WEBVTT - Most Americans Will Get Tax Cuts, Lieber Says 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.240 Bloomberg dot Com, and of course, on the Bloomberg for investors. 0:00:33.280 --> 0:00:36.080 Firmly focused on d C with a big question, what 0:00:36.159 --> 0:00:38.279 does it mean for the US economy? A one off 0:00:38.320 --> 0:00:42.000 sugar high or the beginning of a sustainable improvement in 0:00:42.120 --> 0:00:44.760 US growth? Johnny gus now to discusses Chris rob Key, 0:00:44.840 --> 0:00:48.320 MUFG Union Bank chief financial economist. Chris, is it the 0:00:48.360 --> 0:00:50.800 former or one off sugar high or the latter the 0:00:50.920 --> 0:00:54.480 beginning of something more sustainable? Well, I guess the problem 0:00:54.560 --> 0:00:57.960 was starting in two thousand and twenty, they think the 0:00:59.080 --> 0:01:01.920 tax reform is going to lead to three percent GDP 0:01:02.800 --> 0:01:06.720 every single year for those finals seven years or so. 0:01:06.800 --> 0:01:09.039 That seems a bit of a stretch. I mean, one 0:01:09.080 --> 0:01:11.880 of the things we're struggling with here, and you know, 0:01:12.400 --> 0:01:15.840 this fiscal stimulus. It's not convinced the Fed at all, right, 0:01:15.880 --> 0:01:20.199 They're keeping their GDP call like two in two thousand 0:01:20.280 --> 0:01:23.640 and twenty. Um. Yeah, I mean it's just gonna be 0:01:23.760 --> 0:01:25.600 very difficult to achieve. One of the things that we're 0:01:25.680 --> 0:01:29.360 running into is that the unemployment unemployment rate is so low. 0:01:29.680 --> 0:01:33.080 Who are we going to employ to make the economy 0:01:33.280 --> 0:01:36.360 run faster? There's no workers. This is the first time, 0:01:36.440 --> 0:01:40.679 really an economic history, modern economic history since the seventies, 0:01:40.680 --> 0:01:45.120 that we're going to test can the economy grow without 0:01:45.720 --> 0:01:48.760 having a good labor supply? CHRISTI touch on something important. 0:01:49.040 --> 0:01:51.400 Most economists would say that any improvement growth is just 0:01:51.440 --> 0:01:53.360 a function of one of two things, or perhaps both, 0:01:53.360 --> 0:01:55.960 an increasing productivity or an increase in the size of 0:01:55.960 --> 0:01:58.960 the population. Are we going to get either? Yeah, I 0:01:58.960 --> 0:02:02.920 mean we don't really get the population is slowing or 0:02:02.960 --> 0:02:07.000 at least the Baby Boom generation. Uh, you know, it's 0:02:07.000 --> 0:02:09.919 a twenty year wave of people. The first one retired 0:02:09.960 --> 0:02:13.360 in two thousand and eleven. You know, people who retired 0:02:13.400 --> 0:02:16.639 don't spend as much. That's the theory. Uh, you wouldn't 0:02:16.760 --> 0:02:20.680 think that the economy has as much spending power based 0:02:20.720 --> 0:02:23.960 on demographic headwinds. I think that's why the Federal Reserve 0:02:24.040 --> 0:02:27.440 has two percent growth and not three percent like the administration. 0:02:28.919 --> 0:02:31.880 Productivity it's trickier. I mean, when when whenever I hear 0:02:31.880 --> 0:02:34.720 the word productivity, you really want to look at our 0:02:34.760 --> 0:02:38.680 consumer spending as investment, and you know consumers are spending 0:02:38.800 --> 0:02:41.600 enough right now despite all the claims that graphics are 0:02:41.600 --> 0:02:43.520 going to hurt. I got excited. Christa heard Tom King 0:02:43.560 --> 0:02:45.280 clear his throat, and I thought maybe he'd be joining 0:02:45.360 --> 0:02:52.359 us Wednesday. Decide should I start my Christmas shopping Wednesday 0:02:52.440 --> 0:02:55.079 or Thursday. I know what I want, it's a very 0:02:55.200 --> 0:03:01.240 very your tax cut a tax cut, well, I don't know. 0:03:01.280 --> 0:03:03.840 We'll see. There's been some interesting early analysis on that. 0:03:03.919 --> 0:03:05.799 We'll touch you. I'll wrap up the script and we'll 0:03:05.840 --> 0:03:08.720 do that here in a moment. Plumberg Surveillance this morning 0:03:09.000 --> 0:03:12.040 with Chris Rockki. Thrilled he's with us, brought you by Investco. 0:03:12.240 --> 0:03:15.880 Learned how investcos pure focus on investing, diversity of thought, 0:03:16.440 --> 0:03:18.799 and passion to exceed can help you get more out 0:03:18.800 --> 0:03:23.000 of life. Visit investco dot com slash more out of life. 0:03:23.080 --> 0:03:25.160 He is with m U f G. Chris Rupki. Chris, 0:03:25.200 --> 0:03:27.400 people read your note because they know on the first 0:03:27.400 --> 0:03:30.080 page they're gonna get a payoff of the linkage of 0:03:30.080 --> 0:03:34.360 the fixed income market into what's going on in economics. 0:03:34.520 --> 0:03:37.760 William Hoagland was with us yesterday. He was brilliant, and 0:03:37.840 --> 0:03:40.080 he put out a tweet yesterday. I should point out 0:03:40.200 --> 0:03:44.520 Mr Hoagland, John is not some young Twitter type. He's like, 0:03:44.680 --> 0:03:48.240 you know, relatively ancient. And he said, in twenty four months, 0:03:48.240 --> 0:03:52.960 we're gonna have a one point one trillion dollar US deficit. 0:03:53.520 --> 0:03:58.240 How I'm sorry, John dine underd billion is a lot, lot, 0:03:58.360 --> 0:04:03.240 lot less than one trilliont How will your world react, 0:04:03.360 --> 0:04:07.960 Chris Rupki when we start to frame a what is 0:04:07.960 --> 0:04:13.720 that nine figures three six, nine, twelve figure deficit? Yeah, 0:04:13.800 --> 0:04:16.240 I don't know. I mean I'm looking for anything to 0:04:16.320 --> 0:04:22.080 push up tenure treasury yields, economy. We got it yesterday, 0:04:22.480 --> 0:04:24.480 Yes we did. Where did that come from? I think 0:04:24.480 --> 0:04:26.560 it was just technical. I don't know where that came from, 0:04:27.360 --> 0:04:29.800 although it could have been partly the the idea of 0:04:29.880 --> 0:04:34.000 greater deficits out there from the tax reform um. You know, 0:04:34.040 --> 0:04:37.200 we had trillion dollar deficits during the Obama years, four 0:04:37.320 --> 0:04:39.760 years of it ending two thousand and twelve I think 0:04:39.800 --> 0:04:43.000 it was, and tenure treasury yields never went up. I 0:04:43.080 --> 0:04:45.360 would like to think that, you know, one point one 0:04:45.400 --> 0:04:49.680 trillion dollar deficit could push up tenure treasury yields, get 0:04:49.720 --> 0:04:52.280 some more auctions of treasuries, maybe there'll be no one 0:04:52.360 --> 0:04:55.080 to buy them. Uh, maybe yields would go up. But 0:04:55.160 --> 0:04:58.800 I don't know. It's a it's a major question mark. Chris. 0:04:58.839 --> 0:05:00.920 You think yesterday's I'm one if that flatten it going 0:05:00.960 --> 0:05:04.680 into your end was just purely exactly that unwinding position 0:05:04.760 --> 0:05:08.320 the markets feel. I'm on the high achiever train every 0:05:08.400 --> 0:05:11.359 day from the suburbs. People don't talk on the train, 0:05:12.000 --> 0:05:15.000 and it doesn't feel like anyone's in. You know, the 0:05:15.080 --> 0:05:18.400 market seem to be very thin right now. There's no 0:05:18.440 --> 0:05:20.800 corporate bond issuance. I don't trust the upward move in 0:05:21.120 --> 0:05:23.800 movement in yields, even though I want it, but I 0:05:23.839 --> 0:05:26.000 don't know if it's gonna stick. We did some FED 0:05:26.080 --> 0:05:29.520 talk this morning. Let us continue that right now. And 0:05:29.520 --> 0:05:33.520 and you are clearly in the camp of four rate increases. 0:05:34.120 --> 0:05:38.800 That's a non linear market in behavioral event. The next 0:05:38.880 --> 0:05:40.920 rate increase, I'm gonna suggest there is no big deal. 0:05:41.600 --> 0:05:44.680 But when does the not the pain click in? But 0:05:44.760 --> 0:05:48.640 when does the market impact click in of the second 0:05:48.800 --> 0:05:52.279 or the third or the fourth unit increase? Yeah, I 0:05:52.279 --> 0:05:54.680 mean we always I mean, remember, we haven't really had 0:05:54.720 --> 0:05:58.400 a major bond market sell off higher soaring yields for 0:05:58.440 --> 0:06:01.400 a long time. And it's really what we need to 0:06:01.400 --> 0:06:04.680 see is the Fed got consistently to start scaring people 0:06:05.200 --> 0:06:06.960 on the raid out look a little, so they have 0:06:07.040 --> 0:06:10.080 to go March, June, September. Maybe if we get to 0:06:10.160 --> 0:06:12.680 December they go four in a row, or we're thinking 0:06:12.720 --> 0:06:14.760 they go four in a row, then maybe ten year 0:06:14.800 --> 0:06:17.880 yields break out above three. But you got to really 0:06:17.920 --> 0:06:22.119 awake the market up. Okay, better said, when do we wait? John? 0:06:22.160 --> 0:06:24.760 This is important? When do we wake the market up? 0:06:24.800 --> 0:06:27.599 Beautifully said? At this time of year? I say it's 0:06:27.640 --> 0:06:33.240 just months away, and then yes, exactly, and then I'm 0:06:33.320 --> 0:06:37.640 bitterly disappointed by the summer when China arises and brings 0:06:37.680 --> 0:06:40.880 down all the works. You're holding talking about a deficit 0:06:40.960 --> 0:06:44.240 which have choked that a kingdom. You know, I don't 0:06:44.240 --> 0:06:46.039 know what the deficit the g d P numbers on 0:06:46.120 --> 0:06:48.920 that CBO can inform us here in a couple of months. 0:06:49.160 --> 0:06:52.520 Do you just assume the price of this tax legislation 0:06:53.560 --> 0:06:56.160 is deficits that you and I talked about when we 0:06:56.240 --> 0:07:02.240 had no gray hair. Uh Um, yeah, I'm just assuming 0:07:02.320 --> 0:07:04.960 that we'll get through the one trillion, although that you're right, 0:07:05.040 --> 0:07:06.440 it is a big number. I think part of the 0:07:06.440 --> 0:07:09.280 problem is we don't realize that right now the deficits 0:07:09.360 --> 0:07:14.440 running about seven hundred billion and six D sixty six billion. Yeah, 0:07:14.440 --> 0:07:17.880 and the auction schedule isn't enough to really push up 0:07:17.960 --> 0:07:21.600 yields on an extra three hundred billion. I don't know 0:07:21.640 --> 0:07:26.240 if that's enough to John Ferrell doesn't know who there's 0:07:26.280 --> 0:07:30.400 some real forces of our listening audience. Michael Bardie, you 0:07:30.400 --> 0:07:34.960 know who ever dirks and is I was sick that day. 0:07:36.520 --> 0:07:41.560 How much coffee if you had this morning? To King distinguished, 0:07:41.720 --> 0:07:43.640 I am fired. I'll tell you a minute. On the 0:07:43.640 --> 0:07:47.560 Wednesday before Chris extinguished, senator from Illinois, Ever Dickson, who 0:07:47.600 --> 0:07:50.520 said a billionaire, a billionaire or whatever, Yeah, what doesn't matter. 0:07:51.480 --> 0:07:54.960 That was Senator Dirkson as well. Chris Rupki. Thank you 0:07:55.000 --> 0:08:14.160 so much with m U John Farrowe and Tom Keane 0:08:14.920 --> 0:08:17.000 with you, and now we are thrilled to bring you 0:08:17.680 --> 0:08:22.440 John Lieber with p w C, who has been wonderfully, 0:08:22.480 --> 0:08:27.200 wonderfully correct about this process of tax reformed, tax cuts 0:08:27.720 --> 0:08:31.600 and deficit expansion. John, you have the privilege of working 0:08:31.600 --> 0:08:35.880 with Alan Meltzer years ago at a EI and I 0:08:35.920 --> 0:08:39.599 went back and I looked, it seems like yesterday a 0:08:39.840 --> 0:08:44.440 wonderful discussion on at the time a burgeoning deficit of 0:08:44.559 --> 0:08:47.360 Alan Meltzer, led by Gordon Theesen. And this is with 0:08:47.480 --> 0:08:50.439 Larry Ball and others. In the title of it is great. 0:08:51.040 --> 0:08:55.320 What do budget deficits do? William Hoblin's suggests we are 0:08:55.400 --> 0:08:58.640 going to have a larger budget deficit, even out to 0:08:58.760 --> 0:09:02.640 one trillion plus US in a matter of twenty four months. 0:09:03.000 --> 0:09:07.160 John Lever, what the budget deficits do? And the Senators 0:09:07.200 --> 0:09:12.160 and congressmen and women do they care? Well, it's hard 0:09:12.200 --> 0:09:14.600 to really pass judgment of what a budget deficit does 0:09:14.720 --> 0:09:16.800 in a vacuum. I mean the real question is can 0:09:17.440 --> 0:09:21.640 UH sovereign fund and finance the budget deficit? Are there 0:09:21.840 --> 0:09:25.319 outsiders willing to lend money? What will the monetary authorities do? 0:09:25.480 --> 0:09:27.319 How fast is the rate of growth? I mean, all 0:09:27.320 --> 0:09:30.040 of these questions are important when evaluating what a budget 0:09:30.040 --> 0:09:32.360 deficit does. There's been a lot of panic about the 0:09:32.400 --> 0:09:35.080 budget deficit over the last eight or ten years after 0:09:35.080 --> 0:09:38.320 financial crisis, and that's really calmed down. The politics of 0:09:38.320 --> 0:09:41.880 that have really changed recently, especially with the election of 0:09:41.920 --> 0:09:44.760 President Trump. So I think that you know, the Republicans 0:09:44.840 --> 0:09:47.040 voting for this bill today are hoping that not only 0:09:47.160 --> 0:09:49.360 will this deficit not do anything, but will be much 0:09:49.400 --> 0:09:51.640 smaller than is projected because of the growth they're going 0:09:51.679 --> 0:09:54.959 to get from the text bill. John talked to me 0:09:55.000 --> 0:09:56.680 about the effects that this is going to have going 0:09:56.720 --> 0:09:58.800 forward in terms of who this is actually for. There's 0:09:58.800 --> 0:10:01.040 a narrative out there and this is just for corporate America. 0:10:01.360 --> 0:10:03.920 This does not help the middle class. Can you punch 0:10:03.960 --> 0:10:06.920 your any holes in that narrative? Yeah, Look, I mean 0:10:07.679 --> 0:10:10.000 of taxpayers are getting a cut next year, that's courting 0:10:10.040 --> 0:10:11.800 to j C. T. You're going to see an immediate 0:10:11.960 --> 0:10:14.960 increase uh decrease in withholding, which means that paychecks are 0:10:14.960 --> 0:10:20.080 going to grow starting in February. And that's a huge effect. 0:10:20.080 --> 0:10:21.959 That's going to be important to folks now that dollars 0:10:22.120 --> 0:10:24.440 for a lot of people are small because the reality 0:10:24.559 --> 0:10:27.439 is a lot of lower income in middle class taxpayers 0:10:27.520 --> 0:10:29.319 don't play a lot in tax so it's really hard 0:10:29.360 --> 0:10:31.600 to cut their taxes. But you're doubling the standard deduction, 0:10:31.640 --> 0:10:34.240 you're increasing the child tax credit, you're doing things that 0:10:34.280 --> 0:10:37.360 will be meaningful to people who are on the bottom 0:10:37.400 --> 0:10:40.960 half of the income spectrum, and the loser's jump. Well, 0:10:41.000 --> 0:10:44.200 you've got you know, high income people living in high 0:10:44.200 --> 0:10:46.520 tax states with high talk to livings like in Silicon 0:10:46.600 --> 0:10:49.680 Valley Manhattan, who are going to pay probably more because 0:10:49.679 --> 0:10:52.520 they're gonna lose the state and local tax deduction. Um. 0:10:52.559 --> 0:10:54.680 You've got you know, the real estate industry is and 0:10:54.760 --> 0:10:56.760 thrilled with this bill because the increase in the standard 0:10:56.760 --> 0:11:00.160 deduction means fewer people will take the mortgages your deduction um. 0:11:00.240 --> 0:11:03.080 But the reality is, you know, looking across the income spectrum, 0:11:03.440 --> 0:11:06.800 most individual Americans are going to get a tax cut 0:11:06.840 --> 0:11:11.240 next year. Will that be overwhelmed by higher interest rates 0:11:11.320 --> 0:11:13.920 as we moved to a back of the envelope five 0:11:13.960 --> 0:11:19.560 and a half percent deficit to GDP. It's possible. I mean, 0:11:19.559 --> 0:11:21.960 if you look at the CBO, the j c T projections, 0:11:22.000 --> 0:11:25.600 you've got you know, higher financing costs due to the deficit. 0:11:25.920 --> 0:11:29.240 But you don't see a lot of the government forecasters 0:11:29.280 --> 0:11:31.320 saying that this bill is going to either crash the 0:11:31.360 --> 0:11:36.439 economy or overwhelming That's a really important distinction, John Lieber, 0:11:36.480 --> 0:11:39.560 It's not a question of crashing the economy. It is 0:11:39.600 --> 0:11:44.720 the weight of new deficit worries upon the Washington and 0:11:44.800 --> 0:11:47.720 frankly the national debate. Is that what we voted in 0:11:47.880 --> 0:11:52.679 last night a new dampening or a new initiation, I 0:11:52.720 --> 0:11:58.559 should say, of deficit analysis and angst. Um, I think 0:11:58.559 --> 0:12:00.000 I would argue, Know, I think we're kind of an 0:12:00.040 --> 0:12:02.320 give an era than we were even five years ago, 0:12:02.840 --> 0:12:05.800 where the deficit has just become a second tier of 0:12:05.800 --> 0:12:09.480 political consideration. Um, You've got first these tax cuts one 0:12:09.480 --> 0:12:12.920 point five trillion dollars to the deficit before any economic growth. 0:12:13.200 --> 0:12:14.800 And now you've got a lot of new spending that's 0:12:14.800 --> 0:12:16.280 coming down the pike in the next month or so. 0:12:16.440 --> 0:12:19.760 You've got disaster funding, you've got increased military spending. These 0:12:19.760 --> 0:12:23.319 are all priorities of the Trump administration, and politically, UM, 0:12:23.360 --> 0:12:25.439 I don't think the Democrats are going to score a 0:12:25.520 --> 0:12:27.760 lot of points going after the deficit. They've got a 0:12:27.760 --> 0:12:30.319 lot of other things that they're John wants to jump 0:12:30.360 --> 0:12:32.199 in here, but I got to ask one obvious question 0:12:32.280 --> 0:12:35.080 that we'll maybe get at one PM today. Is Donald 0:12:35.080 --> 0:12:40.360 Trump in any way like Ronald Reagan? Uh, he's in 0:12:40.440 --> 0:12:43.400 some sense he's a you know, Republican leader of his party. 0:12:43.440 --> 0:12:45.960 So I guess you give him credit for that. Um, 0:12:46.000 --> 0:12:47.960 I'm not really sure. I'm qualified to give you a 0:12:48.040 --> 0:12:52.920 much more uh detailed analysis, and that I'm going to get. 0:12:54.800 --> 0:12:57.120 John talked to me about what an accomplishment this actually 0:12:57.240 --> 0:12:58.760 is to get it done in such a short period 0:12:58.760 --> 0:13:03.080 of time, given its directly it's taken years, not months. Yeah, 0:13:03.080 --> 0:13:04.880 I think the key thing, I mean, again getting back 0:13:04.880 --> 0:13:06.880 to the deficits, The key thing here is that Republicans 0:13:07.040 --> 0:13:09.679 about three months ago said that they're there. They kind 0:13:09.679 --> 0:13:12.520 of decided to hold hands together, jump off the devaicity cliff, 0:13:12.559 --> 0:13:15.160 and that was really key to unlocking getting this bill done. 0:13:15.360 --> 0:13:17.880 Tax reform has been a long standing goal for the 0:13:17.920 --> 0:13:21.120 Republican Party. UM. And you know, in particular, lowering the 0:13:21.120 --> 0:13:24.400 corporate tax rate is considered a very essential pro growth, 0:13:25.040 --> 0:13:28.520 pro u S policy, And knowing that they didn't manage 0:13:28.559 --> 0:13:30.360 to get it done under Obama, it wasn't really on 0:13:30.400 --> 0:13:32.880 the table under President Bush, and a year in the 0:13:32.920 --> 0:13:36.559 Trump administration, they've achieved this major reform that's going to 0:13:36.640 --> 0:13:39.319 have lasting effects for decades on both on the US 0:13:39.400 --> 0:13:41.760 and around the world. As other countries raced to keep 0:13:41.800 --> 0:13:44.040 up with where the US corporate tax rate is going, John, 0:13:44.080 --> 0:13:46.640 most economists would say that this is not the time 0:13:46.720 --> 0:13:49.720 for fiscal stimulus, that they should engage in counter cyclical 0:13:49.800 --> 0:13:53.000 fiscal stimulus, which is a countersygnical fiscal policy, which would 0:13:53.000 --> 0:13:56.000 mean on a downturn, expand the deficit and when things 0:13:56.040 --> 0:13:58.840 are good, tighten things up. That's not what's happening, Kia. 0:13:59.120 --> 0:14:02.120 But what I find strange, even stranger than that, is 0:14:02.160 --> 0:14:05.200 this renewed worry about the deficit and the debt pile. 0:14:05.600 --> 0:14:07.360 Why are we're worrying about this now? We've had years 0:14:07.400 --> 0:14:09.360 to worry about this. The debtload has been trillions and 0:14:09.400 --> 0:14:12.520 trillions and trillions, and we've added to it in multiples 0:14:12.559 --> 0:14:14.560 over the last ten years. So why is now the 0:14:14.600 --> 0:14:17.880 time to worry about it? Well, I think the political 0:14:17.880 --> 0:14:20.000 opportunism is a good reason for that. I'd love to 0:14:20.000 --> 0:14:21.600 hear what these critics were saying if this were going 0:14:21.640 --> 0:14:24.440 to be a deficit finance infrastructure bill, where there's a 0:14:24.440 --> 0:14:27.600 lot more bipartisan buy in for an infrastructure bill than 0:14:27.640 --> 0:14:29.600 there is for tax cuts. I mean, the US has 0:14:29.640 --> 0:14:32.760 not had any trouble financing its deficits in recent years, 0:14:33.160 --> 0:14:34.960 and you know, depending on who you talk to, that 0:14:35.000 --> 0:14:37.200 doesn't seem like it's going to get acutely worse in 0:14:37.240 --> 0:14:39.520 the near term. It just strikes me as odd that 0:14:39.560 --> 0:14:41.600 we're always, in fact, maybe it's not at all, Tom, 0:14:41.640 --> 0:14:45.160 We seem to be politicizing the deficit. It seems to 0:14:45.160 --> 0:14:47.200 be a story that's not going away anytime soon. When 0:14:47.200 --> 0:14:50.360 the Republicans were out of power, of course, they politicized 0:14:50.360 --> 0:14:52.760 the deficit, and now the Democrats seem to be doing 0:14:52.760 --> 0:14:56.040 the same thing. To Mr Leever's point, though, the conversation 0:14:56.160 --> 0:14:59.800 is nothing like it was in the early nineteen nineties really, 0:15:00.080 --> 0:15:02.920 or the so called Clinton surplus. And on we go 0:15:03.040 --> 0:15:06.160 from there. What will you watch for in the next 0:15:06.240 --> 0:15:12.640 two or three weeks in the budget debate to come? John, Um? 0:15:13.320 --> 0:15:16.200 You know, I think there's there's a non zero chance 0:15:16.200 --> 0:15:18.480 of a government shutdown coming up, you know, as earlier 0:15:18.600 --> 0:15:21.600 this week. Um, both chambers have to pass a bill 0:15:21.680 --> 0:15:24.120 to keep the government funded. I think they probably will 0:15:24.240 --> 0:15:26.600 at least through mid January. And there's a lot of 0:15:26.640 --> 0:15:28.440 issues on the table that are going to be you know, 0:15:28.480 --> 0:15:31.560 where there's bipartisan support war that are gonna keep kind 0:15:31.560 --> 0:15:34.760 of hard to do. Um. Increasing the discretionary spending, caps 0:15:34.760 --> 0:15:38.080 on descents, and mess expending. I'm looking out for that. 0:15:38.080 --> 0:15:41.080 That could be a significant boost to government spending next year, 0:15:41.120 --> 0:15:44.200 which would also be a significant fiscal stimulus because it's 0:15:44.240 --> 0:15:46.400 all going to be added on the debt. I think 0:15:46.400 --> 0:15:48.280 there's you know, a couple of help. What's gonna happen 0:15:48.280 --> 0:15:50.680 to the insurance industry, whether or not the federal government's 0:15:50.720 --> 0:15:54.480 offering support for insurers who are selling into the exchanges 0:15:54.520 --> 0:15:56.760 and losing money there um something like that could be 0:15:56.840 --> 0:15:58.240 coming down the pike. And then you've got a host 0:15:58.240 --> 0:16:02.040 of other like non fiscal issues, such as what to 0:16:02.080 --> 0:16:04.600 do with the children of immigrants, legal immigrants that were 0:16:04.640 --> 0:16:07.360 brought here, or what to do with surveillance authority. There's 0:16:07.360 --> 0:16:08.960 a lot of things going on that have to be 0:16:09.000 --> 0:16:11.600 resolved in Congress in the next fo a week and 0:16:12.040 --> 0:16:13.640 is going to come come to head the next three days. 0:16:13.840 --> 0:16:16.200 John Lieber, thank you so much. He's with p WC 0:16:16.440 --> 0:16:21.320 and gave us wonderful perspective and timeline wisdom on all 0:16:21.360 --> 0:16:39.320 of this text cut effort. As well. We digress away 0:16:39.320 --> 0:16:43.920 from economics, finance, investment, we do international relations, we do politics, 0:16:44.680 --> 0:16:49.320 and maybe they all implode into what Secretary Kissing you're 0:16:49.320 --> 0:16:53.000 called me. Dr Kissinger called told me was without question 0:16:53.080 --> 0:16:56.520 the issue of the moment, not only for you Germany, 0:16:56.560 --> 0:16:59.480 not only for Europe, for the United Kingdom, but frankly 0:16:59.520 --> 0:17:04.520 for all. And this is the idea of refugees and migrants. 0:17:04.880 --> 0:17:08.359 We can avoid it. We're a transatlantic ocean away. David 0:17:08.359 --> 0:17:12.040 Milliban would suggest, no, we can't. You know the name. 0:17:12.119 --> 0:17:15.680 It is a political family within the United Kingdom. He's 0:17:15.680 --> 0:17:19.640 confused on a daily basis with his brother. He has 0:17:19.680 --> 0:17:25.959 written a brilliant monograph, Rescue Refugees in the political crisis 0:17:26.040 --> 0:17:29.960 of our time. He's dedicated himself to this issue. Dr 0:17:30.040 --> 0:17:33.360 Kissingers said to me, without question, this is the most 0:17:33.400 --> 0:17:37.200 important issue in Europe going back hundreds of years. Where's 0:17:37.240 --> 0:17:40.320 the dynamic as we end two thousand seventeen. Well, the 0:17:40.400 --> 0:17:42.520 dynamic today, thank you very much for having me on. 0:17:42.560 --> 0:17:46.159 The dynamic today, is that the refugee crisis is a 0:17:46.200 --> 0:17:49.760 trend and not a blip. The forces driving record numbers 0:17:49.760 --> 0:17:52.119 of people from their homes around the world, across the 0:17:52.119 --> 0:17:56.640 Middle East, across Africa, but also most recently the Rhinga 0:17:56.640 --> 0:17:59.560 who have been driven from Me and mar those forces 0:17:59.600 --> 0:18:02.040 are EAP, that to do with weak states that don't 0:18:02.040 --> 0:18:04.080 share political power, that to do with a weak and 0:18:04.119 --> 0:18:07.119 divided international system, that to do with tumult within the 0:18:07.200 --> 0:18:09.800 Islamic world. Those are not going away. And so not 0:18:09.880 --> 0:18:11.959 just for Europe but for the US too. There are 0:18:12.000 --> 0:18:15.680 fundamental questions of geopolitics, which is I guess why Dr 0:18:15.720 --> 0:18:20.040 Kissinger was interested in it, but also of personal commitment 0:18:20.040 --> 0:18:23.000 and what the West stands for, because the West is 0:18:23.000 --> 0:18:26.040 a political idea, not just a geographic one, and it's 0:18:26.119 --> 0:18:29.000 under assault. You're you have a hundred and twenty pages here. 0:18:29.160 --> 0:18:31.240 It's brought out the Ted people. This is the Ted 0:18:31.320 --> 0:18:34.720 speaking people. But this is a heavyweight hundred and twenty 0:18:34.760 --> 0:18:38.320 pages about a massively adult topic. Let's go back to 0:18:38.400 --> 0:18:42.159 the Europe of nineteen twelve where everything was stable and 0:18:42.200 --> 0:18:45.800 then it became instable. Uh, there was an instability out 0:18:45.800 --> 0:18:48.240 of Saraevo and then aren't we go to World War 0:18:48.280 --> 0:18:51.840 one and all that? Can the refugee crisis have a 0:18:52.040 --> 0:18:56.960 tendencies towards a Saria Avo where it generates real instability. 0:18:57.040 --> 0:18:59.720 There's a massive difference because the refugee crisis of the 0:18:59.720 --> 0:19:02.520 twin year century, certainly the first half of the twentieth 0:19:02.520 --> 0:19:06.080 century with a result of wars between states. There are 0:19:06.080 --> 0:19:09.520 no wars between states today. There's no hot wars between 0:19:09.560 --> 0:19:12.280 two countries. What we have are so called civil wars. 0:19:12.280 --> 0:19:15.280 In fact, they're very uncivil in various ways. Civil wars 0:19:15.280 --> 0:19:18.560 are producing record numbers of people fleeing for their lives, 0:19:18.920 --> 0:19:21.320 and that is because states are collapsing. They're not able 0:19:21.359 --> 0:19:24.239 to protect their own citizens. Sometimes they're all suiting their 0:19:24.280 --> 0:19:27.960 own citizens, as in the case of Syria, and sometimes 0:19:27.960 --> 0:19:31.240 you've got proxy wars being fought. So there's a massive 0:19:31.800 --> 0:19:35.880 difference today in terms of the origin of these refugee crisis. 0:19:35.960 --> 0:19:39.119 Second big difference. The Second World War seemed like a 0:19:39.160 --> 0:19:42.679 long war in the twentieth centuries, six years for America, 0:19:42.720 --> 0:19:48.160 anything over five years exactly. So the wars in Congo, 0:19:48.240 --> 0:19:52.679 in Somalia and Afghanistan their thirty year wars. The civil 0:19:52.680 --> 0:19:55.800 wars that are taking place today are longer and more 0:19:55.920 --> 0:20:01.120 numerous than at any time in the nineteen or twentie centuries. 0:20:01.320 --> 0:20:04.160 Third big change. Third and final big change, refugees don't 0:20:04.200 --> 0:20:07.600 live in camps anymore. Of the world's refugees are in 0:20:07.800 --> 0:20:12.200 urban areas. It's a phenomenon of globalization that people are urbanizing. 0:20:12.240 --> 0:20:15.200 That's true of refugee populations as well. So the humanitarian 0:20:15.240 --> 0:20:18.920 aid model, which was about keep people in camps, give 0:20:18.960 --> 0:20:23.920 them food and water and healthcare and then they'll go home. Now, well, 0:20:23.920 --> 0:20:27.600 Turkey's an interesting example. Turkey has built but some of 0:20:27.600 --> 0:20:29.840 the best refugee camps in the world for two hundred 0:20:29.880 --> 0:20:32.320 thousand Syrians who they thought would flee as a result 0:20:32.359 --> 0:20:34.440 of the war. How many fled to Turkey two point 0:20:34.520 --> 0:20:37.000 seven million. So if you go to a stan bull 0:20:37.480 --> 0:20:41.399 a thousand kilometers from the Syrian border, it's full of refugees. 0:20:41.800 --> 0:20:44.560 How should our listeners coast to coast respond and forget 0:20:44.560 --> 0:20:47.239 about the comfort of the Atlantic and Pacific Ocean in 0:20:47.240 --> 0:20:51.680 our good relationships with Mexico in Canada, how do we 0:20:51.760 --> 0:20:56.320 respond to the ageless emotion? Just shut the borders down? 0:20:56.640 --> 0:20:58.960 I mean, I mean the conservatives are gonna say, oh 0:20:59.000 --> 0:21:01.440 that Miller Bay and there goes with his lefty tailed again, 0:21:01.760 --> 0:21:04.399 bring in more people. And then the liberals are going 0:21:04.480 --> 0:21:05.800 to say, no, we have to bring in more and 0:21:05.840 --> 0:21:08.119 more and more, and then you have the immediate social 0:21:08.320 --> 0:21:11.000 Actually it's credit responded. I respond to that by saying 0:21:11.000 --> 0:21:15.240 the number who come here are very small compared to 0:21:15.280 --> 0:21:20.399 the numbers. So the US has the global economy and 0:21:20.480 --> 0:21:23.359 one percent of the world's refugees, and by arguing that 0:21:23.400 --> 0:21:27.600 the administration could should keep up the historic nine average, 0:21:27.600 --> 0:21:30.520 we're arguing that that should continue to be a relatively 0:21:30.560 --> 0:21:32.280 small number. But these are the most vulnerable people who 0:21:32.280 --> 0:21:35.399 need a new start in life. Secondly, it's vital that 0:21:35.480 --> 0:21:38.240 countries like Jordan, who are after all, your second closest 0:21:38.240 --> 0:21:40.600 ally in the Middle East, get the kind of support 0:21:40.600 --> 0:21:45.040 that allows them to sustain their own administ They're not 0:21:45.240 --> 0:21:48.240 because neither from the Trump administration nor from the pre administration. 0:21:48.240 --> 0:21:50.280 They're on a drip feed of short term aid. The 0:21:50.320 --> 0:21:52.680 Saudis cut off all their aid actually two years ago, 0:21:53.240 --> 0:21:55.399 and so a country like Jordan, Look, don't take it 0:21:55.400 --> 0:21:57.280 from me. The King of Jordan says, these countries are boiling. 0:21:57.480 --> 0:21:59.800 They've got six hundred thousand refugees. So my point is 0:21:59.840 --> 0:22:03.480 that America's geo strategic interest, as well as the moral 0:22:03.520 --> 0:22:06.160 interest symbolized by the lady on a plinth in the 0:22:06.200 --> 0:22:09.879 middle of the water a couple of um that the 0:22:10.160 --> 0:22:12.600 moral interest is not the only argument. I'm like, I'm 0:22:12.600 --> 0:22:14.920 not here saying America should just have a big heart. 0:22:15.040 --> 0:22:17.159 I'm saying here, should have a smart head, which is 0:22:17.160 --> 0:22:20.159 that if you don't address these problems, it's so causes 0:22:20.200 --> 0:22:22.720 your interest to suffer, not just your morals. David Bimbad 0:22:22.760 --> 0:22:24.800 where this is the book is Rescue Refugees in the 0:22:24.800 --> 0:22:27.280 political crisis of our time. I think of it as 0:22:27.359 --> 0:22:30.200