker 1: the deal with Iran, what does Europe do? Well? First

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Speaker 1: of all, let's let's hope. Uh, this is only hot

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Speaker 1: air and and it's not yet decided. That's what I

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Speaker 1: hope that the United States will walk away from the

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Speaker 1: around deal. If if the United States walks away from

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Speaker 1: the AROUND Deal. UH, this will be a major setback

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Speaker 1: UH in various dimensions. First of all, it will will

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Speaker 1: be a major setback for the role and the credibility

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Speaker 1: of the United States in international politics. Second, it will

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Speaker 1: be a major setback for our effort to keep Iran

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Speaker 1: under wraps for the next decade or so, because if

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Speaker 1: the US walks away, Iran may walk away and we

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Speaker 1: may have the re emergence of nuclear activities. And Third,

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Speaker 1: and most importantly, if the US walks away from the

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Speaker 1: AROUND deal, how are we ever going to explain to

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Speaker 1: North Korea that it would be better to negotiate with

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Speaker 1: the international community, including with the United States, then to

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Speaker 1: build more missiles and and and and nuclear weapons. Um,

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Speaker 1: the lesson from the US walking away to North Korea

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Speaker 1: will be just keep doing what you're doing. That's terrible, German,

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Speaker 1: who can actually diffuse a situation? And again, is there

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Speaker 1: a specific role that Europe can play can play mediating this? Well?

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Speaker 1: I think the message needs to be I'm there's not

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Speaker 1: a happy message. And and as as a as a

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Speaker 1: confirmed you know, transatlantic person, I'm really sorry to say this,

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Speaker 1: I think we would need we the Europeans would need

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Speaker 1: to say to the United States, if you think that

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Speaker 1: you're going to re in state sanctions against Iran, you'll

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Speaker 1: have to do it without us. You will be really

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Speaker 1: America alone. Um. And that will create, of course, all

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Speaker 1: sorts of business and economic and political tensions. Is that

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Speaker 1: what President Trump really needs at this point? I wonder, Ambassador,

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Speaker 1: it is wonderful to have you with us today. I

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Speaker 1: want to go back to your inner international relations study,

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Speaker 1: A tough Fletcher school of years and years ago, I

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Speaker 1: would assume right now is not in the textbooks. What

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Speaker 1: would you like to see in leadership capabilities from Secretary Tillerson? Well, I,

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Speaker 1: first of all, I think that um, you know, speaking

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Speaker 1: tough too dictators is not often by itself always wrong.

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Speaker 1: But and in that sense, uh, I would uh a

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Speaker 1: week ago if you had asked me, I would have said, uh,

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Speaker 1: Donald Trump and the Trump administration has scored a success

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Speaker 1: in getting a unanimous decision at the United Nations on

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Speaker 1: North Korea and getting the sanctions enhanced. So uh, you know,

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Speaker 1: I am not against a tough position. But but what

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Speaker 1: is what what my textbook would suggest is that you

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Speaker 1: if you put if you want to put pressure on Iran,

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Speaker 1: or on North Korea, or on Russia for that matter.

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Speaker 1: You've got to show them the door through which they

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Speaker 1: can walk out of the room or come into your

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Speaker 1: conference room. Pressure alone, Threats alone are not gonna work

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Speaker 1: unless you show them there is going going to be

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Speaker 1: an incentive if they follow your your proposal. Well, you

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Speaker 1: mentioned that you're incentive. It's lacking you. You mentioned you're

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Speaker 1: a confirmed transatlantic person as president, and Trump risk giving

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Speaker 1: up all of the games from the days of the

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Speaker 1: Atlantic Charter. Well, I think that we have um a

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Speaker 1: historic um phenomenon of change here. You see, for the

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Speaker 1: last sixty or more years, Um, my country has celebrated

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Speaker 1: the fact that after World War Two we have finally

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Speaker 1: joined the West. And who exactly what exactly is the West?

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Speaker 1: The West for us in Germany has been symbolized by

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Speaker 1: the President of the United States. My generation admired John F. Kennedy.

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Speaker 1: The younger generation admired Barack Obama. Remember, two hundred thousand

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Speaker 1: Germans came when he spoken. He was only a candidate

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Speaker 1: at the time. So what I think uh is now

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Speaker 1: happening is that we are lose ing that symbol of

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Speaker 1: the West, which would used to be undisputedly the president

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Speaker 1: of the United States. I cannot explain to my children

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Speaker 1: that they should think of President Trump as the leader

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Speaker 1: of the West, the person that represents the values of dignity,

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Speaker 1: of human freedom that the West stands for. That is

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Speaker 1: a very serious problem, a remarkable statement, Ambassador. So then,

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Speaker 1: if Angelo Miracle is reaffirmed as a chancellor of a

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Speaker 1: new Germany, do you suggest as chief should project internationally

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Speaker 1: as we saw from Conrad at an hour in another

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Speaker 1: time in place, is mercle the one that has to

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Speaker 1: push the West dialogue forward. Well, let me be very

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Speaker 1: frank about this. There is no way that Germany, or

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Speaker 1: Germany and France, or Germany, France and the UK replace

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Speaker 1: the leadership role of the United States. We need the

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Speaker 1: United States, We need the US presence in Europe. We

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Speaker 1: need American involvement in the Middle East, in the areas

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Speaker 1: of tension surrounding Europe. So, even if we have serious,

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Speaker 1: rather fundamental disagreements, there is no alternative to close cooperation,

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Speaker 1: and I think we we will. We will simply need

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Speaker 1: to do everything we can to work as closely as

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Speaker 1: possible with the US, and of course working with the

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Speaker 1: US meets. Not only working with the White House. There

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Speaker 1: are fifty states. There are governors, there are senators, there

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Speaker 1: are congressmen, and many of them know that some of

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Speaker 1: the jobs in their districts, in their states are owed

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Speaker 1: to investments from European companies. So there are many, many

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Speaker 1: areas through which we can work together, even if the

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Speaker 1: going is going to be a little rougher than it

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Speaker 1: used to be between the White House chairman and European Chancellor.

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Speaker 1: Is away from the symbols that you were talking about,

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Speaker 1: do you believe, amongst all the noise that the Trump

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Speaker 1: administration is actually fully committed to Transatlantic defense? Or do

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Speaker 1: you believe that the alliance has lost credibility? So it's

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Speaker 1: not symbolism, but has it actually lost power? UM. I

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Speaker 1: have always felt that, of course words are important, but

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Speaker 1: facts at action is even more important. And if you

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Speaker 1: look at the facts and the action there there can

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Speaker 1: be no doubt that the United States UM remains committed

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Speaker 1: to Transatlantic solidarity Tornado to the famous Article five. Let's

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Speaker 1: not forget the current reinforcement. Military reinforcements that have taken

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Speaker 1: place in the Baltic States, etcetera, etcetera, have been led

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Speaker 1: not by France or Germany or the UK, but by

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Speaker 1: the United States. So I, in my own mind there's

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Speaker 1: no doubt that the United States is a firm leader

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Speaker 1: and partner in the North Atlantic Alliance. But of course

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Speaker 1: some of the tweets and some of the talk that

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Speaker 1: we heard UH during the campaign and earlier this year

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Speaker 1: wasn't really very helpful. Ambassador, Thank you so much. We

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Speaker 1: look forward to meeting with you in our London and

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Speaker 1: New York studios within your travels. Ambassadorsnger of course, with

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Speaker 1: us this morning from Berlin. Stephen Roach joining us now,

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Speaker 1: as I said, senior fellow at the Jackson Institute at Yale,

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Speaker 1: former chairman of Morgan Stanley Asia and before that, the

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Speaker 1: chief economist at Morgan Stanleys and Roach. Great to have

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Speaker 1: you with us. Let's start with just the import of

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Speaker 1: this decision. I mentioned that Moody's did this a few

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Speaker 1: months back, and my sense is that this was telegraphed here,

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Speaker 1: This was this was gonna happen. Well again, David, as

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Speaker 1: I said to Tom, um, it was hardly a surprise.

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Speaker 1: I mean, um, you know, rating agencies are lagging, not

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Speaker 1: leading indicators. We've all known about the dead intensive issues

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Speaker 1: in China, including the Chinese, and they're very focused on

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Speaker 1: financial stability and in de levering. The biggest challenge for China,

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Speaker 1: I think is not a debt crisis as we saw

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Speaker 1: in Asia, because they have a huge domestic savings rate.

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Speaker 1: They owe the debt to themselves. The biggest challenge is

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Speaker 1: to get their state owned enterprises, which have been leading

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Speaker 1: the charge in dead intensive growth UH, to reduce their

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Speaker 1: appetite for credit. And this is a fundamental issue that

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Speaker 1: I think UM will be addressed by the the party

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Speaker 1: leaders at the upcoming party congress in UH mid October.

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Speaker 1: Dealing with state owned enterprise reform is at the core

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Speaker 1: of the Chinese control issue and in managing UH the

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Speaker 1: role of these companies in AH what is still a

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Speaker 1: blended Chinese economy. I gather that that congress is scheduled

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Speaker 1: to begin in just about a month's time. What's the

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Speaker 1: what's the appetite for the kind of reforms you're talking

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Speaker 1: about it? We are we seeing an increased appetite for

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Speaker 1: dealing with the s O S. Yeah, that's a great question.

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Speaker 1: I think you know, there's a real tug of war.

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Speaker 1: A great question. There's a real, real tug of war

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Speaker 1: in China between the role of the state UH and

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Speaker 1: the the the role of markets. The Chinese wanna sort

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Speaker 1: of manages balancing act UH in a very delicate way,

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Speaker 1: maintaining their own unique blend of state and market driven system.

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Speaker 1: And you know, we in the West say, you know,

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Speaker 1: come on, it's not gonna work. You gotta cut the

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Speaker 1: cord and let markets UH drive the outcome. And the

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Speaker 1: Chinese say, we think we can do both. And you know,

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Speaker 1: there's no clear UH verdict yet in this balancing act.

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Speaker 1: And yet we do know that the state on enterprises

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Speaker 1: UM are well, they've diminished in terms of importance, in

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Speaker 1: terms of employment UH, there's still a very significant piece

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Speaker 1: of the Chinese model. I want one more question in

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Speaker 1: China before we get to what we've been talking about

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Speaker 1: all morning, which is Steve Roach and basically wonderful economics

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Speaker 1: one on one discussion of savings investment of course central

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Speaker 1: bank theory as well. Do you suggest that China will

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Speaker 1: adapt and adjust to the President of the United States?

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Speaker 1: Is that what a nation does, or do they become

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Speaker 1: China like almost out of Jonathan Spence where they look

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Speaker 1: at the continuum of four or a or ten or

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Speaker 1: fifty years and just ignore this moment in the United

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Speaker 1: States of America, which is it. Well, the book I

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Speaker 1: wrote on the U. S and China a few years

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Speaker 1: ago is one of codependency where we depend on them

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Speaker 1: and they depended on So they can't afford to ignore uh,

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Speaker 1: their most important economic partner, nor can we afford to

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Speaker 1: ignore them in the same sense. Um. They're not gonna

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Speaker 1: let their perceptions of um this relationship uh be uh

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Speaker 1: continually uh disturbed by you know, the latest tweet and

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Speaker 1: bluster coming out of our our president uh. And I

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Speaker 1: think you know they they have managed this uh uh

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Speaker 1: relationship um uh extremely well since the president took office

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Speaker 1: on in January, moving into this very sensitive political season

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Speaker 1: for the Chinese. I think they're gonna uh stay very steady,

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Speaker 1: uh and looking through the noise that comes out of Washington.

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Speaker 1: Was the press conference yesterday, a lot of noise uh

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Speaker 1: from Cherry and I think you know, it was still

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Speaker 1: very very focused on the interplay between normalization uh and inflation.

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Speaker 1: And I think that the FED has a really tough

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Speaker 1: time letting go of its inflation targeting mindset, even though

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Speaker 1: there's no inflation or really target tell us a bit

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Speaker 1: more about that that interplay there. I guess it's the

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Speaker 1: the old argument can they walk and chew gum? At

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Speaker 1: the same time, I was struck yesterday listening to the

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Speaker 1: press conference and looking at the statement how little was

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Speaker 1: devoted to the balance sheet, unwinded telegraphed or laid out

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Speaker 1: how this process is going to work or how they

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Speaker 1: hope it will work. Are they giving each equal weight?

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Speaker 1: I guess is my question? What do we know about

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Speaker 1: the interplay between the two? Well, I think, um, they

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Speaker 1: have made an important decision, David, and that is to

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Speaker 1: um begin what's going to be a long and drawn

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Speaker 1: out process of getting this balance sheet back that I

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Speaker 1: guess they say now a little bit above it's pre

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Speaker 1: crisis level. But you know this is gonna take uh

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Speaker 1: years and years of of time to do. And uh,

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Speaker 1: you know, I'm not it's not clear to me that

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Speaker 1: you know they have the luxury of of that time. UH.

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Speaker 1: If there's one thing we learned from the UH sort

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Speaker 1: of the build up to the the great financial crisis

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Speaker 1: of oh eight o nine was that a long and

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Speaker 1: drawn out normalization post dot com bubble, UH was really

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Speaker 1: the uh so the seeds of the excesses that were

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Speaker 1: building back then. And you know, you think that the

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Speaker 1: central bank would say, wait a second, is there a

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Speaker 1: lesson there that we need to pay attention to that?

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Speaker 1: You know, this idea that we have the luxury of

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Speaker 1: time to keep uh you know, monetary policy uh at

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Speaker 1: unusual settings because inflation is low may not necessarily be

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Speaker 1: the right conclusion to draw from that period or in

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Speaker 1: impose it on this period. So I worry that, uh,

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Speaker 1: we we haven't really we don't really appreciate, uh that

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Speaker 1: that the lessons of that experience. When it comes to

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Speaker 1: central bank introspection, What are we losing with stan Fisher's departure.

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Speaker 1: He's somebody who knows monetary policy so acutely and so deeply.

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Speaker 1: Are we looking at perhaps even even less introspection going

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Speaker 1: forward here with his departure next month? I think that's

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Speaker 1: a great point. Uh. You know, in stand Fisher, you

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Speaker 1: have somebody who has got a wealth of experience, UM,

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Speaker 1: a man who has uh you know, written textbooks on

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Speaker 1: macro economics, who's taught um generations of central bankers himself

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Speaker 1: in the classroom. A man who has made mistakes, uh,

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Speaker 1: certainly when he was at the i m F in

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Speaker 1: the late nineteen nineties. Uh, and hopefully as himself has

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Speaker 1: learned from the mistakes that the I m F made

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Speaker 1: uh during that period. But it's a wealth of experience

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Speaker 1: that uh he brings to bear. Uh And when when

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Speaker 1: he goes, you know, does the institutional memory stay. But

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Speaker 1: his ultra accommodated is the same as Steve Roaches, maybe

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Speaker 1: for different reasons. But you both want to get there faster?

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Speaker 1: Are we gonna see that by the end of two

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Speaker 1: thousand and eighteen? Do you have any optimism quickly? Here?

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Speaker 1: Do we do we get there by November December of

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Speaker 1: a year from? No way? Tom, I mean I don't

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Speaker 1: think we get there faster. And I think that's that's

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Speaker 1: a problem, because the longer it takes to get back

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Speaker 1: to normal, uh, the more the power of excess liquidity

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Speaker 1: and distorting asset prices remains a real force in in

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Speaker 1: in creating what attentionally could be the next financial crisis.

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Speaker 1: Steven Horns, thank you so much, particularly comments on China.

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Speaker 1: With the news of the right reduction that we saw

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Speaker 1: this morning. Dr Roaches with Yale University, Steven wrote, staring

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Speaker 1: at me, like Tom, what do you nuts. Let's go

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Speaker 1: down to the physics of economics long agoing far away, Steve,

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Speaker 1: you have the courage to say, original balance sheet, macroeconomics matters.

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Speaker 1: Savings and its relationship to investment matters. Everyone now talks

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Speaker 1: on the income side GDP. Statement of the dearth of investment,

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Speaker 1: link that core equation of investment in savings together. Given

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Speaker 1: the lack of investment today in America, Well, the best

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Speaker 1: number time is the what I call the net national

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Speaker 1: savings rate. It's savings of individuals, businesses in the government sector.

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Speaker 1: Strip out depreciation that goes from the wear and tear

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Speaker 1: of my of our existing capital stock. Uh and you

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Speaker 1: find that the America's net national savings rate uh and

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Speaker 1: is now about one point nine percent of GDP, which

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Speaker 1: is pathetically low, compares with the six and a quarter

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Speaker 1: percent of average in the final three decades of the

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Speaker 1: twentieth century. Uh And it you know, the the onion

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Speaker 1: just keeps um the layers. The onion keep peeling away.

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Speaker 1: When you look at that lacking and saving and wanting

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Speaker 1: to consume and grow, We've got to import surplus savings

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Speaker 1: from abroad. Uh and that means we run these massive

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Speaker 1: um uh, current account and by the way, multilateral trade

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Speaker 1: deficits with over a hundred countries around the world. So

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Speaker 1: the Trump administration says, oh, we've got this big deficit

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Speaker 1: with China. We don't like trade deficits. Let's close. Let's

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Speaker 1: fix the trade deficit with China. If we don't save

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Speaker 1: and we and we eliminate the trade deficit with China.

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Speaker 1: The Chinese piece goes to other training partners in that

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Speaker 1: taxes the American work classic Steve roach folks and ignored

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Speaker 1: down about of e on one on one courses. I

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Speaker 1: would editorialize as well, Steve. Let me go to a

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Speaker 1: second or third or condition of this, which is, why

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Speaker 1: should I save? If interest rates the visible rate or

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Speaker 1: the inflation adjusted rate, if they're so low, what's my

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Speaker 1: incentive to save? That's not a primary condition, but it's

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Speaker 1: it's not much ran much. But again it goes back

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Speaker 1: to the point we talked about earlier. You know, with

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Speaker 1: the central bank UH in the market crushing returns for savers. UH,

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Speaker 1: there is no instave. Get the fed out of the markets,

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Speaker 1: give us not just normal policy rates, but normal returns

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Speaker 1: on saving tom so you will have something to live

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Speaker 1: on when you stop doing this for a list, Steven

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Speaker 1: tearing up. David Gurage just wrote wrote down on his

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Speaker 1: piece of paper and Martilly and Cross. I can't believe

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Speaker 1: that that's you. That's your first Martilly and Cross, folks.

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Speaker 1: That was brilliant theory with Dr Rode. Seriously, David, Steve Roach,

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Speaker 1: any indications that's happening, any indications that we're moving on

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Speaker 1: that path to the kind of changes you're you're you're prescribing.

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Speaker 1: Well again, David, you know the discussion yesterday by the

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Speaker 1: Fed and then you know they've got a memo talking

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Speaker 1: about normalization. You know, we may get there, maybe not

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Speaker 1: in my lifetime, but in your lifetime. The FED is

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Speaker 1: committed to normalizing. UH. It's it's balance sheet. In the meantime,

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Speaker 1: what are you know, poor savers like Tom UH supposed

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Speaker 1: to do? And you know, again the Fed, by UH

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Speaker 1: being so active in UH injecting liquidity in their risking markets,

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Speaker 1: UH encourages investors to take more risk than otherwise might

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Speaker 1: be the case. UH. And this is another UH sort

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Speaker 1: of systemic problem with their their strategy of quantitative easing.

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Speaker 1: When when you look at trade policy in this in

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Speaker 1: this country, do you do you think there are members

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Speaker 1: of this administration who get what you're saying about the

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Speaker 1: need for companies to look to external demanders as domestic demanded.

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Speaker 1: At this point, are there is there growing nuance to

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Speaker 1: the discussion about trade or is it still where it

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Speaker 1: was five six months ago. I don't think there's much

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Speaker 1: enlightened view on looking at trade policy in the broader context.

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Speaker 1: This is a UH you know, UH an administration that

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Speaker 1: takes UM, takes its instructions from a deal focused president.

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Speaker 1: He looks at trade on a transactional basis, country by country,

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Speaker 1: failing to appreciate the fact that last year, David, we

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Speaker 1: had trade deficits with a hundred and one countries. This

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Speaker 1: is a multilateral problem. It's not a country by country problem.

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Speaker 1: And when you when you recognize that, you know the

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Speaker 1: multilateral dimensions of this. It has to come from somewhere.

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Speaker 1: And that goes back to the savings point that I

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Speaker 1: just made with UH Tom UH and the Trump the

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Speaker 1: Trump administration and now the Republicans in the Senate say

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Speaker 1: we don't really care about deficits anymore. If they get bigger,

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Speaker 1: it's no big deal. Well, if the deficits get bigger,

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Speaker 1: the savings rate, it gets lower than multilateral problem gets worse.

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Speaker 1: Uh and uh, there's really no real appreciation for the

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Speaker 1: fundamentals of this issue in this administration. The bell just rang.

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Speaker 1: Look for the homework assignment. You can do that when

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Speaker 1: you're in your class notes. Stephen Rouch, thank you so

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Speaker 1: much from Yale University. A pop quiz tomorrow. David Garret

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Speaker 1: and Tom Keane here in New York in our Bloomberg

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Speaker 1: eleven three oh studios. A pleasure now to be joined

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Speaker 1: by someone who sits on the Senate Armed Services Committee,

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Speaker 1: the Senate Form Relations Committee as well as we look

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Speaker 1: at this headline crossing the Bloomberg, President Trump saying to

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Speaker 1: expect more sanctions on North Korea later today. Tim Kaine,

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Speaker 1: the junior Senator from the state Commonwealth of Virginia, of

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Speaker 1: course set from a vice presidential candidate as well, joining

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Speaker 1: us on our phone lines and Senator King, great to

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Speaker 1: have you with us. This is an issue that's deviled

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Speaker 1: us here in the US for a very long time.

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Speaker 1: President here talking about further sanctions. Are you convinced that

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Speaker 1: this is the way forward? More sanctioning? Is there a

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Speaker 1: diplomatic solution in sight? Do you think well, there could

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Speaker 1: be a diplomatic solution. But here, here's here's where we

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Speaker 1: draw the line. I voted for a recent Iran sanctions

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Speaker 1: package that was contained with sanctions against North Korea and

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Speaker 1: in Russia as well, but very clearly this was focused

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Speaker 1: on Iran's activity outside the scope of the nuclear agreement

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Speaker 1: we have with Iran that Iran is complying with. So,

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Speaker 1: if Iran is violating U n Security Council resolutions on

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Speaker 1: its missile program, then there ought to be sanctions for that,

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Speaker 1: and we have given the President the power to impose

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Speaker 1: those sanctions. What would be a disastrous mistake would be

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Speaker 1: if the President were to decertify Iran's compliance with the

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Speaker 1: nuclear agreement we reached with them. The International Atomic Energy

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Speaker 1: Agency says Iran is complying with that deal. Um, the

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Speaker 1: other nations are allies that work with us on the deal.

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Speaker 1: They believe Iran is complying. And if the US unilaterally

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Speaker 1: backs out of the deal, three bad things will happen.

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Speaker 1: Iran will start racing toward nuclear weapons again, which they

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Speaker 1: were UM. Second, our credibility in getting other nations to

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Speaker 1: help us with sanctions on other activities will be dramatically

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Speaker 1: weakened because people will not trust that the US will

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Speaker 1: honor our diplomatic commitment. And third, and maybe the most

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Speaker 1: frightening is the Trump administration is trying to find a

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Speaker 1: diplomatic resolution to North Korea's nuclear ambitions. UM Secretary Maddison

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Speaker 1: others always say it's diplomacy first. We're never out of

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Speaker 1: diplomatic options. That's what we want to prefer. But if

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Speaker 1: the US pulls out of a nuclear deal with Iran

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Speaker 1: when Iran is in compliance, it will eliminate the chance

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Speaker 1: of North Korea would ever enter into a diplomatic deal

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Speaker 1: with the United States, because they'd say, why would we

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Speaker 1: enter a diplomatic deal? The U s will just pull

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Speaker 1: out of it a year or two later. So this

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Speaker 1: is very high stake stuff. And if the President were

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Speaker 1: to decertify the Iran deal, I think it would be

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Speaker 1: disastrous for the security of our country in the world.

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Speaker 1: And indeed, a great important piece by Mark Landler of

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Speaker 1: the New York Times on that very issue out today

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Speaker 1: at well Worth well Worth reading. I wonder what kind

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Speaker 1: of conversations you've had. If I can pivot here a

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Speaker 1: little bit to talk about healthcare with the governor of

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Speaker 1: the Commonwealth Terry mccauliffe about the prospect for Graham Cassidy

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Speaker 1: becoming law. Of course, I'm sure you're watching watching the

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Speaker 1: goings on in your Senate as we as we all

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Speaker 1: are here. If that were to come to pass. What

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Speaker 1: would it mean for the Commonwealth of Virginia if the

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Speaker 1: funding structure were to be changed as radically as proposed

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Speaker 1: there under this piece of legislation. Yep. Governor mccauliffe has

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Speaker 1: signed a letter with I think a dozen other governors

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Speaker 1: equally democratic and Republican, opposing gram Cassidy. So here's what

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Speaker 1: it means for Virginia, sort of in in three buckets. First,

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Speaker 1: the Affordable Care currently protects you if you have a

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Speaker 1: pre existing health condition and an insurance company must write

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Speaker 1: you a policy and can't treat you unfairly in your rates. Uh.

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Speaker 1: The Grand Cassidy Bill would allow states to weigh the

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Speaker 1: essential health offits, which means you might get a policy

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Speaker 1: if you have a pre existing condition, but the insurance

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Speaker 1: company could say, but we're not going to cover your conditions.

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Speaker 1: So you're a diabetic, you'll write you a policy, but

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Speaker 1: we won't cover insulin. Or you're a woman, I'll write

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Speaker 1: you a policy, but we won't cover maternity. If your

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Speaker 1: pre existing condition is not covered, then you have no protection.

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Speaker 1: So that's going to hurt every Virginian that has a

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Speaker 1: pre existing condition, and it's causing great Second um, there's

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Speaker 1: a proposal in the funds that currently go to states

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Speaker 1: under the Affordable Character which is largely either Medicaid expansion

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Speaker 1: monies or premium assistance to help lower income people afford insurance.

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Speaker 1: You would reduce those funds by two d forty billion

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Speaker 1: dollars nationally over the next ten years, and then you

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Speaker 1: would eliminate all the funds. Virginia, because of this complicated

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Speaker 1: Black Grant formula, has gets a temporary boost, but you

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Speaker 1: can't take two hundred and forty billion dollars out of

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Speaker 1: the system without driving up premiums for people, and in

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Speaker 1: ten years, all the money goes away and Virginia gets hurted.

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Speaker 1: Third thing, though, is the real, I think, the real,

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Speaker 1: big problem, and it's a hidden problem in this bill.

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Speaker 1: For some reason, the Republicans they're talking about repealing the

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Speaker 1: Affordable Care Act, but they want to go after the

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Speaker 1: Medicaid program which existed before the Affordable CARECT So they're

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Speaker 1: capping Medicaid expenditures that will take a hundred and twenty

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Speaker 1: billion dollars out of Medicaid over the next ten years

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Speaker 1: and more thereafter. That would hurt Virginia a lot about

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Speaker 1: our Medicaid recipients or kids. If you're just joining us now.

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Speaker 1: A senator from Virginia who released a hundred and forty

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Speaker 1: five thousand emails which came up to the summary, Tim

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Speaker 1: Caine is a policy wonk. We continue, Senator Kane, you

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Speaker 1: know I picked this out in you and I were

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Speaker 1: on the same page, which is David Leonard in the

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Speaker 1: New York Times on the Senator from Arizona for for

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Speaker 1: you know, when you're on the other side of the the

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Speaker 1: old blah blah blah, this is real drama in emotion.

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Speaker 1: What will you look for from John McCain and the

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Speaker 1: next few days as on our Medical America, UM. David

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Speaker 1: Leonhard's piece this morning is really good because he basically

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Speaker 1: said John McCain changed the dynamic in the Senate when

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Speaker 1: he came back diagnosed with brain cancer, time in a

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Speaker 1: hospital with a whole lot of people, came back to

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Speaker 1: a standing ovation and basically said to the Senate on

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Speaker 1: healthcare and on everything else. Let's start really acting like

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Speaker 1: a Senate again. Let's have hearings and consider amendments and

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Speaker 1: have debate, and that will mean compromise, but that will

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Speaker 1: be for the good of the country. And and he

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Speaker 1: called for that. And because the bill that was on

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Speaker 1: the floor in August had not gone through any of

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Speaker 1: the procedures that he said we needed to do, he

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Speaker 1: voted against it. Well, now there's a rush. And and

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Speaker 1: you guys know this. I'm on the Health Committee and

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Speaker 1: Lamar Alexandra. After the failure of the vote in Augustine

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Speaker 1: and Patty Murray had pulled together a series of hearings

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Speaker 1: bipartisan governors, insurance commissioners, patients, hospitals, and we have basic

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Speaker 1: the basics of a deal bipartisan to stabilize the individual

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Speaker 1: insurance market and and engage in a longer term discussion

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Speaker 1: about how we fix, not destroy healthcare. But two days

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Speaker 1: ago the President and Speaker Ryan and Mitch McConnell basically

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Speaker 1: torpedoed the bipartisan effort. They said, we don't want that.

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Speaker 1: We want a partisan only repeal vote on on Graham Cassidy.

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Speaker 1: And so Senator McCain is going to be confronted as

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Speaker 1: our others with this this you know dilemma. We called

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Speaker 1: for a fair process. There hasn't been a fair process.

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Speaker 1: What should we do? What what everybody supports? Under Kane,

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Speaker 1: you know you were in a rush. You got through

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Speaker 1: Missouri in three years summer cum laude, and you know

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Speaker 1: you went onto Harvard Lawn all that. I get the

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Speaker 1: idea of a Tim Kine rush. Why are we in

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Speaker 1: such a rush in Washington? I just as an American?

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Speaker 1: Why can't we I don't want to get back to

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Speaker 1: Howard Baker and Sam Irvin, but why what's the rush? Senator? Well?

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Speaker 1: There there shouldn't be a rush. I mean, if we're

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Speaker 1: if we're thinking about people, we wouldn't rush. Healthcare is

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Speaker 1: the most important expnature you ever make, it with a

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Speaker 1: dollar in your pocket. And second, it's the biggest set

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Speaker 1: for the American economy. If you screw it up, you

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Speaker 1: screw up a big you know, a big swath of

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Speaker 1: the nation's GDP. The reason that there is a quote

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Speaker 1: rush is there is a budget instruction that's out on

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Speaker 1: the table that says a matter that is quote purely

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Speaker 1: budgetary can be resolved by a simple majority vote fifty

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Speaker 1: plus a tiebreaker. As long as it's done before September,

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Speaker 1: then that instruction expires, and at that point you could

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Speaker 1: only legislate on healthcare under traditional Senate order. You need

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Speaker 1: to get sixty votes, which means that the radical notion,

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Speaker 1: if we're gonna do someone healthcare, we ought to try

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Speaker 1: to find a little bit of bipartisan agreement before we

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Speaker 1: take steps. I actually think that's a good thing. The

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Speaker 1: House goes majority rule, but in the Senate you've got

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Speaker 1: to find some bipartisan agreement. And since healthcare is either

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Speaker 1: Democratic nor Republican um, finding bipartisan agreement is a good thing.

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Speaker 1: But they want to try to rush it through with

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Speaker 1: fifty votes and a tiebreaker. Frankly, Mitch Candell says, so

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Speaker 1: we don't have to work with Democrats in coming up

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Speaker 1: with the solution. That's not a good answer. Too short

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Speaker 1: with you today, Thank you very much for the time

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Speaker 1: that Senator Tim Kine from a vice presidential Canada as well,

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Speaker 1: the junior senator from the Commonwealth of Virginia. I would

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Speaker 1: love to have him back talk more about social politics

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Speaker 1: in this country as well. Of course, he wandered that

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Speaker 1: terrain trod by Thomas Jefferson Ademial County after those terrible

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00:32:22,680 --> 00:32:25,520
Speaker 1: incidents in Charlottesville in Augustine would love to talk to

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Speaker 1: him about the healing process in Virginia. Hope we can

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Speaker 1: talk to the Senator against So grateful for him joining

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Speaker 1: us here on our phone lines. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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00:32:45,960 --> 00:32:51,560
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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00:32:51,600 --> 00:32:54,840
Speaker 1: on Twitter at Tom Keene David Gura. Is that David

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00:32:54,880 --> 00:32:59,320
Speaker 1: Gura before the podcast? You can always catch us worldwide.

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Speaker 1: I'm blue Bird Radiom