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Speaker 3: We're just as busy as New York is today with
Speaker 3: this double dip of big economic events, a FED decision
Speaker 3: coming up in just over half an hour. Joe after
Speaker 3: cooler inflation data this morning on the headline monthly CPI figure,
Speaker 3: we get a zero point zero.
Speaker 4: Of our set. Yeah, kind of amazing. Markets love it.
Speaker 4: White House likes it, but treading carefully. As we see
Speaker 4: in the statement here, prices are still too high, writes
Speaker 4: the statement from the White House. But today's report shows
Speaker 4: welcome progress on lowering inflation. Let's go to the source
Speaker 4: and a great opportunity just moments before our special coverage
Speaker 4: begins here on today's FED meeting, to speak with Heather Bouchet,
Speaker 4: a member of President Biden's Council of Economic Advisors. She's
Speaker 4: with us from a beautiful north lawn today, and Heather,
Speaker 4: it's great to have you back. As I read the
Speaker 4: statement from the White House, which is clear as I
Speaker 4: read at the outset, prices are still too high. I
Speaker 4: also wonder if you're thinking inside about how far we've come.
Speaker 5: Oh, we have come so far in so many different ways,
Speaker 5: you know. I think about the economy that the President
Speaker 5: inherited and so many challenges. How we got unemployment down,
Speaker 5: how we got people back to work. And yes, prices
Speaker 5: went up, but we have seen prices come down by
Speaker 5: about sixty percent, and certainly good news today with the
Speaker 5: zero you know, the flat increase in prices overall. So
Speaker 5: this has certainly been giving. As the President likes to say,
Speaker 5: family is a little bit more breathing room and is
Speaker 5: good news for American families, and of course good news
Speaker 5: for American workers today as we saw yet another month
Speaker 5: of wages outpacing inflation. That marks fifteen months for the
Speaker 5: eighty percent of the workforce that are production and non
Speaker 5: supervisory employees where their wages have been outpacing inflation. So
Speaker 5: that's great news for workers and their families.
Speaker 3: Well, Heather, even as we talk about a flat figure
Speaker 3: on the headline, there still is a bit more happening
Speaker 3: beneath the surface that shows some stickiness in certain areas,
Speaker 3: including shelter prices up four tenths of one percent owners
Speaker 3: equivalent rent similar How can that realistically be addressed at
Speaker 3: this point when there are arguments being made, including by
Speaker 3: members of the Democratic Party like Senator Elizabeth Warren, that
Speaker 3: this is something that high interest rates are actually exacerbating
Speaker 3: because it costs more to borrow to buy a house.
Speaker 3: How can you be confident, as long as rates remain high,
Speaker 3: that the shelter price pressures are going to come down.
Speaker 5: Well, let me give you two answers to that question,
Speaker 5: first a technical one and then a policy one. So first,
Speaker 5: you know, CA, the Council of Economic Advisors, we've been
Speaker 5: tracking this for quite some time. The way that shelter
Speaker 5: is accounted for. You know, you build in rents from
Speaker 5: leases that were signed while ago, so you have a
Speaker 5: good sense when you look at real time data how
Speaker 5: this might shift over time. You know, we have been
Speaker 5: estimating that these these numbers will come down as the
Speaker 5: prices of new leases come down, and certainly that's what
Speaker 5: we've been seeing in general. Now, granted we certainly want
Speaker 5: to come those to come down more, but that's taking
Speaker 5: up a larger share of the monthly increase in price changes.
Speaker 5: On the second point though, in terms of policy, and
Speaker 5: the President has been acutely aware of the challenges in housing.
Speaker 5: You know, he has put together a comprehensive housing supply
Speaker 5: plan and that would do a number of things. One
Speaker 5: thing that I just would like to point out is
Speaker 5: that that plan includes giving new home buyers a tax
Speaker 5: credit to make it just that much more affordable, which
Speaker 5: can help account help ease the burden of those higher
Speaker 5: interest rates during these times, so that people can get
Speaker 5: into those new homes.
Speaker 4: Heather, at what point to higher interest rates in themselves
Speaker 4: become inflationary or are we already there?
Speaker 5: Well, listen, you know, we have been in this situation
Speaker 5: for quite a while now, and the expectations of where
Speaker 5: interest rates are have been baked into you know, forecasts
Speaker 5: and where people are thinking about the economy. And certainly
Speaker 5: this is challenging for folks making those big purchases or
Speaker 5: things like that. But we remain optimistic that because of
Speaker 5: the success in the economy, and you know, critically we've
Speaker 5: made so much progress, and that very quick progress in
Speaker 5: the beginning, but we have seen you know, things like
Speaker 5: the gains and jobs and output that we're starting to
Speaker 5: see those get down to that kind of pace that
Speaker 5: is sustainable, and so that's what we're looking for. And
Speaker 5: you know, here today, we're here to talk about the
Speaker 5: fact that you know, we have these numbers on inflation
Speaker 5: that beat expectations on the low side. That certainly is
Speaker 5: its ongoing good news and means that we're going to
Speaker 5: get that extra bit of breathing room in the economy
Speaker 5: to continue.
Speaker 3: Well, as we think about the strength of the economy
Speaker 3: that you're characterizing and say the labor market specifically, we
Speaker 3: have seen a lot more analysis of the way in
Speaker 3: which migrants have contributed to that the idea that they
Speaker 3: are actually playing a very key role in the strong
Speaker 3: job growth we continue to see every single month. But
Speaker 3: President Biden just signed an executive order essentially cracking down
Speaker 3: on those seeking asylum. Heather, how quickly do you expect
Speaker 3: that might actually show up in the data? What economic
Speaker 3: impact could it have?
Speaker 5: So the President does not expect this to have negative
Speaker 5: implications on the economy. Certainly, we have seen that, you know,
Speaker 5: immigrants are an important part of our labor market. They
Speaker 5: add to the economy, they go out there and get
Speaker 5: those jobs, and you know in all the different ways
Speaker 5: than add to the economy as they're buying things. But
Speaker 5: we also know that the economy is very strong right
Speaker 5: now in terms of the labor market, and we've seen
Speaker 5: an unemplomerate add or below four percent, for you know,
Speaker 5: over two and a half years now, and so that
Speaker 5: certainly is an indication of the strength that there are
Speaker 5: a sufficient number of jobs out there for anybody who
Speaker 5: you know, wants to go out and try to find
Speaker 5: something that continues to be a strong labor market even
Speaker 5: though we've had this immigration We're spending.
Speaker 4: Time with Heather Bouchet live from the White House as
Speaker 4: we prepare for our spend. She'll fed coverage here on
Speaker 4: Bloomberg TV and radio. There's a big debate about to begin, Heather.
Speaker 4: We were discussing it before you joined us, about potentially
Speaker 4: making the Trump era tax cuts permanent. There's a big
Speaker 4: drive among Republicans to make that happen. And as we
Speaker 4: consider the potential impacts of greater deficits on inflation, I
Speaker 4: wonder what you would see happening to our economy if
Speaker 4: that took place. These are set to expire next year.
Speaker 4: What would happen if they were made permanent.
Speaker 5: Well, listen, here's the thing. We know that the kinds
Speaker 5: of policies that the prior administration put forward, we're supposed
Speaker 5: to lead to a ramp up and investment and productivity
Speaker 5: and particularly in manufacturing jobs across the country, and that's
Speaker 5: not what we saw. In fact, the President Biden's agenda
Speaker 5: has led to that kind of sharp uptick in investment,
Speaker 5: and not doing it through the massive tax cuts that
Speaker 5: were not good for the economy, but actually doing it
Speaker 5: through smart targeted policy that has led to real economic
Speaker 5: out comes and communities all across the place. So, as
Speaker 5: we're looking at this conversation about what should and should
Speaker 5: not expire, the President's been very clear. He continues to
Speaker 5: believe that no one making under four hun one thousand
Speaker 5: dollars a year should see their taxes go up. But
Speaker 5: he also knows that we should not be just having
Speaker 5: giveaways for American businesses that are not tied to investment
Speaker 5: in growth and the kinds of things that really matter
Speaker 5: to our economy. So that, I think is where the
Speaker 5: important real contrast is between that Tex Cuts and Jobs
Speaker 5: Act that only starved a government of the resources that
Speaker 5: it needed and the President's proposals that have been put
Speaker 5: forward in a way that is helped to lower the
Speaker 5: deficit but is also making those of the top pay
Speaker 5: their fair share.
Speaker 6: All right.
Speaker 3: Heather Bouchet, member of the White House Council of Economic Advisors,
Speaker 3: joining us from the north lawn of the White House today.
Speaker 6: Thank you.
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Speaker 3: Often we talk about here in Washington the political implications
Speaker 3: of that, but there also is a fiscal question around
Speaker 3: the very high level of borrowing costs and an incredibly
Speaker 3: high level of debt. And as we get ready to
Speaker 3: see former President Donald Trump meeting with congressional Republicans tomorrow,
Speaker 3: addressing the debt, also addressing just the ledger, how much
Speaker 3: money's coming in versus how much money is going out,
Speaker 3: definitely going to be on the AGECTA.
Speaker 4: Yeah, that's right. And of course there's going to be
Speaker 4: a big drive for Donald Trump supporters to reinstate or
Speaker 4: make permanent is a better way to put it. The
Speaker 4: twenty seventeen Trump tax cuts. They are set to expire
Speaker 4: next year, Kayley, and this is a big push in Washington.
Speaker 4: We're already hearing a lot about this, and it's at
Speaker 4: a time that frequently the concept of debt and deficits
Speaker 4: can be forgotten in a campaign season. But it's obviously
Speaker 4: an issue that Washington needs to get its.
Speaker 3: Arms around pret quick, especially when you consider the potential
Speaker 3: impact that that could have. I actually spoke about this
Speaker 3: last month with Philip Swegel, who's the director of the
Speaker 3: Congressional Budget Office, and he talked about how much it
Speaker 3: would cost realistically to keep those tax cuts intact in
Speaker 3: twenty twenty five.
Speaker 7: That's right, that important parts of the twenty seventeen tax
Speaker 7: Act expire at the end of next year, at the
Speaker 7: end of twenty twenty five. Those are not in our
Speaker 7: physical projections in the sense of the taxes referred to
Speaker 7: the pre December twenty seventeen law and is more revenue.
Speaker 7: So extending the parts of the tax Act that expire
Speaker 7: would cost upwards of three trillion dollars over ten years,
Speaker 7: and really closer to four trillion dollars, including the interrat service.
Speaker 4: Three to four trillion dollars. We're talking big money here,
Speaker 4: and it's going to prompt a conversation about spending as
Speaker 4: well as taxation while we're at it, Kayley, and that's
Speaker 4: where Kevin Brady comes in with us at the table today.
Speaker 4: You know him as Congressman. We call him former Congressman,
Speaker 4: now former chairman of the House Ways and Means Committee.
Speaker 4: Kevin Brady is now spokesman for the Alliance for Competitive
Speaker 4: Taxation and we're lucky to have him just in time
Speaker 4: for the annual Congressional baseball Game. It's great to see you.
Speaker 4: Welcome back to Blueberg. Thanks for having What a treat
Speaker 4: to have you at the table here. This is going
Speaker 4: to be part of your cause. So what do you
Speaker 4: have as a response when you hear about debt and
Speaker 4: deficits as an answer to making these tax cuts?
Speaker 8: Yeah, so when you have to ask a question, what's
Speaker 8: happens if they don't extend? So, you know, putting a
Speaker 8: three to four trillion dollar tax hikes on families, main
Speaker 8: street businesses, on American competitiveness has real consequences for lower paychecks,
Speaker 8: much lower growth in the economy US less competitive at a
Speaker 8: timetime is super aggressive, you.
Speaker 5: Know what I mean.
Speaker 8: They want to dominate our industries and technologies, and so
Speaker 8: I think it's going to be crucial for both parties
Speaker 8: to find a way forward to extend those tax cuts,
Speaker 8: especially for those families, mainStreet businesses, and our competitiveness. You
Speaker 8: may remember. The reason we did it is that for
Speaker 8: a decade before twenty seventeen, the economy was slow growth
Speaker 8: less than two percent. For a decade, paychecks have been flat,
Speaker 8: and every other month we saw another US company move overseas.
Speaker 2: So we had to.
Speaker 8: Modernize the code in a big way lower rates. But
Speaker 8: we didn't in such a way. We created code built
Speaker 8: for growth of jobs and the economy and paycheck. We
Speaker 8: wanted to make sure we were the desirable location for
Speaker 8: new plants, innovation.
Speaker 9: We did that.
Speaker 8: We wanted one of the most competitive economies on the planet.
Speaker 8: We did that, and as a result, paychecks the thing
Speaker 8: I think I'm proud oft of. In the first three
Speaker 8: years after tax reform, paychecks inflation adjusted went up nine percent,
Speaker 8: the highest level since we began keeping records. So people
Speaker 8: were getting ahead in a big way. That's really the
Speaker 8: legacy of those cuts and why Congress has to find
Speaker 8: a way to extend those or make them permanent.
Speaker 3: But people were getting ahead at the same time the
Speaker 3: deficit was growing. So if you, as you say, businesses
Speaker 3: and consumers actually need these to stay in place, how
Speaker 3: do you make it fiscally responsible?
Speaker 8: Yeah, So the good news is there's ways and here's why.
Speaker 8: You know, people remember the tax cuts is costing one
Speaker 8: and a half trillion dollars, even though we've seen record revenue,
Speaker 8: Like corporate rate revenue today is higher at twenty one
Speaker 8: percent than it was at thirty five percent because of
Speaker 8: the growth, so we've seen good growth. But bottom line
Speaker 8: is the actual cuts for five and a half trillion dollars.
Speaker 8: We paid for four trillion dollars of it reforms to
Speaker 8: lower the rates, to modernize the code, and to grow
Speaker 8: the economy in a big way. So lawmakers, as they
Speaker 8: extend the tax cuts, will also extend the reforms that
Speaker 8: help pay for that won't cover all of it. It's
Speaker 8: a good solid step. So depending on the party, depending
Speaker 8: on in an era where deathsit and debths really matter,
Speaker 8: you know, both parties are going to have to decide,
Speaker 8: so do we pay for all of it? We pay
Speaker 8: for most of it. You know, what does that good
Speaker 8: policy look there? And so they're going to have to
Speaker 8: be looking at similar type reforms as we did in
Speaker 8: twenty seventeen going forward for that very reason, to make
Speaker 8: sure we're not adding, you know, significant amounts to the debt.
Speaker 4: But you're sitting down there in Texas looking up at
Speaker 4: this crowd. Now, we can hardly figure out a budget
Speaker 4: to pay for the government, never mind deal with the
Speaker 4: debt ceiling that's going to be looming. You do you
Speaker 4: trust the people who currently serve in Congress to do
Speaker 4: what you just said, extend the tax cuts and find
Speaker 4: a way to pay for it.
Speaker 8: You know, I do? And here's why. I think there's
Speaker 8: a middle class in Congress people you don't see or
Speaker 8: hear about often. They are very solid, trying to do
Speaker 8: the right thing, serious lawmakers, and they're going to be
Speaker 8: the ones to be putting these.
Speaker 4: Packages together on both sides of the office.
Speaker 8: So I believe there's I believe there is, and I
Speaker 8: think that they can because sort of like twenty twelve
Speaker 8: when we saw the Bush tax cuts expire, both parties
Speaker 8: had a lot at stake, you know what I mean
Speaker 8: in that and they do again in twenty twenty five.
Speaker 8: The thing is, my point is, don't just extend or
Speaker 8: permanent keep improving the tax code. We can be more
Speaker 8: pro growth. It can be simpler, especially on small businesses.
Speaker 8: There are things have changed, you know, because of China's
Speaker 8: so super competitive. AI has changed things innovation should be,
Speaker 8: especially for our US companies, the country the winds the
Speaker 8: innovation race, wins the future and acts as top priorities
Speaker 8: are keep America competitive, make us the most desirable place
Speaker 8: for those new plants innovation, keep incentivizing innovation in the US.
Speaker 8: And I think those are policies both parties, I think
Speaker 8: can embrace.
Speaker 3: Well, it's going to be one party or at least
Speaker 3: the majority of the parties in both chambers meeting with
Speaker 3: Donald Trump when he's here at Washington tomorrow. To what
Speaker 3: extent is he already influential on this conversation, knowing that
Speaker 3: there was a bipartisan tax bill that passed the House
Speaker 3: with massive bipartisan majority that ended up going nowhere in
Speaker 3: the Senate, and some people were telling us it's because
Speaker 3: it's an election year and if you expand the child
Speaker 3: tax credit, potentially Biden gets credit for it. Comes political
Speaker 3: I wonder what you think of that narrative.
Speaker 8: Yeah, so I think one president presidenthp's very influential, certainly
Speaker 8: among the republic Party and party. These drove his economic
Speaker 8: agenda that is so popular with the American people, so
Speaker 8: he's got a big stake extending that in the corporate
Speaker 8: rate cut, for example, that drove so much the paycheck
Speaker 8: wage growth was his signature achievement, So he's going to
Speaker 8: play a big role. I think some of the dynamics
Speaker 8: of this year's tax bill will still be front and
Speaker 8: center in twenty twenty five. You know, you're gonna have businesses,
Speaker 8: you know, Republicans that want the middle class cuts, the
Speaker 8: small business cuts remaining place, and want America to be
Speaker 8: super competitive. Democrats are going to want a child tax
Speaker 8: credit that looks like the COVID era credit. They're going
Speaker 8: to want to defend the Green Energy Subsidies Inflation Reduction Act.
Speaker 8: So you can already see sort of the battle lines
Speaker 8: being drawn. But twenty twenty five, with the prospect of
Speaker 8: three or four trillion dollars of tax hikes, it's gonna
Speaker 8: to focus leaders in both those parties, tax writers who
Speaker 8: are already beginning their work.
Speaker 4: We're still waiting for the task COO to fit on
Speaker 4: a postcard. Wasn't that going to happen?
Speaker 8: You know, I'll tell you what in the house we
Speaker 8: did exactly that. Our version was thirteen lines on a
Speaker 8: postcard that ninety percent of Americans would use to file
Speaker 8: I still dream about that because others. Can you imagine
Speaker 8: you and I looking at a postcard and saying, this
Speaker 8: is how I'm taxed, and more importantly, that's how my
Speaker 8: neighbor is taxed. There's real power to simplicity. So I'm
Speaker 8: you know, if you asked me things I'd dream about,
Speaker 8: I wish we could have actually achieved, you know, the
Speaker 8: postcard and that fairness from that is certainly.
Speaker 10: One of them.
Speaker 3: On the subject of what could be dream and what
Speaker 3: could be achievable, we had Donald Trump over this past
Speaker 3: weekend in Nevada floating no taxes on tipped income.
Speaker 1: Yeah.
Speaker 3: Do you think that is actually something workable knowing he
Speaker 3: would need congressional approval to actually do that in a
Speaker 3: second administration? Or do you think that was just kind
Speaker 3: of an idea that was thrown out there given the audience.
Speaker 8: No, I think it doesn't surprise me. Here's why because
Speaker 8: during tax reform especially, you couldn't be at the White
Speaker 8: House that he wasn't asking what are we doing for
Speaker 8: the little guys? What are we doing for the blue
Speaker 8: collar workers? I mean, that is part of who he is.
Speaker 8: I don't know tons about the tip thing, but here's
Speaker 8: so full disclosure. I'm one of those people. I want
Speaker 8: fewer tax provisions for some lower rates for everyone. I
Speaker 8: think that's the fairness here. But I think there's two impacts. One,
Speaker 8: if you tax less is something to get more of it,
Speaker 8: So I think there'll be more wages sort of redesigned
Speaker 8: on the tip model. Secondly, those are industries that really
Speaker 8: have trouble hiring people and keeping them, you know, I
Speaker 8: mean those service industries, So you may see more young people.
Speaker 8: I was a waiter and a bartender. I've lived that
Speaker 8: tip life as well, and so you see may see
Speaker 8: more people drawn to some of those service industries that traditionally,
Speaker 8: you know, it's been hard to cover those tables.
Speaker 10: That's for sure.
Speaker 7: Yeah.
Speaker 3: All right, well sir, great to have you here in
Speaker 3: our studio. Thank you so much for joining us. Kevin
Speaker 3: great indeed, beautiful night here in Washington. Former Chair of
Speaker 3: the House Ways and Means Committee now spokesman for the
Speaker 3: Alliance for Competitive Taxation. We appreciate you joining us. We
Speaker 3: want to turn now to our political panel as we
Speaker 3: look ahead to the perhaps non tax related discussions that
Speaker 3: will be happening on Capitol Hill tomorrow between former President
Speaker 3: Trump and Congressional Republicans. Rick Davis and Jeanie Shanze. Know
Speaker 3: our signature political panel contributors here at Bloomberg are joining
Speaker 3: us now. So, Rick, do you think that there's actual
Speaker 3: items on the agenda for these meetings or is most
Speaker 3: of this about optics in the show.
Speaker 2: Yeah?
Speaker 11: Well, first of all, you can't get away from the
Speaker 11: optics in the show.
Speaker 5: Right.
Speaker 2: We're right in the middle of.
Speaker 11: A presidential contest, and I think that part of what
Speaker 11: Donald Trump's message is going to be is, Hey, our
Speaker 11: boat floats with me at the top of the ticket.
Speaker 11: Anybody who thinks that they can do better is crazy.
Speaker 11: Everybody needs a rally around my annidacy. It's going to
Speaker 11: be all about how the top of the ticket's going
Speaker 11: to drive the outcome of the election.
Speaker 2: And that's the political message.
Speaker 11: I think that when you get into substance, I think
Speaker 11: that Donald Trump's gonna make sure, nobody goes out there
Speaker 11: with a with an agenda that somehow puts either his
Speaker 11: campaign in a bad light or the Biden administration in
Speaker 11: a good light.
Speaker 2: You know, I certainly I'm the untold message.
Speaker 11: You won't say this specifically, I would assume, but you
Speaker 11: never know what Donald Trump is that don't do anything
Speaker 11: it's going to cause me any problems between now and November.
Speaker 11: That is probably the most important thing, because there are
Speaker 11: various elements of the House and the Senate who have
Speaker 11: agenda items that could cross pressure his campaign, and he
Speaker 11: doesn't want any of that stuff happening. So it's almost like,
Speaker 11: play along with my campaign. Do what I tell you
Speaker 11: to do. We're all unified around me, and don't do
Speaker 11: anything between now and November that's going to cause a
Speaker 11: problem from my campaign.
Speaker 4: Genie, you just heard the pitch from none other than
Speaker 4: Kevin Brady, who used to share the House Ways and
Speaker 4: Means Committee, with a strong argument on making the Trump
Speaker 4: era tax cuts, as we call them, permanent. This is
Speaker 4: going to be a big debate that makes its way
Speaker 4: onto the campaign trail. What's Joe Biden's answer, Well, first
Speaker 4: of all, I.
Speaker 10: Love the thirteen lines. I remember a good postcard, and
Speaker 10: I love that, so I wish Kevin Brady would come
Speaker 10: back and fulfill that. I think what is going to happen,
Speaker 10: or what should happen in a serious discussion, is to
Speaker 10: look back and look at the reality of Donald Trump's record.
Speaker 1: You know, he.
Speaker 10: Promised cuts, and he delivered those cuts for billionaires, for
Speaker 10: the very wealthy, and for big corporations. He reduces the
Speaker 10: corporate income tax to twenty one percent. He's the first
Speaker 10: president it's Herbert Hoover to leave with less jobs than
Speaker 10: when he came in. And of course he had the
Speaker 10: pandemic to deal with, so I will cut him some
Speaker 10: slack on that. And the budget deficit a sword under
Speaker 10: both him and Joe Biden, and we're now over three trillions.
Speaker 10: So you know, I think he likes to hype his record,
Speaker 10: but I think real serious questions have to be asked
Speaker 10: about both his record in the past and what he
Speaker 10: wants to do now. If he wants to grow our military,
Speaker 10: for instance, how is he going to do that? If
Speaker 10: he is cutting revenue. You know, in a way, this
Speaker 10: isn't complicated. You if you're going to spend more, you
Speaker 10: got to tell us what you're going to cut. I
Speaker 10: don't suspect we hear any of that tomorrow, by the way,
Speaker 10: but I think those are the serious discussions that have
Speaker 10: to be had. And I think on Joe Biden's part,
Speaker 10: he's got to say, we haven't reached where we should.
Speaker 10: We still have very high costs in this country, but
Speaker 10: we are moving in the right direction. And I am
Speaker 10: going to take on all of those corporate billionaires and
Speaker 10: the corporations that Donald Trump has been delivering for and
Speaker 10: continues to promise to deliver for if they give a
Speaker 10: billion dollars to his campaign.
Speaker 3: Well, Rick, to Jeanie's point on a few are going
Speaker 3: to reduce revenue. You also need to reduce spending. We
Speaker 3: all know how big the slice of the pie is
Speaker 3: that you can actually reduce. Because the mandatory part of
Speaker 3: the ledger is just so much larger than everything else,
Speaker 3: there's very little discretionary that you can actually cut. The
Speaker 3: problem is when all of that, or a big chunk
Speaker 3: of that is entitlements. Neither Joe Biden nor Donald Trump
Speaker 3: can touch that politically, right, that's.
Speaker 11: Well, certainly they're not going to touch it between now
Speaker 11: and election day. They've both been very clear about their
Speaker 11: lack of interest in reforming entitlements. The real question is
Speaker 11: both of these guys, regardless of who wins, this will
Speaker 11: be the last job of their political career, and so
Speaker 11: they have an opportunity to then sit back and say,
Speaker 11: you know, in order to reform some of our fiscal house,
Speaker 11: we have got to start to get these entitlements under control,
Speaker 11: because as you point out, Kaylee, I mean, there is
Speaker 11: no such thing as cutting a budget without touching the entitlements.
Speaker 2: The rest of it is just optics.
Speaker 11: And so that's the question is do they have the
Speaker 11: political wisdom and courage in the last four years of
Speaker 11: their political career to try and put the country on
Speaker 11: the right track when it comes to the successive entitlement
Speaker 11: spending that's going to bankrupt the country at some point
Speaker 11: if it's continued to go unchecked.
Speaker 4: Our great panel, Rick Davis and Jeanie Shanzano or signature
Speaker 4: panel on Balance of Power, and many thanks to both
Speaker 4: of you for helping us distill all of this. We're
Speaker 4: going to be talking a lot more about it, of course,
Speaker 4: tomorrow when Donald Trump makes his visit here to Washington,
Speaker 4: d C. Meeting with lawmakers on the House and the
Speaker 4: Senate sides.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 4: television audience in the next hour as we gear up
Speaker 4: for the decision on interest rates and of course the
Speaker 4: news conference that's going to follow. What Lindsey Owens would
Speaker 4: ask if she were in that news conference today with
Speaker 4: the chair Jay Powell, or maybe what she would say,
Speaker 4: I told you so. She's not like that though. Groundwork
Speaker 4: Collaborative executive director, former Senior economic policy advisor to Senator
Speaker 4: Elizabeth Warren. Didn't that cross your mind? Great to see, lindsay,
Speaker 4: at eight thirty this morning, you said I told you so.
Speaker 4: You should have started cutting by now.
Speaker 12: Oh no, not quite, not quite that spacier vindictive. I mean,
Speaker 12: I just think for me, when I saw the numbers
Speaker 12: this morning, breathed, breathed a huge sigh of relief. You know,
Speaker 12: zero percent, zero year over year inflation. You know, it's
Speaker 12: hard to get much better than that. And you know,
Speaker 12: the second thought that came into my mind was be
Speaker 12: better cut in September. I mean, there is no reason
Speaker 12: to be looking past September to November.
Speaker 4: Now, Okay, I got you. Are we going to hear
Speaker 4: that today or are you concerned that higher for longer
Speaker 4: remains the message this summer?
Speaker 6: Yeah?
Speaker 12: I mean I am really concerned that this may slip
Speaker 12: to November. I think, you know, Powell has been pretty
Speaker 12: hawkish on this front, but I think the data really
Speaker 12: supports a September cut for a couple of reasons. But
Speaker 12: the primary one is we are now if you exclude
Speaker 12: owners equivalent of rent, we are now actually on the
Speaker 12: year below the FEDS two percent target. So the last
Speaker 12: mile here is housing. This is a housing story. We've
Speaker 12: talked about this before and again. The interest rate environment
Speaker 12: does not do you any favors on the housing front,
Speaker 12: and if anything, could be exacerbating some of the housing
Speaker 12: price issues that we're seeing lingering in the inflation numbers.
Speaker 12: So the rest of the data suggests that we have
Speaker 12: got to see cuts and the housing story doesn't get
Speaker 12: better with this punitively high interest rate environment.
Speaker 4: Whether we're talking housing or just broadly, lindsay, at what
Speaker 4: point do high interest rates become inflationary on their own?
Speaker 6: I mean, I think we're pretty much they are right.
Speaker 12: We've got folks locked out of the mortgage market because
Speaker 12: the cost of borrowing is prohibitively high. We're starting to
Speaker 12: see an increase in credit card delinquencies for some borrowers.
Speaker 12: That's not a great situation to be in. Economically, we're
Speaker 12: starting to see a little bit of signs of a
Speaker 12: slowing labor market. I mean, we're still, obviously just in
Speaker 12: an incredibly strong labor market.
Speaker 6: We've had now more.
Speaker 12: Than two full years of unemployment at or below four percent.
Speaker 12: We're seeing folks who've been on the sidelines in the
Speaker 12: labor market who've wanted to get pulled into the labor
Speaker 12: market able to get jobs. Americans with disabilities are able
Speaker 12: to get jobs at higher rates than in decades past.
Speaker 12: So you know, we've got a really strong economy here.
Speaker 12: But I do think the Fed has got to stick
Speaker 12: to its promised to follow the data, and the data
Speaker 12: is saying, look, we're we're below the FEDS two percent
Speaker 12: target when you pull out.
Speaker 6: Owners equivalent of rent.
Speaker 12: The other thing we're seeing on the housing front here is,
Speaker 12: you know, new leases are are coming in low, so
Speaker 12: this is really kind of a hangover of older leases.
Speaker 12: And that's not a problem you solve with with high
Speaker 12: interest rates, right. You know, people have just got to
Speaker 12: you know, flow through those older leases. They you know,
Speaker 12: they come back online and you get those at lower
Speaker 12: price points. So I'm definitely ready for interest rate cuts,
Speaker 12: I'll tell you. I find it quite concerning that you
Speaker 12: hear over and over again in Washington that the Federal
Speaker 12: Reserve chair will be uncomfortable cutting interest rates in September
Speaker 12: because it's so close.
Speaker 4: To the election.
Speaker 6: And you know, I actually view that that position.
Speaker 12: I understand that folks think he's trying to sort of
Speaker 12: not to be political by not cutting interest rates before
Speaker 12: the election.
Speaker 6: I view that as dangerously political ground. If the data.
Speaker 12: Supports a cut in September, there should be a cut
Speaker 12: in September, right. He shouldn't sort of be playing timing
Speaker 12: games with the election here. Manage the economy like you
Speaker 12: said you would, adhering to the data and go for
Speaker 12: the cut in September.
Speaker 4: It's really something to when you read the President's statement
Speaker 4: on this today, it begins by saying, not, you know, hey,
Speaker 4: look everyone, this is great news. It begins by saying
Speaker 4: prices are still too high, and he has to keep
Speaker 4: saying that. I suspect publicly. We're going to talk to
Speaker 4: Wendy Benjaminson about that in just a second, Lindsay. The
Speaker 4: fact is he's got to be thinking, look how far
Speaker 4: we've come, right.
Speaker 12: I mean absolutely, you know, we're now almost two years
Speaker 12: of inflation falling off. It's June twenty twenty two peak, right,
Speaker 12: so we've come a huge way here. But Americans are
Speaker 12: upset about high prices, and they're also upset about how
Speaker 12: pricing works. And the administration has been taking this on aggressively.
Speaker 12: The junk fees that Americans are paying, the drip pricing,
Speaker 12: the personalized pricing, You paying more than your neighbor for
Speaker 12: the same sweater because of the user interface dark pattern
Speaker 12: you got pushed into through your Instagram app. I think
Speaker 12: you know, it's not just the high prices Americans are
Speaker 12: upset about.
Speaker 6: It's how pricing works.
Speaker 12: And I think you know what he said into his
Speaker 12: statement is he's also taking that on. He's taking on
Speaker 12: the drug companies who are jacking up the price of insulin.
Speaker 12: He's taking on the hotels who are adding all manner
Speaker 12: of you know, fees and other sort of deceptive add
Speaker 12: ons to your total bill at the end of your stay.
Speaker 12: And I think that stuff is really resonating with the
Speaker 12: public because they're sick of that crap. And so that's
Speaker 12: also what he said in his statement today, is that
Speaker 12: he's doubling.
Speaker 6: Down on those efforts.
Speaker 4: So you have it from Lindsay Owens. It's good to
Speaker 4: have you back on a FED day, no less groundwork
Speaker 4: collaborative executive director. Thank you, Lindsey for the insights as
Speaker 4: we bring in the aforementioned Wendy Benjaminson, who had her
Speaker 4: eyes on this statement as well when the White House
Speaker 4: decided to speak up this morning. She is Bloomberg's Washington
Speaker 4: senior editor. Nice to see you, Nice to see it.
Speaker 4: I don't care if you're running our poll or if
Speaker 4: we're talking about Joe Biden's message of the day, which
Speaker 4: frequently veers into different things, including the border, including the
Speaker 4: reproductive rights. But this is the stuff that he needs
Speaker 4: to be talking about every day. I'm just curious your
Speaker 4: thoughts on the reaction here, because he could take a
Speaker 4: victory lap right, look at the markets and maybe do
Speaker 4: what Donald Trump I do for months. But prices are
Speaker 4: still too high. He has to say that.
Speaker 13: He has to say that, But I think this is
Speaker 13: the first time he's done that. I mean, I was
Speaker 13: been watching. Maybe I missed a month or so, but
Speaker 13: I've been watching his statements over the whole period of
Speaker 13: this where he does nothing but spike the football. And
Speaker 13: while he has good reason to spike the football, has
Speaker 13: the rate of inflation has slowly been coming down. Prices
Speaker 13: in the grocery store, prices at the gas pump have
Speaker 13: not significantly changed, and voters are feeling that. So you
Speaker 13: tell an average voter that the rate of inflation has slowed,
Speaker 13: but prices are still three percent higher than they were
Speaker 13: yesterday and last year, and you got a one and
Speaker 13: a half percent raise. That's not going to do it
Speaker 13: so in November. So the fact that this month they
Speaker 13: decided to start with that simple sentence prices are still
Speaker 13: too high is an acknowledgement of the pain that voters
Speaker 13: are still feeling when they go to buy things.
Speaker 4: Do they believe him when he says that, you know,
Speaker 4: he's going after big pharma. Republicans allow the special interest
Speaker 4: from big oil. They're fighting for billionaires on Park Avenue.
Speaker 4: I'm fighting for families. Is that resonating after three years
Speaker 4: of this?
Speaker 13: Maybe the polls are not really showing that.
Speaker 4: I mean, He's people are remembering Donald Trump's economy.
Speaker 13: Is a lot better than that now, of course, whether
Speaker 13: that's real or not, right, that was before a global pandemic,
Speaker 13: and that was before a huge infusion of federal spending.
Speaker 13: But the economy, there's no argument that the economy is
Speaker 13: getting better. And it is and Biden should politically take
Speaker 13: credit for that. Voters still aren't feeling it. And he's
Speaker 13: talking though about how I presume he means in a
Speaker 13: second term he will actually get some of these things
Speaker 13: done that he's been talking about, Yes for three years,
Speaker 13: working with farm upbringing taxes down, things like that.
Speaker 4: Well, we're going to have a grand debate about extending
Speaker 4: the Donald Trump tax cuts next year.
Speaker 13: Yes, Well, if Trump wins, we are ye. Oh well yeah, rue.
Speaker 4: Although they are starting the full court press with his
Speaker 4: visit this week. We're going to talk to Kevin Brady
Speaker 4: about that a little bit later on. You wonder to
Speaker 4: the extent that deficits are going to matter in an
Speaker 4: election year. It's funny how people get amnesia over deficits.
Speaker 4: Is Donald Trump running the agenda here in Washington for
Speaker 4: Republicans with or without this election, because it's feeling like
Speaker 4: it with this meeting tomorrow.
Speaker 13: Absolutely, there's no question that Donald Trump is the head
Speaker 13: of the Republican Party, is the driver of Republican Party policies.
Speaker 13: And this meeting on Capitol Hill, to which Evan Mitch McConnell,
Speaker 13: who has never had a lot of love lost for
Speaker 13: Donald Trump, is attending, He is meeting with the House
Speaker 13: Republicans and Senate Republicans to set the policy for the
Speaker 13: rest of this year and then if they win after that.
Speaker 13: I think even if he loses, he's still and Biden
Speaker 13: as president. Republicans in Congress will still be pushed and
Speaker 13: pulled by Donald Trump in terms of the policy that
Speaker 13: they're going to talk about tomorrow, right before he goes
Speaker 13: and meets with the most powerful CEOs in the country
Speaker 13: down on the wharf tomorrow afternoon.
Speaker 4: Speaker would love to deliver a contempt vote for the
Speaker 4: Attorney General Merrick Arland to give for the President when
Speaker 4: he comes to town. Are they going to make that
Speaker 4: happen today?
Speaker 13: I think they're going to try. The odds are not
Speaker 13: firmly in their favor that they're going to succeed. There
Speaker 13: are some centrist House Republicans, some House Republicans who used
Speaker 13: to work for the Justice Department or the FBI, who
Speaker 13: feel that this is not right to do. And right
Speaker 13: after the conviction of the President's son on gun charge,
Speaker 13: is what are we I mean, there's all over the.
Speaker 4: Release of audio recordings of the president.
Speaker 13: By the way, is funny about the weaponization of the
Speaker 13: justice they're feeling that that's what's.
Speaker 4: Well and the and the Attorney General doesn't think that
Speaker 4: due to privacy issues and many other things. But the
Speaker 4: precedent that would be set you get the transcript, not
Speaker 4: the recording. Is it funny that we still call them
Speaker 4: tapes after people listening never had a tape, but we
Speaker 4: still but they know what we mean by audio tapes.
Speaker 4: I just think it's funny there are no tapes. They're
Speaker 4: like MP three's or something. That's going to be a
Speaker 4: big story tomorrow, Yes, and it's going to set us
Speaker 4: off in a conversation, whether there's a content vote or
Speaker 4: not about Donald Trump's e can policies. And I hope
Speaker 4: that you'll be back with us to do it again soon.
Speaker 4: I know you're Are you in the field right now
Speaker 4: for our next pole?
Speaker 5: Now?
Speaker 4: You love to say that after the debates Inside Information, Yeah,
Speaker 4: Wendy benjamins In Bloomberg Washington, Senior Editor. Always great to
Speaker 4: have Wendy's insights with us.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Can
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 4: Walking us through the markets on a very important day here.
Speaker 4: Double risk is what I was reading about this morning,
Speaker 4: and we just checked one of those two boxes waiting
Speaker 4: for I guess single risk with the FED meeting, and
Speaker 4: that's coming. We have special coverage planned for you. But
Speaker 4: the news at eight thirty. My goodness, everyone's happy. US
Speaker 4: inflation broadly cools, an encouraging sign for Fed officials. I
Speaker 4: read on the terminal White House seems pretty happy about it.
Speaker 4: Markets seem pretty happy about it. See how Molly Smith
Speaker 4: feels about it. She was up early if you want
Speaker 4: to get on the terminal. By the way, Molly Smith
Speaker 4: is the gatekeeper if you cover economics here. She is
Speaker 4: Bloomberg's economics editor. And you know CPI day is one
Speaker 4: thing with a FED day on top of it. We're
Speaker 4: lucky that you made time for is Molly Smith? Welcome back?
Speaker 4: Do you drive a car? I know you live in
Speaker 4: New York? Right, do you mind?
Speaker 10: Well?
Speaker 4: I like god you could, but gosh, be just about anywhere?
Speaker 4: Are you coming in from the suburbs? You live in
Speaker 4: New York? You don't have a car? Is that right?
Speaker 14: I don't drive, and I live very close to HQ,
Speaker 14: so I'm right here for the action.
Speaker 4: You're really smart, as I know. Spend an hour to
Speaker 4: get to work every morning. Although I don't live above
Speaker 4: the store, they can't call me at night the way
Speaker 4: they do you or first thing in the morning. And
Speaker 4: I'm asking you about this because of these crazy prices,
Speaker 4: not only for automobiles that we've been talking about, but
Speaker 4: all insurance up twenty percent. Is this the number that
Speaker 4: distorts the CPI today? How is that even possible.
Speaker 14: So, actually, we've been looking at it more from the
Speaker 14: monthly change in car insurance. What you were citing, correctly
Speaker 14: is the annual pace that car insurance is up twenty
Speaker 14: percent year every year. It has been one of the
Speaker 14: bigger drivers of services and pleas.
Speaker 4: Did it come down from last month?
Speaker 8: What's that?
Speaker 4: Did it come down from last month? Is that why
Speaker 4: you make the difference?
Speaker 6: Correct?
Speaker 14: Yes, so this was the first month in gosh, I
Speaker 14: think it was over two years.
Speaker 8: Maybe it'd have.
Speaker 14: To check me on that that our insurance fell in
Speaker 14: the monthly rate. That is so look obviously on actual
Speaker 14: prices still definitely high, not discounting that whatsoever. But when
Speaker 14: you're looking at directionally, if this is maybe a sign
Speaker 14: that this is going to start easing more going forward
Speaker 14: and not contributing to more outsized readings, that could be
Speaker 14: very significant.
Speaker 4: So if you're looking at the more broad picture here
Speaker 4: and you're, say, Joe Biden hoping for an interest rate cut,
Speaker 4: we're going to talk more about that coming up in
Speaker 4: a minute as well. What has you encouraged about this reading?
Speaker 4: I mean we're talking we're celebrating over a tenth of
Speaker 4: a percent essentially, here right.
Speaker 14: Well, it's a lot of things, you know, It's not
Speaker 14: just car insurance. This was a really broadly positive report
Speaker 14: no matter if you're at the FED, if you're Joe
Speaker 14: Biden American consumers. It really had a lot of good
Speaker 14: news for a lot of people. That where we have
Speaker 14: seen so much of the inflation pressure in the last
Speaker 14: couple of years has been from services, and that's where
Speaker 14: we finally got to see services prices coming down. Car
Speaker 14: insurances was a big one that that has been, like
Speaker 14: we said, going up for so many months, and we
Speaker 14: also saw airfares come down that was significant some other
Speaker 14: travel related expenses as well.
Speaker 6: Well.
Speaker 14: The next one that we're really all waiting for and
Speaker 14: that economists are getting more conviction is going to show up.
Speaker 14: And next month's report is that long awaited slowdown in
Speaker 14: how inflation that has still really yet to materialize. So
Speaker 14: we're hoping that the June CPI is going to be
Speaker 14: the first real look at that.
Speaker 4: So core CPI up two tenths from April market expected
Speaker 4: three tenths. Is that right? But that I mean, this
Speaker 4: is the sliver we're talking about here right right, And.
Speaker 14: If you want to get even to even more to
Speaker 14: a narrower sliver than that and get really walky with it,
Speaker 14: as our readers like to. Then you're going to look
Speaker 14: at it out to two decimal places. So this was
Speaker 14: actually a point one six percent, so that rounds up
Speaker 14: to zero two versus let's say if it was point
Speaker 14: twenty four.
Speaker 8: And rounded down.
Speaker 14: And that's really significant because let's try to annualize that rate.
Speaker 14: Point one six multiplied out over twelve months is a
Speaker 14: one point nine to two pace of inflation. That's under
Speaker 14: two percent. That's the magic number that we're looking for.
Speaker 4: That's why I would have copied off of Molly's homework
Speaker 4: in high school.
Speaker 6: Couldn't do that one?
Speaker 10: In your head?
Speaker 6: I didn't either, I think.
Speaker 4: Before I came here, Well, you've got a terminal, by God,
Speaker 4: connect the dots for beyond this fed meeting of Molly.
Speaker 4: They're not making decisions today, I'm sure based on this alone.
Speaker 4: But in the grand scheme when we talk about the
Speaker 4: dot plot, how does this factor into it?
Speaker 1: Right?
Speaker 2: Yeah?
Speaker 14: I mean this was already we were wondering about how
Speaker 14: the dots were going to shift from the March quarterly
Speaker 14: projections to now, and after we had seen all of
Speaker 14: those really hefty inflation prints at the start of the year,
Speaker 14: and that's when the FED was thinking there would be
Speaker 14: three rate cuts in twenty twenty four. Everybody's thinking, Okay,
Speaker 14: that's now got to be down to two. This report
Speaker 14: really helps solidify that, like there are probably two rate
Speaker 14: cuts that could happen this year, and investors in the
Speaker 14: market reaction today even more bullish that those could start
Speaker 14: to come sooner. So right now, the first fully priced
Speaker 14: FED hike would be in November, which is consequently two
Speaker 14: days after the election.
Speaker 4: Consequently, and we're told they don't play those games right
Speaker 4: if it's too close to the election. That might be
Speaker 4: part of the fact in although the FED wouldn't acknowledge that,
Speaker 4: I'm sure.
Speaker 14: Correct, But that's I'm sure that would come up in
Speaker 14: Jay's press conference today and we will all be very
Speaker 14: much listening.
Speaker 4: Michael mckey's in there crafting a question that the I'm
Speaker 4: sure the chairman will have to stop down and think about.
Speaker 4: And Molly is great to have you. We appreciate your
Speaker 4: joining us. Molly Smith, Bloomberg Economics editor, spends more time
Speaker 4: on Bloomberg Radio than I do. She's that good. This
Speaker 4: is a very important day in Washington tomorrow that you
Speaker 4: might not have heard about, maybe if you're not inside
Speaker 4: the beltway. Here an important thing called Seersucker Thursday. It's
Speaker 4: happening on June thirteenth this year. And I bring this
Speaker 4: up because if you're with us right now on YouTube,
Speaker 4: you can close your eyes. If you're listening on Bloomberg
Speaker 4: Radio or in satellite radio, the Great Lester Munson is
Speaker 4: prepared for Seersucker Thursday. You're a day early, and it's
Speaker 4: nice to see you in the studio here.
Speaker 9: Thanks Joe on k Street. We like to do it
Speaker 9: a little bit. We like to be ahead of the
Speaker 9: curve Senate. It's going to be on Thursday out there today.
Speaker 4: I have so much to learn from you. Still is
Speaker 4: the co head of the international practice at BGR Group
Speaker 4: and spent some time on the Senate Foreign Relations Committee
Speaker 4: as as an important staff director. Another thing starts tomorrow,
Speaker 4: that's the G seven. Funny how that coincides Joe Biden's
Speaker 4: on Air Force one right now, heading over there with
Speaker 4: your acumen in foreign policy, I want to get your
Speaker 4: take on this because we have two hot wars going
Speaker 4: that this president is trying to balance, and he has
Speaker 4: the opportunity to sit down with our most important allies
Speaker 4: the next couple of days to try to move the
Speaker 4: ball on both of them. Does it help will pick
Speaker 4: through those Ukraine and Israel first? How about that? Does
Speaker 4: it help with the potential for a ceasefire? For him
Speaker 4: to be in the same room with his G seven allies?
Speaker 2: Well?
Speaker 9: I think it can and can he use Is he
Speaker 9: nimble enough to use this as an opportunity to drive
Speaker 9: a message and show strength in the international community. It's
Speaker 9: it's there's a higher degree of difficulty today than a
Speaker 9: few days ago. The European Parliament elections were just a
Speaker 9: few days ago, the right wing did really well. That's
Speaker 9: going to be the mood with the Europeans at the
Speaker 9: G seven. Prime Minister Maloney, who is hosting it's kind
Speaker 9: of the spokesperson for that, so she's going to have
Speaker 9: a prominent position. There's a mood of change afoot. Can
Speaker 9: Joe Biden kind of turn that to his advantage? It's
Speaker 9: hard as the incumbent, he's got some real challenges, but
Speaker 9: this could be a real good opportunity for him to
Speaker 9: show some foreign policy chops.
Speaker 4: He got a bit of a running start in Normandy
Speaker 4: last week he was in the same room with a
Speaker 4: lot of the same people who'll be talking to now,
Speaker 4: including Emmanuel mcron to your point, bruised up a little
Speaker 4: bit in the elections over the weekend, but also President Zelenski.
Speaker 4: He's going to be holding a bilateral news conference. I
Speaker 4: suspected a land right in the middle of the show tomorrow.
Speaker 4: As a matter of fact, we'll bring it to you
Speaker 4: as it happens from overseas. Ukraine is something, of course
Speaker 4: that's in the air, but we've cleared funding here in
Speaker 4: the US. What's the next hurdle for Joe Biden and Ukraine.
Speaker 9: Crane has been using some of our new aid and
Speaker 9: some of the new kind of longer leash from Biden
Speaker 9: to start striking at supply lines inside Russia. That's a
Speaker 9: big deal. And now we see as kind of a
Speaker 9: tit for tat Russian ships coming into Cuba in our backyard. Yeah,
Speaker 9: a little bit of a violation of the Monroe doctrine
Speaker 9: if you want to go way back, So can can
Speaker 9: Biden double down with Zelenski. Let's punch the bully in
Speaker 9: the nose. Let's go after the Russians. Let's show them
Speaker 9: that we're undeterred here by what they're doing in the
Speaker 9: Caribbean and that we're going to We're going to bring
Speaker 9: the fight to them in Ukraine where it really matters.
Speaker 9: So again, big opportunity for President Biden.
Speaker 4: Seizing a Russian assets I suspect is on the agenda.
Speaker 4: Remember we President signed the REPO Act into law same
Speaker 4: time he passed the funding for Ukraine. But the bulk
Speaker 4: of that money, we're told as in Europe. So this
Speaker 4: sounds like an important conversation this week.
Speaker 9: It can be, it can be. I think they should
Speaker 9: keep expectations low. There's gonna be a lot of legal,
Speaker 9: real impediments to fring up that money to use it
Speaker 9: right away. It's probably going to be a few years
Speaker 9: before we really see it being used.
Speaker 4: So that's the rebuilding of Ukraine, that's the war.
Speaker 9: That's right, that's right.
Speaker 4: So the problem, why is it so hard to do
Speaker 4: this when everyone seems to be on that side.
Speaker 9: There's just it. It's harder than it looks.
Speaker 2: Right.
Speaker 9: The people are going to lawyer up these assets have
Speaker 9: that are very valuable. President can't just go grab them,
Speaker 9: or we are nations of laws here in the West, yes,
Speaker 9: which is our wonderful asset and occasionally it's a bit
Speaker 9: of a problem. In this case, it might be a
Speaker 9: bit of a problem.
Speaker 4: You mentioned offensive weapons. That is the big development, I
Speaker 4: guess most recently, but it's isolated around Kharki for the
Speaker 4: most part, where it appears that Ukraine has been on
Speaker 4: the ropes. There have been interesting comments We've heard from
Speaker 4: the likes of Emmanuel Macron and others say, hey, maybe
Speaker 4: you want to use European weapons, and in some cases
Speaker 4: Ukraine has been taking them up on that. Are we
Speaker 4: on the same page with our European allies and are
Speaker 4: we going to see a widening of that offensive posture.
Speaker 9: It's a great question, Joe. The Biden administration has been
Speaker 9: letting Europeans kind of push the envelope in terms of
Speaker 9: what weapons systems are being used. Was Europeans and the
Speaker 9: British who were pushing for more tanks, for more jet aircraft,
Speaker 9: longer range weapons, and the Biden administration made it appear
Speaker 9: like they were kind of going along reluctantly with that.
Speaker 9: I think that's intentional to make to give the Europeans
Speaker 9: some agency here, which can be a very good thing.
Speaker 9: But so I'm hoping that's what this is. And there
Speaker 9: isn't a real delta between the US and Western Europe here.
Speaker 4: Well, it's interesting when you step back then and look
Speaker 4: at this G seven. How much of this is photo
Speaker 4: opportunity versus policy.
Speaker 9: Sometimes the photo opportunity is the policy. The appearances matter here.
Speaker 9: Can the President show some vigor and some nimbleness and
Speaker 9: get these the Europeans to show their supportive of him.
Speaker 9: Can they hold off the specter of, if you will,
Speaker 9: of kind of an ascendant right wing in both Europe
Speaker 9: and the United States. They're going to have to look
Speaker 9: like they've got energy and they can solve problems. Can
Speaker 9: they win in Ukraine? Can they get to a negotiated
Speaker 9: settlement in Gaza? Can they show results for their efforts?
Speaker 9: If not, people are going to vote for change.
Speaker 4: So this is an important summit and the optics behind
Speaker 4: it for this president. He's probably getting a good nap
Speaker 4: on the plane right now. Right this is exhausting for
Speaker 4: a young man, This would be exhausting. They're putting him
Speaker 4: down the short stairs now to eliminate the chance.
Speaker 2: Of a stumble.
Speaker 4: This is part of the calculation for this White House.
Speaker 4: No matter where he's.
Speaker 9: Going low expectations. If he can walk off the stage
Speaker 9: in the right way, in a straight.
Speaker 4: Line, that's all I am going to my own self
Speaker 4: to be perfectly on it. So I mentioned your time
Speaker 4: on the Senate Foreign Relations Committee, there's discord over the ICC.
Speaker 4: Getting back to where we started with Israel. Here, this
Speaker 4: is the International Criminal Court arrest warrants.
Speaker 5: Right.
Speaker 4: We heard for Benjaminett Yahoo along with the leaders of Hamas,
Speaker 4: and there was a move to have a resolution essentially
Speaker 4: condemning the ICC. And it's not a layup. Why is
Speaker 4: this controversial within the Senate Foreign Relations Committee? And will
Speaker 4: it die there?
Speaker 9: So I think Senator Rish, who's the ranking Republican there,
Speaker 9: who's kind of the instigator of the is in the
Speaker 9: is actually in the right place. He's taking a bipartisan
Speaker 9: bill from the House. He wants the Senate to move it.
Speaker 9: Senator Carden, who's the chair of the committee, has said, well,
Speaker 9: I don't think it's bipartisan enough. I don't like the methodology,
Speaker 9: but I'll continue talking to you. And and Senator Rish
Speaker 9: is kind of holding his feet to the fire saying
Speaker 9: all right, I'm going to slow down some of these
Speaker 9: other things until we get this thing resolved. This is
Speaker 9: the hot item, this is what both parties care about,
Speaker 9: and and poor Sendor Cardon has to kind of defend
Speaker 9: this little bit schizophrenic policy of the White House, partisan
Speaker 9: the past House with a lot of Democrats, there are
Speaker 9: some there's several Democrats in the Senate who want to
Speaker 9: move this thing. I think it will at the end
Speaker 9: of the day in some form, whether it's it goes
Speaker 9: through the committee on some sort of compromise where they
Speaker 9: attach it to something else. There's just there's just a
Speaker 9: lot of energy and Congress that's playing out in other
Speaker 9: committees on other legislation. Congress wants to support Israel. They
Speaker 9: see Israel as very much the victim of Hamas and
Speaker 9: Hamah and the positions of Hamas as utterly untenable. They're
Speaker 9: going to pushing until this thing is over.
Speaker 4: Which has got a minute with Lester Munson. But I
Speaker 4: have to ask you, with that said about Benjamin ett Ya,
Speaker 4: who paying a visit. That's going to be quite a
Speaker 4: day in Washington with some very sensitive feelings on both
Speaker 4: sides of the Aisle. He will be addressing a joint session.
Speaker 4: It seems what's the potential boycott list's going to look.
Speaker 9: Well, let's remember he was invited by the Speaker, Yes,
Speaker 9: Speaker Johnson and the Minority leader in the House, and
Speaker 9: Schumer and McConnell. So this is a bipartisan, bicameral effort. Yes,
Speaker 9: it'll be a little bit controversial, I think, particularly for progressives,
Speaker 9: there may be some on the far.
Speaker 4: Right or ceasefire by then that's that.
Speaker 9: Really is the big question, Joe, like, can can the
Speaker 9: Biden administration get to a place where this where whatever
Speaker 9: is going to happen, happens before the address that will
Speaker 9: make it much more successful. And if that doesn't happen,
Speaker 9: then I think we are looking at a real hot
Speaker 9: topic that we'll.
Speaker 4: Be curious to see if there's a White House visit
Speaker 4: and if there's gloating when he goes home, because that's
Speaker 4: a big score for Benjamin Att yahow to do.
Speaker 9: There should be a White House list the lay up here.
Speaker 4: Yeah, we'll talk more about it then. Great to see you,
Speaker 4: Seersucker Thursday. He's at Day Ahead. That's how they play
Speaker 4: it on K Street. Lester Munson at BGR Group. Of course,
Speaker 4: our good friend here often a panelist and great to
Speaker 4: have a long form conversation with Lester. Thanks for listening
Speaker 4: to the Balance of Power podcast. Make sure to subscribe
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