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Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us

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Speaker 1: Live weekdays at one Eastern on Bloomberg dot com, the

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Speaker 1: iHeartRadio app, and the Bloomberg Business app.

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Speaker 2: Or listen on demand wherever you get your podcast.

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Speaker 3: As we count down to a pivotal vote in the

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Speaker 3: US House tonight, a pivotal vote when it comes to

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Speaker 3: avoiding in default. This is the debt limit deal struck

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Speaker 3: over the weekend, set to hit the House floor tonight

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Speaker 3: after clearing the Rules Committee in what some described as

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Speaker 3: a tortured affair yesterday.

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Speaker 2: Mister chairman, six to six, What should I do? The

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Speaker 2: chair to Hi?

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Speaker 3: Hi, mister Chairman, I breaking the vote the time I

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Speaker 3: should say.

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Speaker 1: Talent rules seven news motion is agreed to.

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Speaker 3: Motion agreed to. Then they will deal with that rule

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Speaker 3: on the floor before the big vote this evening they

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Speaker 3: say seven thirty eight o'clock or something. We've been waiting

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Speaker 3: for this seventy two hour clock to expire, with a

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Speaker 3: lot of questions about what happens to the Freedom Caucus

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Speaker 3: members in the Republican House. We talked about this yesterday

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Speaker 3: as Chip Roy and others held a news conference saying

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Speaker 3: no not voting for this bill. Speaker McCarthy was asked

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Speaker 3: about it in the corridors as he got back to

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Speaker 3: work here preparing for the vote tonight. What is it

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Speaker 3: they said that the Freedom Caucus doesn't like. How many

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Speaker 3: do you stand to lose?

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Speaker 4: I'm not sure what in the bill people are concerned about.

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Speaker 4: It is the largest savings of two point one trillion

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Speaker 4: we've ever had. It's the first time in history the

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Speaker 4: largest recisions where we're pulling money back from the hard

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Speaker 4: working taxpayers that are going to China. Are they opposed

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Speaker 4: to work requirements for welfare?

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Speaker 3: And he was in the room with them making that

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Speaker 3: case with a lot of arm twisting going on. Today

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Speaker 3: the Democrats are doing the same thing as they prepare

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Speaker 3: to back up the speaker here to get this over.

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Speaker 3: The finish line question is can Kevin McCarthy produce a

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Speaker 3: majority of his majority. We're going to talk about that

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Speaker 3: coming up in just a moment with Libby Cantrell. First,

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Speaker 3: we're joined by Anna Wong, Bloomberg's chief US economist, out

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Speaker 3: with quite the headline today, debt deal will make everyone unhappy?

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Speaker 3: And Anna, you say we agree now that we actually

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Speaker 3: have the ninety nine pages here, I know you took

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Speaker 3: a deep dive on the original bill that passed the

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Speaker 3: House couple of weeks ago. But in terms of the

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Speaker 3: legislation that's up for a vote tonight, what would be

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Speaker 3: the economic impact.

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Speaker 5: Yeah, so we think that this debt deal may produce

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Speaker 5: about one trillion of savings relative to the original baseline.

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Speaker 5: And you know, that's not tiny, but it certainly fell

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Speaker 5: short of the over four trillion savings in the original

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Speaker 5: McCarthy plan. So we think that the economic hit of

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Speaker 5: this would would be that GDP growth GDP level will

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Speaker 5: be about zero point four percent below baseline by the

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Speaker 5: end of next year. And a lot of this, you know,

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Speaker 5: GDP drag and also unemployment increase would happen around late

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Speaker 5: twenty twenty four and twenty twenty five. So it will

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Speaker 5: add to you know, headwinds that's already facing the economy

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Speaker 5: and economy that's about to fall into recession. So I

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Speaker 5: think that the debt deal overall could make the recovery

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Speaker 5: from a recession, which we expect to unfold later this year.

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Speaker 5: It will make the recovery even more tepid going into

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Speaker 5: late twenty twenty four.

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Speaker 3: What does it mean for the job market? You add

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Speaker 3: numbers on jobs, A lot of people on that originally.

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Speaker 5: Well, so I think that this deal will produce about

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Speaker 5: three hundred and forty thousand additional job losses relatives to

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Speaker 5: the baseline, So it's not as scary.

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Speaker 3: The course of two years. Yes, that's still three hundred

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Speaker 3: and forty thousand people who are not going to.

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Speaker 5: Have a job though, yes, yes, yes, Especially this is

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Speaker 5: on top of a rising unemployment in the baseline. So

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Speaker 5: we already expect that unemployment will to almost five percent

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Speaker 5: by the end of next year, right, so this is

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Speaker 5: adding on to that. And the reason why nobody is

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Speaker 5: happy about this deal is even as it adds to

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Speaker 5: the near term headwinds facing the economy, it also barely

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Speaker 5: does anything to lower the longer term fiscal debt to

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Speaker 5: GDP trajectory. So you know, before this deal, CBO is

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Speaker 5: expecting debt to GDP ratio to grow from ninety seven

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Speaker 5: percent from the end of last year to one hundred

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Speaker 5: and nineteen percent of GDP by ten years later. But

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Speaker 5: this deal will only knock off about two percentage point

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Speaker 5: out of that.

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Speaker 3: Yes, hard numbers. This is really helpful because when you

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Speaker 3: hear from politicians, they tend not to get specific, certainly

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Speaker 3: not like this. Ana Wong, thank you so much for

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Speaker 3: your work. Bloomberg's chief US economist read the column US Insight.

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Speaker 3: It's on the terminal debt deal will make everyone unhappy.

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Speaker 3: Here's why. But as I read from Libby Cantrell's notes

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Speaker 3: this week following the deal, the Kidney Stone has almost passed.

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Speaker 3: She's with us right now, the managing director head of

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Speaker 3: Public Policy at PIMCO. Libby, It's great to have you back.

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Speaker 3: You see this bill passing tonight, right, it's just a

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Speaker 3: question of how many Democrats are needed to make up for.

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Speaker 6: Republican knows, yes and yeah, and then we do we

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Speaker 6: we're probably a little bit more constructive on the build

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Speaker 6: in generally, Yeah, we see this passing. We see passing

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Speaker 6: most likely Joe with the majority of the majority. That's

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Speaker 6: so called pastor rule that you know, the other Republican

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Speaker 6: speakers have tried to get. We think that, uh, the

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Speaker 6: super McCarthy will likely get the support. And then importantly

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Speaker 6: there will also be Democrats who will vote for this

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Speaker 6: as well. And I think that you know, not every

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Speaker 6: not neither party is particularly happy with the outcome of this,

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Speaker 6: but there are also some wins for both parties as well.

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Speaker 6: So I think that the for the moderate members, for

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Speaker 6: the sort of the center, if you will, the center

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Speaker 6: will hold. And we think this will get you know,

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Speaker 6: to pass the House and then pass the Senate and

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Speaker 6: we'll then we'll be signed to a lot. And then

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Speaker 6: importantly for Marcus, this means that the that markets will

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Speaker 6: not have to deal with the dead ceiling for two

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Speaker 6: plus years, so well, maybe maybe some fiscal headwinds. Very incrementally,

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Speaker 6: we think that there's a big upside here that it

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Speaker 6: reduces a pretty big source of uncertainty for at least,

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Speaker 6: you know, the next two years.

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Speaker 3: Yeah. Are you surprised that we're not seeing any more

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Speaker 3: relief in the stock market, which has been decidedly negative

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Speaker 3: since this whole thing was announced that we got back

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Speaker 3: to work this week.

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Speaker 6: Yeah, and of course that you know, the stock market

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Speaker 6: is reacting not only to this, but also to some

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Speaker 6: more hawkish rhetorics from some of the from the said

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Speaker 6: and some prints that are coming in maybe a little

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Speaker 6: bit you know, a little bit more more heated. So

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Speaker 6: I think the stock market is interpreted others focused on

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Speaker 6: other things, but I also think there is still some

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Speaker 6: uncertainty regarding whether this will pass the House and the Senate.

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Speaker 6: And again, I think we are very confident that once

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Speaker 6: we've been sort of saying this to clients for the

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Speaker 6: last few weeks, once the deal was struck between the

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Speaker 6: President and super McCarthy, we thought that enough folks would

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Speaker 6: fall into line. They may have to hold their nose,

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Speaker 6: which is exactly what they're doing and sort of demogoget,

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Speaker 6: but at the end of the day, there will be

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Speaker 6: enough most at least it's passed.

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Speaker 7: About to have the Senate.

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Speaker 3: We'll ask you that about the markets. From what we

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Speaker 3: just heard from Anna Wong, I know this cuts both

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Speaker 3: ways here, but as she writes, this will deal an

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Speaker 3: additional short term blow to an economy already vulnerable to

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Speaker 3: a recession, and that's very much on Wall Street's mind.

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Speaker 6: Yeah, and I think there are a couple of things

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Speaker 6: just to keep in mind, though from a context perspective.

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Speaker 6: One is that discretionary spending has increased by about ten

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Speaker 6: percent a year over year, so we're starting from an

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Speaker 6: elevated base. And she is right that you know that

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Speaker 6: discretionary spending will no longer be growing at the insulation rate,

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Speaker 6: which is what I think folks, sort of the CBO

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Speaker 6: the baseline had penciled in. However, this is split government,

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Speaker 6: so in some ways we were already you know, assuming

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Speaker 6: that there could be as you Joe, as you know,

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Speaker 6: kind of the terminology the continuing resolution, meaning that spending

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Speaker 6: we have already been flat, just given the nature of

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Speaker 6: split government. So I'm not sure that this sort of

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Speaker 6: the CBO baseline again not to get kind of walk

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Speaker 6: out here, is really a fair comparison. I think you

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Speaker 6: have to look at through the political context. The political

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Speaker 6: context is the kind of the best thing that Democrats

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Speaker 6: probably had to hope for, come you know, for twenty

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Speaker 6: twenty four was probably flat spending anyway, So so in

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Speaker 6: many ways this is kind of as good as they

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Speaker 6: probably would have gotten. And of course you increase the

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Speaker 6: death cillion bye bye for two years, which I think

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Speaker 6: is again what the market should be focused on, because

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Speaker 6: that is that is reducing a big source of uncertainty, certainly.

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Speaker 3: The primary factor for Wall Street. You see this passing

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Speaker 3: the House. You've made that clear, Libby, whatever the makeup

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Speaker 3: is uh in these versus ours, is this essentially a

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Speaker 3: rubber stamp in the Senate? Or are we going to

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Speaker 3: hear from a Mike Lee or or Ran Paul, who's

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Speaker 3: gonna cause some trouble here in the other chamber.

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Speaker 6: Well, yeah, and as Joe, as you know, the Senate

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Speaker 6: has a lot more, many more tools in terms of

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Speaker 6: to throw a wrench into through a process perspective. So

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Speaker 6: if they if at least one senator, if any one

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Speaker 6: senator wants to slow this down, he or she could

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Speaker 6: do that. However, what we understand is that there likely

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Speaker 6: will be sort of a backroom door to sort of

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Speaker 6: crease the skids here. There probably will be some accepted

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Speaker 6: amendments that will be voted on in order then to

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Speaker 6: expedite the process. So we think we could see you know,

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Speaker 6: five or six amendments brought to the Senate. Four they'll

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Speaker 6: need sixty votes to pass. We'll sort of see what

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Speaker 6: what what if they do. I think one will be

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Speaker 6: the repeal of that Mountain Valley pipeline that was expedited

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Speaker 6: for Senator Mansion. That probably won't pass, but it will

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Speaker 6: be brought to the foor for a vote, and then

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Speaker 6: sort of in in exchange for that, then there will

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Speaker 6: be some expedited process on the back end. And this

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Speaker 6: all means for people who are listening that we will

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Speaker 6: likely see a vote probably by you know, I would

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Speaker 6: think by Saturday, maybe even Friday, because as you know,

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Speaker 6: Jet funes could be quite motivating for members of the Senate.

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Speaker 6: They want to go back and have their weekend and

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Speaker 6: want to get out of town. So we again are

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Speaker 6: we are expecting this to resolve itself by by the weekend.

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Speaker 3: Interesting, uh, Livy, you write no one can declare victory

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Speaker 3: with this bill, which I find interesting. You also add, however,

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Speaker 3: each side can point to some wins, which in divided

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Speaker 3: government is in some ways the best that can be expected. Uh.

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Speaker 3: I never thought that we'd be sitting here at this

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Speaker 3: point having that part of the conversation. I don't know

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Speaker 3: about you, but the balance here seems to be such

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Speaker 3: that we've now got Democratic and Republican leaders whipping their

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Speaker 3: their their respective caucuses to get this thing passed. And

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Speaker 3: a couple of weeks ago it didn't feel like that

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Speaker 3: was coming.

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Speaker 6: Yeah, Jose, As you know, I've been a little bit

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Speaker 6: more constructive that this would likely be the outcome, not

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Speaker 6: just like our own victory of our all over here.

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Speaker 6: But but I mean, we have in guiding clients to

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Speaker 6: the fact that there would be a resolution, just probably

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Speaker 6: not until the eleventh hour, because of course no one

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Speaker 6: has any any intented to conceive before they absolutely have to.

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Speaker 6: But this is in some ways, as you know, Joe,

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Speaker 6: this is kind of classic Washington dealmaking. You know, both

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Speaker 6: sides come away with something that they are upset about.

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Speaker 3: I wasn't sure we were capable of that anymore, though I.

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Speaker 8: Know, I know.

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Speaker 6: It's actually a little bit reassuring, isn't it. And I think,

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Speaker 6: you know, again, in regardless what your political views are,

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Speaker 6: how you feel about Super McCarthy or the White House,

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Speaker 6: I mean, I do think that they have put together

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Speaker 6: a deal here that again probably will attract the center

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Speaker 6: of both parties. So we've been again guiding clients. The

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Speaker 6: other dynamic here is that while the House Freedom Caucus

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Speaker 6: and House Progressives are upset because they don't think that

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Speaker 6: this deal goes far enough either either direction, it really

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Speaker 6: is going to be a vote that is going to

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Speaker 6: be passed by the center. And in some ways maybe

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Speaker 6: that's reassuring the folks that the center still still exists

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Speaker 6: in Washington. But yeah, there are some wins for both

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Speaker 6: sides here. I mean, the fact that they opened up

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Speaker 6: the negotiations is a win for Republicans. The fact that

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Speaker 6: they froze spending, you know, arguably maybe a win. There's

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Speaker 6: work requirement as you know on some of the food

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Speaker 6: assistant programs, and then some of his energy permitting. I get, wow,

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Speaker 6: they think goes far enough for Republicans perspectives, that's also

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Speaker 6: a win. And then for Democrats, you know, they again

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Speaker 6: they get the seal and extended for two years past

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Speaker 6: the stroy twenty four election. That's definitely a win for

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Speaker 6: President Biden. And they also had an expansion of food

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Speaker 6: assistance programs for homeless and for veterans and for some

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Speaker 6: youth folks. So you know, again, I think there's something

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Speaker 6: tangibly that both sides can kind of point to, right,

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Speaker 6: but at the same time both ads can also point

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Speaker 6: to the fact that they're upset as well.

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Speaker 1: Well.

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Speaker 3: Yeah, I like that both of these these coexist. As

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Speaker 3: you're right, the kidney stone is almost passed for days away.

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Speaker 3: And boy, you've been just so reasoned in your analysis,

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Speaker 3: and I appreciate your your steady hands through this whole

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Speaker 3: experience here, Libby, Thanks for coming back to talk to us.

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Speaker 3: Libby Cantrell, Managing Director, head of Public Policy at PIMCO.

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Speaker 1: You're listening to The Bloomberg Sound on podcast. Catch the

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Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the

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Speaker 1: tune in app, Bloomberg dot Com.

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Speaker 2: And the Bloomberg Business App.

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Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: So it's official for the governor of Florida in Iowa

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Speaker 3: at least. I'm not sure how many times you get

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Speaker 3: to relaunch your campaign, but the official Iowa launch for

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Speaker 3: Governor Ronda Santis was last night, Oho, Iowa.

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Speaker 9: Yes, it is great to be back, and it's great

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Speaker 9: for me to report that our great American comeback starts

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Speaker 9: by sending Joe Biden back to his basement in Delaware.

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Speaker 3: All Right, they love it. Now listen to the way

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Speaker 3: this is constructed. First you hit Joe Biden. He takes

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Speaker 3: two swings out.

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Speaker 10: I mean, he spends so much of his time as

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Speaker 10: president on vacation. We might as well make it permanent.

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Speaker 3: Smattering of laughter. How about Donald Trendy.

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Speaker 10: It is great to be back now. A few weeks

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Speaker 10: ago we were in state. We were not actually scheduled

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Speaker 10: to come to the Des Moines area, but before we

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Speaker 10: DeCamp back to Florida, the weather was so nice that

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Speaker 10: we felt we just had to come back. Everyone a

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Speaker 10: little bit of a visit.

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Speaker 3: Well jabbed Donald. Remember he canceled Trump canceled the rally

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Speaker 3: on a Saturday night because of tornado. Well, not warnings.

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Speaker 3: It was a watch Who's counting? And he did well

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Speaker 3: that they expired before the speech was scheduled. Did he

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Speaker 3: end up rescheduling that the Trump thing in Iowa? Have

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Speaker 3: to go back and look at that. So Ronda Santis

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Speaker 3: is going to remind everybody of that, along with the

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Speaker 3: war against Disney which he got into in the speech.

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Speaker 3: Let's reassemble the panel their take on how things went

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Speaker 3: in the great state of Iowa. Rick Davis can't wait

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Speaker 3: to be back in Iowa, especially winter time. Genie Shanzano,

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Speaker 3: I won't speak for you on this one, Jeanie, but

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Speaker 3: I know you've got a special pair of boots a

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Speaker 3: sock to way for the trip to Iowa because we're

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Speaker 3: all going to be there. The question is Rick, can

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Speaker 3: he win the state of Iowa and how much will

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Speaker 3: that matter to his chances. Well, I think that Iowa has.

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Speaker 11: An enormous potential impact on the Trump campaign. Trump is

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Speaker 11: seen as an incumbent running for re election. It's certainly

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Speaker 11: what he's tried to broadcast to the field, and so

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Speaker 11: there's an expectation that he's got to win everywhere. Right,

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Speaker 11: He's an incumbent. He served as President of United States,

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Speaker 11: and he claims he's still president, I guess in some contexts.

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Speaker 11: And so he's put a very high bar on his

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Speaker 11: own campaign. And so if you could come out of

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Speaker 11: the docks and say, look, he's going to lose the

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Speaker 11: first state. He lost it in twenty sixteen to Ted Cruz,

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Speaker 11: and there's some vulnerability being organized on the ground there.

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Speaker 11: And so yeah, it's a huge deal if you could

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Speaker 11: beat Donald Trump in Iowa and show that the Emperor

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Speaker 11: has no clothes. And I'm sure that's part of the

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Speaker 11: strategy that not just DeSantis has, but a number of

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Speaker 11: other candids who are well positioned for Iowa.

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Speaker 3: How did Ron DeSantis do last evening with all the

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Speaker 3: knocks on him as a retail of politician Genie? Is

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Speaker 3: the speech constructed well? Is it delivered well? Is it

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Speaker 3: resonating you?

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Speaker 12: Know, first of all, didn't we just do an announcement

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Speaker 12: with him on twenty I thought many times, are we

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Speaker 12: going to live through this? You know, he can only

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Speaker 12: go up at this point. In Iowa, the Emerson Pole

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Speaker 12: had Trump sixty percent and Dessanta's way down in the twenties,

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Speaker 12: So he will go up. You know, he is spending

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Speaker 12: the time, to his credit, but you know, the messages

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Speaker 12: themselves are really mind boggling. You know, this idea about

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Speaker 12: Disney's sexualizing children. He got married at Disney. People in Iowa,

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Speaker 12: even Republicans, don't wander around thinking that the thing they

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Speaker 12: want to hear most about from their presidential contenders is

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Speaker 12: a war on Disney. They still like Disney, So you know,

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Speaker 12: it's a mind boggling message, and he keeps bringing it up.

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Speaker 12: So I do think the weather, I have to say

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Speaker 12: the weather was funny. Not so much on the basement

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Speaker 12: with Biden, but that's just my view, but the weather

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Speaker 12: was funny. He is getting better, but you know, there's

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Speaker 12: a long way to go in terms of a message

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Speaker 12: that resonates with people. And in my book, Disney is

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Speaker 12: not what's on the mind of most voters.

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Speaker 3: Well, it was on his mind last night. Let's get

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Speaker 3: to the eight hundred pound mouse in the room. They

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Speaker 3: do not run the state of Florida.

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Speaker 10: I know all these Republicans are lining up against me

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Speaker 10: to take the side of Disney, but I'll tell you this,

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Speaker 10: we stand for the protection of our children. We will

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Speaker 10: fight those who seek to rob them of their innocence,

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Speaker 10: and on that point there will be no compromise.

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Speaker 3: No compromise in the war on Disney or with Disney.

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Speaker 3: Whatever this thing is. Rick, he can't turn back from

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Speaker 3: that now, ken.

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Speaker 11: He Well, it's kind of the cornerstone of his anti

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Speaker 11: wol campaign, and so everything kind of revolves around it.

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Speaker 11: It has more name I d than he's got, right,

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Speaker 11: I mean, like when he talks about Disney, he elevates

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Speaker 11: himself because everybody knows Disney and they're trying to figure out.

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Speaker 13: Who he is.

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Speaker 11: So I think his construct is that this is my

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Speaker 11: gateway to having this woke conversation, and if I have that,

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Speaker 11: I can get voters onto my ticket because I'm the

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Speaker 11: one guy who's actually done anything about this, And of

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Speaker 11: course we know how regressive his agenda has been in Florida,

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Speaker 11: you know, going after this anti woke campaign, so he's

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Speaker 11: investing heavily in it. Will it resonate with a vast

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Speaker 11: majority of the caucas goers in Iowa? And I would

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Speaker 11: just remind everybody about Iowa. Iowa is a caucus it's

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Speaker 11: not a primary state. Polls don't really reflect what a

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Speaker 11: caucas goer is going to do necessarily, And there are

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Speaker 11: thousands of people knocking on doors right now in Iowa

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Speaker 11: trying to recruit caucus goers. And it's a different kind

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Speaker 11: of campaign. So don't be too enamored with public polling

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Speaker 11: when what you really got to figure out is who's

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Speaker 11: going to show up on caucus day?

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Speaker 3: Yeah, who comes in second? He did get to Trump,

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Speaker 3: by the way, they had a little Q and A here,

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Speaker 3: remembering that Donald Trump had suggested that Andrew Cuomo did

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Speaker 3: a better job than DeSantis in handling COVID, and he did.

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Speaker 3: He did take a swing.

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Speaker 2: That's not what he used to say.

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Speaker 10: This is like new like six months ago. He would

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Speaker 10: have never said that, right. He used to say how

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Speaker 10: great Florida was. Hell, his whole family moved to Florida

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Speaker 10: under my governorship. Are you kidding me?

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Speaker 3: Are you kidding me? Genie Shanzano, Is that getting warmer

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Speaker 3: closer to what you think he needs to do to

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Speaker 3: tackle Donald Trump.

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Speaker 12: Is he kidding when he says Donald Trump is not

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Speaker 12: being honest with us? Come on, is he just doing

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Speaker 12: things to get elected himself? You know, it is closer.

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Speaker 12: He's got to take it to Trump. But you know,

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Speaker 12: there's one thing is to be anti woke. That's fine.

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Speaker 12: Another thing is to use the power of government to

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Speaker 12: you know, essentially try to school businesses and to try

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Speaker 12: to you know, really use the power of hopefully he

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Speaker 12: in his mind, the federal government to do that. That's

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Speaker 12: not what conservatism, conservativism.

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Speaker 14: Used to be.

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Speaker 12: So it's a new form. And that's why he is

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Speaker 12: polling well with educated Republican primary voters in some cases,

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Speaker 12: but not so well with many others. And so I

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Speaker 12: think he's going to have to do a lot more

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Speaker 12: to sell that message that he wants a powerful government

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Speaker 12: to tell businesses small and large what they can do

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Speaker 12: in his state and potentially in the US if he

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Speaker 12: becomes president.

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Speaker 3: Well, I suspect he's still going to need sharper elbows

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Speaker 3: to go after Donald Trump, whether or not they end

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Speaker 3: up on a debate. Stays together is another thing.

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Speaker 1: You're listening to the Bloomberg Sound on podcast Catch us

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00:20:49,720 --> 00:20:53,680
Speaker 1: live weekdays at one Eastern, Bloomberg dot com, the iHeartRadio

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Speaker 1: app and the Bloomberg Business app.

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Speaker 2: Or listen on demand wherever you get your podcasts.

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Speaker 3: You do wonder what this whole exhausting episode bringing us

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Speaker 3: to the vote to Night in the House might do

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Speaker 3: for the relationship between Joe Biden and Kevin McCarthy. They've

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Speaker 3: looked into each other's eyes, They've spent much time together

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Speaker 3: in person and on the phone, and some have wondered

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Speaker 3: if maybe we have a new Ronald Reagan Tip O'Neil

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Speaker 3: situation here. They're getting together after work talking about the kids.

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Speaker 3: Patrick McHenry, of course chairs the Financial Services Committee and

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Speaker 3: was one of the lead Republican negotiators in the deal, says,

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Speaker 3: not so.

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Speaker 15: Much better, right, But you've got two Irish guys that

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Speaker 15: don't drink, right. The bonding opportunities are not the same

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Speaker 15: for an Irish guy like me.

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Speaker 3: So just different, but that's the.

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Speaker 15: Nature of it. They both have a sweet tooth, Kevin

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Speaker 15: for desserts broadly, Biden obviously for ice cream. So you know,

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Speaker 15: it's just a different construct for them. Sitting down and talking.

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Speaker 3: It's a different construct for them because they don't drink.

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Speaker 3: Is that what's going on here? Rick Davis and Genie Shanzano,

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Speaker 3: I don't know.

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Speaker 14: Rick.

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Speaker 3: You see these guys maybe getting together, bike ride, little

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Speaker 3: ice cream. I don't know.

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Speaker 11: I like the old fashioned Ronald Reagan and Tip O'Neil

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Speaker 11: getting together with a couple of cocktails and going into

437
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Speaker 11: the night. Look, as long as they're productive, I don't

438
00:22:24,920 --> 00:22:27,520
Speaker 11: care if they love each other. Right, it's not a bromance,

439
00:22:27,600 --> 00:22:32,639
Speaker 11: but it's been productive. So I encourage more bipartisanship. If

440
00:22:32,680 --> 00:22:35,280
Speaker 11: they can do it stone cold, sober, that's great.

441
00:22:35,600 --> 00:22:38,440
Speaker 3: I guess it's gonna have to be in this case, Genie.

442
00:22:39,080 --> 00:22:41,640
Speaker 3: But you do wonder. I mean, look, it's long been

443
00:22:41,680 --> 00:22:43,520
Speaker 3: said that people made a bit much out of the

444
00:22:43,600 --> 00:22:46,359
Speaker 3: Ronald Reagan Tip O'Neil thing. You know, they weren't at

445
00:22:46,400 --> 00:22:48,679
Speaker 3: the bar every night together. Obviously, you do wonder if

446
00:22:48,720 --> 00:22:51,840
Speaker 3: these two, maybe though, have found a way to work together.

447
00:22:52,200 --> 00:22:54,640
Speaker 12: Yeah, there's a little bromance going on there. Who knows.

448
00:22:54,680 --> 00:22:57,080
Speaker 12: They may get together have a little guinness, even though

449
00:22:57,119 --> 00:23:00,359
Speaker 12: they tell us they I don't know about that. I'm irish, Irish.

450
00:23:00,440 --> 00:23:03,600
Speaker 3: I think they probably that qualifies as soft food. That's

451
00:23:03,640 --> 00:23:05,600
Speaker 3: what the speaker was going to bring to the White House, right,

452
00:23:05,880 --> 00:23:10,320
Speaker 3: That's right. Jeanie Stanzano and Rick Davis, our signature paneled.

453
00:23:10,560 --> 00:23:12,760
Speaker 3: Great conversation, guys. We learn a lot every day with

454
00:23:12,880 --> 00:23:16,159
Speaker 3: these two thanks to their insights and experience. And Kaylee

455
00:23:16,200 --> 00:23:16,959
Speaker 3: Lines joins us.

456
00:23:17,000 --> 00:23:21,520
Speaker 1: Next, you're listening to the Bloomberg Sound On podcast. Catch

457
00:23:21,600 --> 00:23:24,840
Speaker 1: us live weekdays at one Eastern on Bloomberg dot com,

458
00:23:24,880 --> 00:23:27,960
Speaker 1: the iHeartRadio app, and the Bloomberg Business app, or listen

459
00:23:28,040 --> 00:23:30,160
Speaker 1: on demand wherever you get your podcasts.

460
00:23:30,920 --> 00:23:33,320
Speaker 3: Boy, I'm Joe Matthew in Washington. We've just caught up

461
00:23:33,320 --> 00:23:36,159
Speaker 3: with Kaylee Lines, who's wired up and ready to go

462
00:23:36,280 --> 00:23:38,160
Speaker 3: as we wait for the big vote here. So we're

463
00:23:38,160 --> 00:23:41,040
Speaker 3: talking seven thirty eight o'clock tonight. Yeah, that satisfies the

464
00:23:41,080 --> 00:23:44,439
Speaker 3: seventy two hour period. You could read a ninety nine

465
00:23:44,480 --> 00:23:45,720
Speaker 3: page bill in seventy two hours.

466
00:23:45,760 --> 00:23:46,280
Speaker 14: I feel like.

467
00:23:46,640 --> 00:23:49,960
Speaker 8: I'd like to think so though. I think legislative text

468
00:23:49,960 --> 00:23:52,520
Speaker 8: is probably a little bit more desk dentse than your

469
00:23:52,520 --> 00:23:55,000
Speaker 8: average ninety nine page book or well to read.

470
00:23:55,400 --> 00:23:58,879
Speaker 3: I just wonder how many members who are railing for

471
00:23:58,960 --> 00:24:02,439
Speaker 3: better and worse on this thing, have actually read the text.

472
00:24:02,920 --> 00:24:05,720
Speaker 3: The CBO has done its work. The Congressional Budget Office

473
00:24:05,720 --> 00:24:10,160
Speaker 3: says this whole whole deal could reduce projected deficits by

474
00:24:10,160 --> 00:24:12,400
Speaker 3: one and a half trillion dollars over the next decade.

475
00:24:12,680 --> 00:24:15,600
Speaker 3: We spoke last hour with our colleague Anna Wong though Kayley,

476
00:24:15,720 --> 00:24:19,080
Speaker 3: the chief US economist here at Bloomberg, who's out with

477
00:24:19,160 --> 00:24:23,520
Speaker 3: a column that says that deal will make everyone unhappy.

478
00:24:23,560 --> 00:24:26,560
Speaker 3: Here's why. And she explains that, you know, this will

479
00:24:26,560 --> 00:24:28,880
Speaker 3: bring a short term blow to an economy already vulnerable

480
00:24:28,920 --> 00:24:31,600
Speaker 3: to a recession, and we'll eat into GDP and will

481
00:24:32,200 --> 00:24:33,960
Speaker 3: will mean the loss of about three hundred and eighty

482
00:24:34,040 --> 00:24:36,160
Speaker 3: thousand jobs, which is a number that I've not heard

483
00:24:36,240 --> 00:24:40,040
Speaker 3: yet now that we've actually negotiated a bill for passage.

484
00:24:40,560 --> 00:24:43,320
Speaker 3: That's the analysis of Bloomberg Economics.

485
00:24:43,400 --> 00:24:46,760
Speaker 8: Yeah, and that's a little bit more dire, I would say,

486
00:24:46,760 --> 00:24:48,680
Speaker 8: in the prediction of the economic costs and what we've

487
00:24:48,680 --> 00:24:51,840
Speaker 8: seen from other shops, including Moody's analytics. Mark Zandy over there,

488
00:24:51,880 --> 00:24:53,280
Speaker 8: of course, was the one who made all of the

489
00:24:53,320 --> 00:24:57,000
Speaker 8: noise when McCarthy first introduced his bill, the Limit Say

490
00:24:57,080 --> 00:25:00,919
Speaker 8: Grow Act, talking about how it could be three quarters

491
00:25:00,920 --> 00:25:03,159
Speaker 8: of a million jobs and a big hit to GDP,

492
00:25:03,320 --> 00:25:06,240
Speaker 8: and even now says he thinks that the ultimate deal

493
00:25:06,320 --> 00:25:09,840
Speaker 8: is manageable. And you have JP Morgan and Goldman Sachs

494
00:25:09,880 --> 00:25:11,720
Speaker 8: saying that it's really just going to be a modest

495
00:25:11,720 --> 00:25:16,080
Speaker 8: impact on growth, very little macroeconomic impact. Obviously, Bloomberg Economics

496
00:25:16,119 --> 00:25:17,720
Speaker 8: thinks it'll be a little bit more than mild. I

497
00:25:17,720 --> 00:25:20,600
Speaker 8: would also note Joe that in this research Anaalong points

498
00:25:20,640 --> 00:25:23,639
Speaker 8: out that they think that the debt to GDP ratio

499
00:25:23,720 --> 00:25:25,679
Speaker 8: is going to climb to one hundred and seventeen percent

500
00:25:26,119 --> 00:25:29,000
Speaker 8: by twenty thirty three. They actually see upside to the

501
00:25:29,040 --> 00:25:30,720
Speaker 8: CBO's on production projections.

502
00:25:31,119 --> 00:25:33,480
Speaker 3: I'd love to hear what Douglas Holtzikin has to say

503
00:25:33,480 --> 00:25:36,280
Speaker 3: about this, the president of the American Action Forum was

504
00:25:36,280 --> 00:25:40,400
Speaker 3: at one time director of the aforementioned CBO, the Congressional

505
00:25:40,440 --> 00:25:43,120
Speaker 3: Budget Office. Doug, it's great to have you back now

506
00:25:43,119 --> 00:25:45,960
Speaker 3: that we have a bill in hand. I assume you

507
00:25:46,080 --> 00:25:48,320
Speaker 3: do see this passing the House. Do you agree with

508
00:25:48,359 --> 00:25:51,520
Speaker 3: the take though that this is essentially going to have

509
00:25:51,680 --> 00:25:54,840
Speaker 3: zero impact on debt or any of the issues that

510
00:25:54,880 --> 00:25:57,120
Speaker 3: they were arguing about for the last several months.

511
00:25:58,800 --> 00:26:01,720
Speaker 16: I think the greatest accomplished is that it will pass

512
00:26:01,760 --> 00:26:04,720
Speaker 16: the House the Senate and suspended that ceiling until early

513
00:26:04,800 --> 00:26:07,879
Speaker 16: twenty twenty five. And that's what needed to be done.

514
00:26:08,359 --> 00:26:10,720
Speaker 16: The price of getting it done was to have a

515
00:26:10,840 --> 00:26:14,240
Speaker 16: debate over fiscal issues and some policy writers in the bill,

516
00:26:14,680 --> 00:26:17,680
Speaker 16: but they're pretty inconsequential in the bigger picture. They don't

517
00:26:17,760 --> 00:26:20,320
Speaker 16: change the physical trajectory a bit, and I don't think

518
00:26:20,320 --> 00:26:23,240
Speaker 16: they changed the economic trajectory a bit. I'm really I

519
00:26:23,280 --> 00:26:27,040
Speaker 16: think compared to other headlindsay economy faces this is not

520
00:26:27,119 --> 00:26:32,040
Speaker 16: great news. So you know, good news is that we

521
00:26:32,119 --> 00:26:34,399
Speaker 16: took the threat to fall off the table and the

522
00:26:34,400 --> 00:26:37,639
Speaker 16: financial disruption that comes with it, and now we have

523
00:26:37,720 --> 00:26:39,439
Speaker 16: some real work to do on the fiscal front. I

524
00:26:39,440 --> 00:26:41,080
Speaker 16: think that's the right takeaway.

525
00:26:41,680 --> 00:26:44,280
Speaker 8: So basically, the idea is that it's good news in

526
00:26:44,320 --> 00:26:46,600
Speaker 8: the near term, but not necessarily good news in the

527
00:26:46,640 --> 00:26:48,320
Speaker 8: long term. And I just wonder how we get to

528
00:26:48,400 --> 00:26:50,480
Speaker 8: a good news in the long term place. If it's

529
00:26:50,480 --> 00:26:54,239
Speaker 8: not going to be through difficult conversations and negotiations like this,

530
00:26:54,320 --> 00:26:56,919
Speaker 8: are we ever going to get better in terms of

531
00:26:56,920 --> 00:26:57,800
Speaker 8: our fiscal health.

532
00:26:58,560 --> 00:27:01,359
Speaker 16: I would love to have a clean answer to that question.

533
00:27:01,560 --> 00:27:05,080
Speaker 16: But I've asked that question myself and to others every

534
00:27:05,200 --> 00:27:08,200
Speaker 16: day for twenty years without any great success, to be honest.

535
00:27:08,280 --> 00:27:12,879
Speaker 16: So what we know is that the real money is

536
00:27:12,920 --> 00:27:16,280
Speaker 16: in the entitlement programs. We're going to spend eighty trillion

537
00:27:16,280 --> 00:27:19,359
Speaker 16: dollars over the next ten years, and fifty trillion of

538
00:27:19,400 --> 00:27:24,440
Speaker 16: it is in mandatory spending the discretionary accounts. The things

539
00:27:24,480 --> 00:27:27,240
Speaker 16: affected by this dealer are tiny by comparison, not really

540
00:27:27,320 --> 00:27:30,280
Speaker 16: where the rapid growth is. So security grows at seven

541
00:27:30,320 --> 00:27:32,639
Speaker 16: percent a year, we don't have any revenute sources that

542
00:27:32,680 --> 00:27:33,240
Speaker 16: are going to grow.

543
00:27:33,280 --> 00:27:33,760
Speaker 13: That's fast.

544
00:27:34,040 --> 00:27:36,200
Speaker 16: Medicare grows, it's a little over six percent a year.

545
00:27:36,520 --> 00:27:39,240
Speaker 16: Same story there. So those are things that have to

546
00:27:39,280 --> 00:27:41,359
Speaker 16: deal with. They're the ones that are off the table

547
00:27:41,359 --> 00:27:44,360
Speaker 16: at the moment. But if you think about the way

548
00:27:44,520 --> 00:27:49,199
Speaker 16: this deal plays out, it says on January second, the

549
00:27:49,240 --> 00:27:52,400
Speaker 16: death suspension goes away in twenty twenty five, and suddenly

550
00:27:52,440 --> 00:27:56,439
Speaker 16: we're up against the deadlimit. Every contender for the presidency

551
00:27:56,600 --> 00:27:58,680
Speaker 16: is going to have to explain what will they do

552
00:27:58,840 --> 00:28:01,719
Speaker 16: when they take office on ten twenty first, because we

553
00:28:01,800 --> 00:28:04,320
Speaker 16: will be in exactive the position with fine ourselves right

554
00:28:04,320 --> 00:28:06,600
Speaker 16: now when they take office. They will have to have

555
00:28:06,640 --> 00:28:08,840
Speaker 16: a plan. That plan will have to take on these

556
00:28:08,880 --> 00:28:11,399
Speaker 16: big discal issues, and I think that's the important the

557
00:28:11,440 --> 00:28:13,080
Speaker 16: debate for the country to have.

558
00:28:13,520 --> 00:28:15,399
Speaker 3: Well, I just find it interesting the whole case for

559
00:28:15,560 --> 00:28:19,000
Speaker 3: keeping the debt ceiling where it is, for having a

560
00:28:19,040 --> 00:28:22,040
Speaker 3: debt ceiling, as opposed to those like Chris van Holland

561
00:28:22,040 --> 00:28:25,760
Speaker 3: who actually wrote legislation to eliminate the debt ceiling. They

562
00:28:25,800 --> 00:28:28,760
Speaker 3: said the whole point was to stop people down and

563
00:28:28,840 --> 00:28:32,600
Speaker 3: have a conversation about reforming the budget. This is the

564
00:28:32,640 --> 00:28:34,760
Speaker 3: only way we're going to keep spending from going out

565
00:28:34,800 --> 00:28:37,200
Speaker 3: of control. To limit the debt is having this debt ceiling.

566
00:28:37,200 --> 00:28:40,000
Speaker 3: And here we are doug a couple of days after

567
00:28:40,040 --> 00:28:42,040
Speaker 3: the deal is struck, and there's not much to show

568
00:28:42,080 --> 00:28:42,320
Speaker 3: for it.

569
00:28:44,200 --> 00:28:48,120
Speaker 16: We have done this in every way through the course

570
00:28:48,160 --> 00:28:51,240
Speaker 16: of history. We've done a clean debt, limited increases sensions,

571
00:28:51,280 --> 00:28:56,400
Speaker 16: We've done policy riders and bold Simpsons commissions, and none

572
00:28:56,440 --> 00:28:58,200
Speaker 16: of it has produced a difference in the outcome. The

573
00:28:58,240 --> 00:29:01,960
Speaker 16: outcome has been ever debt, even relative to the economy.

574
00:29:02,040 --> 00:29:04,640
Speaker 16: So I don't think this is the mechanism that's going

575
00:29:04,680 --> 00:29:07,000
Speaker 16: to solve our problems. I think that the mechanism is

576
00:29:07,040 --> 00:29:09,320
Speaker 16: going to be the American people are going to elect

577
00:29:09,360 --> 00:29:11,840
Speaker 16: people who will come to Washington to deal with it

578
00:29:11,960 --> 00:29:14,400
Speaker 16: or they won't, And if they don't, we'll have real

579
00:29:14,480 --> 00:29:17,720
Speaker 16: serious economic turmoil. And if they do, they will face

580
00:29:17,800 --> 00:29:20,760
Speaker 16: tough decisions, but the people will support them because they

581
00:29:20,800 --> 00:29:22,400
Speaker 16: elected them to do it. I don't think there's any

582
00:29:22,400 --> 00:29:24,760
Speaker 16: other way. There's no magic is definitely, that's for sure.

583
00:29:25,000 --> 00:29:27,080
Speaker 3: Well, it makes you wonder, Kayley, if this conversation needs

584
00:29:27,200 --> 00:29:28,680
Speaker 3: I mean, is it time to bring this up again?

585
00:29:28,720 --> 00:29:30,720
Speaker 3: For everyone who said, no, we need this debt limit,

586
00:29:31,120 --> 00:29:34,000
Speaker 3: it's the only way, and then we have maybe we

587
00:29:34,040 --> 00:29:36,440
Speaker 3: should be eliminating the debt ceiling or reforming it to

588
00:29:36,800 --> 00:29:38,040
Speaker 3: coincide with the fiscal year.

589
00:29:38,120 --> 00:29:40,920
Speaker 8: Yeah, I mean. Peter or Zach, who's the incoming CEO

590
00:29:41,000 --> 00:29:43,920
Speaker 8: of Lizard, was speaking on Bloomberg Television earlier and he

591
00:29:44,000 --> 00:29:46,640
Speaker 8: basically said, for everyone that says that the debt limit,

592
00:29:47,360 --> 00:29:50,640
Speaker 8: you know, helps constrain things fiscally, he just doesn't actually

593
00:29:50,680 --> 00:29:53,240
Speaker 8: think that that's that's true at all, which is obviously

594
00:29:53,240 --> 00:29:55,520
Speaker 8: part of an ongoing conversation. But as we kind of

595
00:29:55,560 --> 00:30:01,360
Speaker 8: talk about the fiscal unsustainability, Douglas of the US is trajectory.

596
00:30:01,440 --> 00:30:03,920
Speaker 8: It makes me wonder if we do deserve a triple

597
00:30:03,920 --> 00:30:05,760
Speaker 8: A credit reading. I mean, we've talked at length about

598
00:30:05,800 --> 00:30:08,280
Speaker 8: what happened in twenty eleven, how S and P global.

599
00:30:09,320 --> 00:30:12,120
Speaker 8: It was really just the trajectory of spending in the

600
00:30:12,120 --> 00:30:14,800
Speaker 8: fiscal picture that ultimately resulted in the downgrade because we

601
00:30:15,360 --> 00:30:18,880
Speaker 8: had already seen the deal happen. And I just wonder,

602
00:30:19,000 --> 00:30:21,840
Speaker 8: as Fitch is saying, you know, warning, putting us on

603
00:30:22,120 --> 00:30:24,240
Speaker 8: ratings to watch negative last week, saying that it would

604
00:30:24,240 --> 00:30:27,719
Speaker 8: be really a default that causes them to downgrade, doesn't

605
00:30:27,720 --> 00:30:31,880
Speaker 8: this trajectory and just the political difficulty around getting the

606
00:30:31,920 --> 00:30:34,520
Speaker 8: dead ceiling raised every time indicate that maybe we aren't

607
00:30:34,520 --> 00:30:38,560
Speaker 8: that credit worthy. Yeah, I'm totally playing Devil's advocate here.

608
00:30:38,560 --> 00:30:40,400
Speaker 8: By the way, this isn't actually market.

609
00:30:44,200 --> 00:30:46,880
Speaker 16: I'm with you, Kyle. I don't have anything really good

610
00:30:46,880 --> 00:30:50,120
Speaker 16: to say about our federal fiscal management period. I don't

611
00:30:50,240 --> 00:30:53,280
Speaker 16: there's nothing good to say. I will simply point out

612
00:30:53,440 --> 00:30:56,520
Speaker 16: that in economics everything is relative, and as it turns out,

613
00:30:56,560 --> 00:30:58,760
Speaker 16: where the best looking horse in the world glue factory,

614
00:30:58,760 --> 00:31:00,760
Speaker 16: and the money comes here when there's a So.

615
00:31:01,080 --> 00:31:02,160
Speaker 13: That's how we survived.

616
00:31:02,720 --> 00:31:08,560
Speaker 3: Wow, the best looking horse in the glue factory. Okay,

617
00:31:08,720 --> 00:31:11,120
Speaker 3: So but are we are we good with where we

618
00:31:11,200 --> 00:31:14,720
Speaker 3: stand now in terms of a potential downgrade that that

619
00:31:14,760 --> 00:31:18,200
Speaker 3: doesn't come in the next twenty four hours or something

620
00:31:18,200 --> 00:31:19,560
Speaker 3: when there's a blow up in the Senate?

621
00:31:19,600 --> 00:31:19,840
Speaker 1: Does it?

622
00:31:19,880 --> 00:31:20,080
Speaker 14: Doug?

623
00:31:21,000 --> 00:31:24,280
Speaker 16: So, if we prove unable to get this through, and

624
00:31:24,320 --> 00:31:26,800
Speaker 16: I really don't think that's the case, and I know

625
00:31:26,920 --> 00:31:29,200
Speaker 16: I could talk about that why But if we don't

626
00:31:29,200 --> 00:31:32,200
Speaker 16: get this through, we will have proven we cannot manage

627
00:31:32,240 --> 00:31:34,800
Speaker 16: our finances and we'll get downgrades from the Rady Agent.

628
00:31:34,880 --> 00:31:38,120
Speaker 16: I think there's a question about that. We're skating on

629
00:31:38,160 --> 00:31:43,080
Speaker 16: the edge as it is, so I really I think

630
00:31:43,160 --> 00:31:46,560
Speaker 16: the public has to get passed just the rating agencies,

631
00:31:46,600 --> 00:31:48,960
Speaker 16: and they have to get passed the debt and start

632
00:31:48,960 --> 00:31:52,440
Speaker 16: thinking about questions like, well, why are we issuing so

633
00:31:52,520 --> 00:31:54,880
Speaker 16: much that? Well, clearly it's to get money into the government.

634
00:31:54,920 --> 00:31:57,040
Speaker 16: But we put take money out of the private sector

635
00:31:57,400 --> 00:32:00,200
Speaker 16: and put it into a really good government investment that

636
00:32:00,320 --> 00:32:02,480
Speaker 16: makes we lose about half the rate of return. So

637
00:32:02,560 --> 00:32:04,560
Speaker 16: for every dollar we're doing that way, we're giving up

638
00:32:04,640 --> 00:32:08,160
Speaker 16: future productivity, future stand on living, you know, basically our

639
00:32:08,200 --> 00:32:11,479
Speaker 16: economic prospects. And we don't invest very much in the government.

640
00:32:11,520 --> 00:32:13,840
Speaker 16: Mostly we take the money from the private sector and

641
00:32:14,000 --> 00:32:16,400
Speaker 16: hand it out so people can consume it and live better.

642
00:32:16,480 --> 00:32:21,600
Speaker 16: And that's a zero growth proposition. So the federal budget

643
00:32:21,680 --> 00:32:24,040
Speaker 16: and the big death that we're seeing really are just

644
00:32:24,040 --> 00:32:27,120
Speaker 16: a reminder that this is the biggest headwind sustained rise

645
00:32:27,160 --> 00:32:29,720
Speaker 16: and prosperity that we have, and perhaps you got to

646
00:32:29,720 --> 00:32:31,880
Speaker 16: think about, you know, sort of having pure headwinds because

647
00:32:32,120 --> 00:32:33,760
Speaker 16: the next generation deserves a break.

648
00:32:35,160 --> 00:32:37,240
Speaker 8: Well, as we talk about all these fiscal questions, I

649
00:32:37,240 --> 00:32:41,120
Speaker 8: also wonder what bearing monetary policy has on this conversation,

650
00:32:41,160 --> 00:32:44,360
Speaker 8: because when we're talking about interest and higher interest on

651
00:32:44,400 --> 00:32:47,680
Speaker 8: the government's stats, we're talking about where rates are right

652
00:32:47,720 --> 00:32:50,400
Speaker 8: and we're still having a live conversation about whether or

653
00:32:50,440 --> 00:32:52,040
Speaker 8: not the FED is going to hike again in June

654
00:32:52,120 --> 00:32:54,560
Speaker 8: or maybe in July if they skip June. I mean,

655
00:32:54,560 --> 00:32:58,640
Speaker 8: what responsibility do the monetary policy makers have to help

656
00:32:58,680 --> 00:32:59,600
Speaker 8: out in this regard?

657
00:33:01,040 --> 00:33:03,800
Speaker 16: Well, I think they that we need to go back

658
00:33:03,800 --> 00:33:06,120
Speaker 16: to something we did pretty well in the nineties. In

659
00:33:06,200 --> 00:33:09,640
Speaker 16: the nineties, after Volk retained inflation in the early eighties

660
00:33:09,680 --> 00:33:13,880
Speaker 16: and after the Regular Revolution sort of sort of settled

661
00:33:13,880 --> 00:33:15,760
Speaker 16: where we were going to be on tax policy and

662
00:33:15,800 --> 00:33:18,720
Speaker 16: then the scale of government. We pretty much let the

663
00:33:18,760 --> 00:33:21,240
Speaker 16: FED take care of near term business cycle fluctuations and

664
00:33:21,320 --> 00:33:24,040
Speaker 16: we set fiscal policy for long term growth. And it

665
00:33:24,080 --> 00:33:26,760
Speaker 16: worked pretty well. We had pretty rapid growth in the

666
00:33:26,840 --> 00:33:30,800
Speaker 16: nineties and we had relatively contained inflation, and then we

667
00:33:30,880 --> 00:33:32,840
Speaker 16: sort of lost our way. We started having lots of

668
00:33:32,880 --> 00:33:37,240
Speaker 16: discretionary fiscal policy, tax tests and you know, pay all

669
00:33:37,240 --> 00:33:40,320
Speaker 16: tax suspensions, and we spent like matt on occasion, and

670
00:33:40,680 --> 00:33:43,320
Speaker 16: that Fed, you know, zero interest rates for a long

671
00:33:43,320 --> 00:33:47,400
Speaker 16: long time and quantitative easing, and I think, I think,

672
00:33:47,560 --> 00:33:49,880
Speaker 16: you know, it's time to get back to to sort

673
00:33:49,880 --> 00:33:52,520
Speaker 16: of basics on both fronts. And so the FED needs

674
00:33:52,560 --> 00:33:54,920
Speaker 16: to take care of the inflation. The Commerce needs to

675
00:33:54,920 --> 00:33:56,840
Speaker 16: think about the long run fiscal policy and make it

676
00:33:56,880 --> 00:33:59,800
Speaker 16: add up, and that would be best for the overall

677
00:33:59,800 --> 00:34:00,800
Speaker 16: for almost an economy.

678
00:34:02,040 --> 00:34:06,280
Speaker 3: Remember the super committee, I don't I don't mean to

679
00:34:06,320 --> 00:34:08,360
Speaker 3: give you a facial tick here. This is the fiscal

680
00:34:08,360 --> 00:34:12,800
Speaker 3: cliff supercommittee that led to the sequester. Couldn't figure out anything,

681
00:34:13,160 --> 00:34:15,560
Speaker 3: and there were a lot of calls this time Doug

682
00:34:15,600 --> 00:34:18,200
Speaker 3: to have some sort of commission, a blue ribbon panel,

683
00:34:18,400 --> 00:34:21,399
Speaker 3: some kind of a select Committee to tackle this once

684
00:34:21,480 --> 00:34:24,200
Speaker 3: and for all. But people have very short memories, don't they.

685
00:34:25,600 --> 00:34:28,760
Speaker 16: They do, but believe it or not, today Speaker McCarthy

686
00:34:28,760 --> 00:34:29,760
Speaker 16: floated that very idea.

687
00:34:29,800 --> 00:34:31,000
Speaker 3: He did, Yes, he did.

688
00:34:31,719 --> 00:34:35,640
Speaker 16: Here we go Bowl Simpson all over again. So that

689
00:34:35,760 --> 00:34:41,400
Speaker 16: was a fine college graduate course in fiscal policy. But

690
00:34:41,400 --> 00:34:45,279
Speaker 16: it didn't prove specially a law. So you know, the

691
00:34:45,600 --> 00:34:48,000
Speaker 16: lawmakers have to deal with this. And the idea that

692
00:34:48,000 --> 00:34:50,120
Speaker 16: they can hand it to someone else and they'll accept

693
00:34:50,160 --> 00:34:53,200
Speaker 16: the solution that comes back is I think really unrealistic.

694
00:34:54,239 --> 00:34:56,360
Speaker 16: I was on the Financial Crisis Inquiry Commission. If you

695
00:34:56,400 --> 00:35:01,279
Speaker 16: remember that, it spent two years accomplishing essentially nothing, and

696
00:35:01,360 --> 00:35:04,319
Speaker 16: so I'm not a big fan of commissions. There are

697
00:35:04,440 --> 00:35:07,120
Speaker 16: only a couple in our history that made a difference.

698
00:35:07,239 --> 00:35:10,759
Speaker 16: So security wants nine to eleven commission. That's about it.

699
00:35:10,840 --> 00:35:11,319
Speaker 2: That's right.

700
00:35:11,840 --> 00:35:13,920
Speaker 3: Did you show up for work every day thinking like, oh,

701
00:35:13,960 --> 00:35:15,239
Speaker 3: you know what, this is the day we're going to

702
00:35:15,280 --> 00:35:16,560
Speaker 3: break through? Or was it TV?

703
00:35:17,960 --> 00:35:18,760
Speaker 13: Oh it's horrible.

704
00:35:19,320 --> 00:35:21,560
Speaker 16: It was one of the worst experiences of my life.

705
00:35:24,480 --> 00:35:25,800
Speaker 3: Okay, so a good idea.

706
00:35:28,760 --> 00:35:31,880
Speaker 16: I mean, we were tasked by the Congress and sign

707
00:35:31,920 --> 00:35:34,040
Speaker 16: into law to explain to American people what happened and

708
00:35:34,080 --> 00:35:36,920
Speaker 16: we didn't do it, That has to constant of failure.

709
00:35:38,040 --> 00:35:41,560
Speaker 16: So you know, let's let's try another route to solving

710
00:35:41,560 --> 00:35:42,959
Speaker 16: our big fiscal problems.

711
00:35:42,760 --> 00:35:47,280
Speaker 8: Here as we talk about problems, Doug, Obviously we've talked about,

712
00:35:47,320 --> 00:35:50,160
Speaker 8: you know, the consequences of not passing the bill of

713
00:35:50,200 --> 00:35:53,319
Speaker 8: defaulting would be severe, the consequences of in the longer term,

714
00:35:53,360 --> 00:35:55,120
Speaker 8: the debt of the United States as well. But in

715
00:35:55,160 --> 00:35:57,480
Speaker 8: the near term, if we're talking about debt ceiling being

716
00:35:57,520 --> 00:36:00,759
Speaker 8: lifted and the Treasury suddenly being free to refill its

717
00:36:00,840 --> 00:36:03,920
Speaker 8: coffers and do so aggressively quickly and issue a ton

718
00:36:03,960 --> 00:36:06,320
Speaker 8: of debt, how worried should we be about the liquidity

719
00:36:06,360 --> 00:36:07,680
Speaker 8: issues that could result from that.

720
00:36:09,480 --> 00:36:12,160
Speaker 16: I think that they should be on everyone's radar, But

721
00:36:12,200 --> 00:36:15,640
Speaker 16: I don't think they're destined to give us an enormous problem.

722
00:36:15,760 --> 00:36:20,000
Speaker 16: That these are financial pressures that the Fed was going

723
00:36:20,040 --> 00:36:21,960
Speaker 16: to have to produce on its own. It will now

724
00:36:22,120 --> 00:36:26,520
Speaker 16: be relieved of some of that. It has already undertake

725
00:36:26,600 --> 00:36:29,120
Speaker 16: some liquidity provision when the regional banks.

726
00:36:28,800 --> 00:36:29,400
Speaker 7: Had some trouble.

727
00:36:29,400 --> 00:36:31,319
Speaker 16: It's going to watch and see if it needs to

728
00:36:31,320 --> 00:36:35,080
Speaker 16: continue to do that. And it has essentially decided that

729
00:36:35,680 --> 00:36:38,280
Speaker 16: the rates are going to be dedicated to fighting inflation

730
00:36:38,560 --> 00:36:42,600
Speaker 16: and the portfolio draw down we paused in the time.

731
00:36:42,640 --> 00:36:45,360
Speaker 16: We have liquidity challenges, so that shows up in the

732
00:36:45,360 --> 00:36:47,200
Speaker 16: second half of this year. I think I can probably

733
00:36:47,200 --> 00:36:47,600
Speaker 16: take care of.

734
00:36:49,040 --> 00:36:51,520
Speaker 3: I'd love to discuss always with Douglas Holtzegen. Does this

735
00:36:51,600 --> 00:36:53,719
Speaker 3: sail through the House and the Senate? Doug, before we

736
00:36:53,840 --> 00:36:54,160
Speaker 3: let you.

737
00:36:54,120 --> 00:36:58,160
Speaker 16: Go, Yeah, the House is a lock because this is

738
00:36:58,160 --> 00:36:59,920
Speaker 16: all they're going to do. So if you're a republic

739
00:37:00,360 --> 00:37:01,960
Speaker 16: what are you going to run for reelection on? Well,

740
00:37:02,000 --> 00:37:04,120
Speaker 16: this is it. Nothing else is going to come out

741
00:37:04,120 --> 00:37:05,360
Speaker 16: of that House and get through the Senate.

742
00:37:05,480 --> 00:37:07,520
Speaker 3: So some of those numbers are going to run on

743
00:37:07,600 --> 00:37:08,640
Speaker 3: the fact that they voted no.

744
00:37:09,600 --> 00:37:12,760
Speaker 16: Absolutely, but the rest need to say we did something

745
00:37:12,800 --> 00:37:15,879
Speaker 16: and this is it. And the Senate has always been

746
00:37:15,880 --> 00:37:18,920
Speaker 16: a place of greater reason. No one's going to like it,

747
00:37:18,920 --> 00:37:20,960
Speaker 16: and you're gonna hear a lot of complaining from both sides,

748
00:37:21,000 --> 00:37:24,480
Speaker 16: but that's the nature of these bills. No one loves them.

749
00:37:24,680 --> 00:37:27,640
Speaker 16: They're ugly step children, but they get done and.

750
00:37:27,640 --> 00:37:30,319
Speaker 3: We avoided default to your initial point, Douglas, whole see

751
00:37:30,320 --> 00:37:32,240
Speaker 3: can always great to talk the President of the American

752
00:37:32,239 --> 00:37:34,719
Speaker 3: Action Forum. Used to be the director of the CBO,

753
00:37:36,480 --> 00:37:38,960
Speaker 3: and I'm thinking we're not going to have another super committee.

754
00:37:39,640 --> 00:37:41,160
Speaker 3: I'm Joe Matthew with Katie Lines.

755
00:37:45,480 --> 00:37:48,840
Speaker 1: You're listening to The Bloomberg Sound on podcast. Catch the

756
00:37:48,880 --> 00:37:52,759
Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the

757
00:37:52,800 --> 00:37:55,000
Speaker 1: tune in alf Bloomberg dot Com.

758
00:37:54,680 --> 00:37:56,160
Speaker 2: And the Bloomberg Business App.

759
00:37:56,280 --> 00:37:59,160
Speaker 1: You can also listen live on Amazon Alexa from our

760
00:37:59,160 --> 00:38:03,240
Speaker 1: flagship New York. Just say Alexa, play Bloomberg eleven.

761
00:38:05,760 --> 00:38:08,120
Speaker 8: Well, it does seem, Joe, that there are at least

762
00:38:08,719 --> 00:38:11,480
Speaker 8: a handful of Republicans who have been very vocal in

763
00:38:11,600 --> 00:38:14,279
Speaker 8: advocating for this deal. And one of them who has

764
00:38:14,320 --> 00:38:18,399
Speaker 8: been quite vocal when it comes to projecting positivity around

765
00:38:18,440 --> 00:38:21,200
Speaker 8: this agreement on Twitter is Congressman Carlos Temenez, who is

766
00:38:21,280 --> 00:38:23,600
Speaker 8: joining us now on the phone from here in Washington.

767
00:38:23,600 --> 00:38:26,719
Speaker 8: He is a Republican from Florida. Congressman, thank you so

768
00:38:26,800 --> 00:38:29,680
Speaker 8: much for being with us. Just judging by your language

769
00:38:29,680 --> 00:38:31,840
Speaker 8: around this bill, I'm guessing you are a yes vote tonight.

770
00:38:32,760 --> 00:38:33,520
Speaker 7: Yes?

771
00:38:34,160 --> 00:38:36,920
Speaker 8: And how many of your Republican colleagues do you expect

772
00:38:36,960 --> 00:38:38,319
Speaker 8: to be in line with you on that?

773
00:38:39,239 --> 00:38:42,320
Speaker 7: I expect the majority of the conference are compence to

774
00:38:42,440 --> 00:38:45,200
Speaker 7: be as I would be surprised if or not. But

775
00:38:45,320 --> 00:38:48,439
Speaker 7: I look from what I'm hearing, from what I saw

776
00:38:48,520 --> 00:38:51,360
Speaker 7: last night, there are a number there are going to

777
00:38:51,360 --> 00:38:55,120
Speaker 7: be no than mostly Freedom Caucus folks. But remember the

778
00:38:55,160 --> 00:38:58,920
Speaker 7: Freedom Caucus. I believe he has forty fifty members and

779
00:38:58,960 --> 00:39:01,799
Speaker 7: not even all of them are going to be voting no.

780
00:39:01,880 --> 00:39:05,239
Speaker 7: Now there are some other Republicans from other caucuses that

781
00:39:05,280 --> 00:39:07,840
Speaker 7: may be voting no. But I expect this to have

782
00:39:07,880 --> 00:39:09,480
Speaker 7: a majority of the majority.

783
00:39:10,840 --> 00:39:12,799
Speaker 3: Are you concerned, Congressman, or is it bother you that

784
00:39:12,840 --> 00:39:16,319
Speaker 3: this does not have the significant budget cuts that were

785
00:39:16,360 --> 00:39:18,959
Speaker 3: in the original bill that Republicans passed in the House.

786
00:39:19,840 --> 00:39:23,160
Speaker 7: No, no, no, no, Look it's how you look at things.

787
00:39:23,200 --> 00:39:25,440
Speaker 7: And so you know, the President Biden said that he

788
00:39:25,480 --> 00:39:28,160
Speaker 7: was not going to negotiate, period, Just give me a

789
00:39:28,200 --> 00:39:33,279
Speaker 7: clean you know, debt ceiling increase and we're good to go.

790
00:39:33,440 --> 00:39:35,480
Speaker 7: Well that's not what happened, So he had to negotiate.

791
00:39:36,040 --> 00:39:37,799
Speaker 7: We always knew that it was never going to be

792
00:39:37,840 --> 00:39:40,680
Speaker 7: that number that we passed. Because we're negotiating. We only

793
00:39:40,719 --> 00:39:45,080
Speaker 7: control one half of one third of government.

794
00:39:45,640 --> 00:39:46,760
Speaker 13: We don't control all government.

795
00:39:46,800 --> 00:39:49,000
Speaker 7: We don't control the presidency. We don't control the Senate,

796
00:39:49,080 --> 00:39:52,600
Speaker 7: and so if we had controlled the presidency in the Senate,

797
00:39:52,680 --> 00:39:54,600
Speaker 7: then we would have had steeper cuts, we would have

798
00:39:54,640 --> 00:39:58,520
Speaker 7: had policy changes, et cetera. But that's not the case.

799
00:39:58,520 --> 00:40:00,439
Speaker 7: So you have to live with reality. I can say

800
00:40:00,480 --> 00:40:03,160
Speaker 7: this a win, and that the President said he was

801
00:40:03,239 --> 00:40:06,040
Speaker 7: never going to negotiate, Well, he negotiated, and we got

802
00:40:06,040 --> 00:40:09,400
Speaker 7: two trillion dollars worth of a reduction in the in

803
00:40:09,480 --> 00:40:15,840
Speaker 7: future debt, we have significant changes, and the permitting processes

804
00:40:15,920 --> 00:40:19,440
Speaker 7: here in the United States is going to accelerate infrastructure projects,

805
00:40:19,480 --> 00:40:23,759
Speaker 7: pipelines and the and the grid, which is so necessary

806
00:40:23,800 --> 00:40:26,600
Speaker 7: for the Green New Deals kind of stuff. But that's

807
00:40:26,640 --> 00:40:29,759
Speaker 7: part of negotiations. And so i'm i'm I'm okay with

808
00:40:29,800 --> 00:40:33,080
Speaker 7: what happened. Am I one hundred percent happy? Nope? But

809
00:40:33,280 --> 00:40:35,439
Speaker 7: I don't think the President is one hundred percent happy either,

810
00:40:35,520 --> 00:40:38,000
Speaker 7: And so that is an indication to me that it's

811
00:40:38,040 --> 00:40:40,000
Speaker 7: probably a good deal. And it's about as good a

812
00:40:40,000 --> 00:40:42,120
Speaker 7: deal as you're going to get when you only control

813
00:40:42,200 --> 00:40:43,720
Speaker 7: one half and one through the government.

814
00:40:44,920 --> 00:40:47,520
Speaker 8: So if you were grounded in reality, that compromise was

815
00:40:47,520 --> 00:40:50,879
Speaker 8: going to need to be made. Congressman, that's one thing.

816
00:40:50,880 --> 00:40:54,120
Speaker 8: But I wonder how the mismatch and expectations versus reality

817
00:40:54,120 --> 00:40:55,840
Speaker 8: may have actually played out. When you looked at the

818
00:40:56,440 --> 00:40:59,280
Speaker 8: CBO report that came out last night on work requirements

819
00:40:59,320 --> 00:41:03,320
Speaker 8: for snap Benefit, for example, it will actually increase spending

820
00:41:03,560 --> 00:41:05,600
Speaker 8: for that program, I would guess that that wasn't what

821
00:41:05,719 --> 00:41:07,240
Speaker 8: was supposed to happen.

822
00:41:08,280 --> 00:41:11,160
Speaker 7: Well, I've spoken actually the people that have been on

823
00:41:11,200 --> 00:41:13,719
Speaker 7: the ground, and there's one congressman that actually ran that

824
00:41:13,800 --> 00:41:17,239
Speaker 7: program for a county in New York, and he's saying that, no,

825
00:41:17,360 --> 00:41:21,080
Speaker 7: the CBO has it wrong. This will decrease the participation.

826
00:41:21,160 --> 00:41:23,479
Speaker 7: That will decrease you know, the number look the top

827
00:41:23,600 --> 00:41:30,240
Speaker 7: the top line number is lower. The savings there are real,

828
00:41:30,920 --> 00:41:34,520
Speaker 7: and so the CBO has been known to miscalculate plenty

829
00:41:34,520 --> 00:41:36,840
Speaker 7: of times. So I'm going to believe the person that

830
00:41:36,880 --> 00:41:39,520
Speaker 7: actually ran that program on the ground in New York

831
00:41:40,160 --> 00:41:44,240
Speaker 7: versus what a couple of bureaucrats here in Washington are saying.

832
00:41:46,000 --> 00:41:48,879
Speaker 3: So, Congressman, what's it going to look like in the

833
00:41:49,000 --> 00:41:51,640
Speaker 3: vote count this evening? Do you have a sense of

834
00:41:51,640 --> 00:41:54,200
Speaker 3: what where the whip count stands at this point, how

835
00:41:54,239 --> 00:41:56,240
Speaker 3: many Republicans will vote yes?

836
00:41:56,880 --> 00:41:58,680
Speaker 7: Like I said, I believe we're going to have a

837
00:41:58,680 --> 00:42:01,000
Speaker 7: majority of the majority. I'm not going to tell you account.

838
00:42:01,239 --> 00:42:03,040
Speaker 7: I'm not going to give you an over under. I'm

839
00:42:03,080 --> 00:42:04,279
Speaker 7: just going to tell you I think we have a

840
00:42:04,320 --> 00:42:06,279
Speaker 7: majority of the majority. I think it's going to be

841
00:42:06,360 --> 00:42:09,000
Speaker 7: you know, people have said one fifty. Yeah, I think so.

842
00:42:09,120 --> 00:42:11,360
Speaker 7: And then I wouldn't be surprised if it's more. I

843
00:42:11,400 --> 00:42:13,120
Speaker 7: wouldn't be surprised if it's less. But I think it's

844
00:42:13,160 --> 00:42:16,000
Speaker 7: going to be around that. And uh, and then you know,

845
00:42:16,080 --> 00:42:17,480
Speaker 7: we're going to come in and have a majority of

846
00:42:17,480 --> 00:42:19,920
Speaker 7: the majority, and then the Democrats are going to have

847
00:42:19,960 --> 00:42:23,319
Speaker 7: to make up the rest, you know, because nobody wants

848
00:42:23,360 --> 00:42:26,680
Speaker 7: to see a default. And I think that this was

849
00:42:26,760 --> 00:42:30,880
Speaker 7: negotiated in good faith. Uh. And you know, I trust

850
00:42:30,960 --> 00:42:35,640
Speaker 7: the folks that led the negotiations are valued members of

851
00:42:35,640 --> 00:42:38,080
Speaker 7: our Congress and our speaker. I think, you know, it's

852
00:42:38,080 --> 00:42:40,360
Speaker 7: done a tremendous job of getting us to this. Nobody

853
00:42:40,400 --> 00:42:41,600
Speaker 7: thought we'd.

854
00:42:41,360 --> 00:42:41,759
Speaker 13: Get to this.

855
00:42:41,920 --> 00:42:44,719
Speaker 7: Everybody thought that we couldn't even pass you know, the

856
00:42:45,480 --> 00:42:47,879
Speaker 7: bill that we did pass. We were the only ones

857
00:42:48,440 --> 00:42:50,920
Speaker 7: in government that actually did their job. We passed the bill.

858
00:42:51,000 --> 00:42:54,000
Speaker 7: There raise a deadline. The Senate didn't do anything. If

859
00:42:54,040 --> 00:42:57,759
Speaker 7: I din't didn't do anything. And so again I think

860
00:42:58,280 --> 00:43:02,319
Speaker 7: the Speaker did a a very good, you know, an

861
00:43:02,320 --> 00:43:06,319
Speaker 7: excellent job with the fact that we only control one

862
00:43:06,360 --> 00:43:07,720
Speaker 7: half of one third of government.

863
00:43:09,320 --> 00:43:11,080
Speaker 8: Well, and of course what the Speaker was able to

864
00:43:11,080 --> 00:43:13,480
Speaker 8: negotiate with the present president as we're talking about the

865
00:43:13,480 --> 00:43:16,280
Speaker 8: different components of this deal. Also was a three percent

866
00:43:16,320 --> 00:43:19,279
Speaker 8: increase in defense spending. I know you sit on the

867
00:43:19,400 --> 00:43:21,640
Speaker 8: Armed Services Committee in the House. How do you feel

868
00:43:21,640 --> 00:43:24,880
Speaker 8: about that number? And really how that spending figure positions

869
00:43:24,960 --> 00:43:27,680
Speaker 8: the US from a defense standpoint.

870
00:43:28,560 --> 00:43:31,680
Speaker 7: I would rather have a larger number, to be honest

871
00:43:31,719 --> 00:43:35,120
Speaker 7: with you, but again, this is negotiations and so I

872
00:43:35,160 --> 00:43:37,440
Speaker 7: have to be a realist about it. Also, you know,

873
00:43:37,480 --> 00:43:40,279
Speaker 7: some folks I guess that's sit on Armed Services aren't

874
00:43:40,280 --> 00:43:42,200
Speaker 7: happy about the number. I'm not happy about the number.

875
00:43:42,200 --> 00:43:45,040
Speaker 7: I think we need more to look at ways that

876
00:43:45,080 --> 00:43:47,920
Speaker 7: we can strengthen that. You know, what we need for

877
00:43:48,440 --> 00:43:52,000
Speaker 7: security is what we need for security, whatever that number is,

878
00:43:52,520 --> 00:43:55,520
Speaker 7: and we believe it's it's somewhat higher than that, and

879
00:43:55,560 --> 00:43:56,920
Speaker 7: so that's some of the things we're going to have

880
00:43:56,960 --> 00:44:00,640
Speaker 7: to you know, work around, maybe look at and how

881
00:44:00,680 --> 00:44:05,360
Speaker 7: we there. I know that there's also waste in the

882
00:44:05,400 --> 00:44:08,479
Speaker 7: Defense Department, and so cut out that waste and put

883
00:44:08,480 --> 00:44:12,200
Speaker 7: that money into systems and personnel, or it's going to

884
00:44:12,200 --> 00:44:14,160
Speaker 7: make a difference and cut out a lot of the

885
00:44:14,200 --> 00:44:16,840
Speaker 7: waste that is in the DOT. And so you know,

886
00:44:16,880 --> 00:44:19,799
Speaker 7: there's different ways to skin that cat. You know, i'd

887
00:44:19,800 --> 00:44:21,680
Speaker 7: be lying to you I say, oh, I'm thrilled with

888
00:44:21,760 --> 00:44:23,560
Speaker 7: that number. No, I'm not thrilled.

889
00:44:23,200 --> 00:44:23,760
Speaker 13: With that number.

890
00:44:23,800 --> 00:44:27,359
Speaker 7: But again, this is part of negotiations, and so that's

891
00:44:27,360 --> 00:44:29,759
Speaker 7: the number we'll live with. That's a number that you

892
00:44:29,800 --> 00:44:33,200
Speaker 7: know we can sustain. You know, our American dominance in

893
00:44:33,239 --> 00:44:35,080
Speaker 7: the world militarily.

894
00:44:34,760 --> 00:44:37,840
Speaker 3: Well, we consider our military defense here. I see, Congressman

895
00:44:37,880 --> 00:44:41,479
Speaker 3: that you tweeted the video of this Chinese fighter jet

896
00:44:41,520 --> 00:44:45,800
Speaker 3: coming within four hundred feet of an American surveillance plane

897
00:44:45,960 --> 00:44:48,759
Speaker 3: and the bouncing around that, the experiences they hit the

898
00:44:49,120 --> 00:44:52,719
Speaker 3: wake of that aircraft. This is dangerous behavior that we

899
00:44:52,760 --> 00:44:55,480
Speaker 3: are seeing over and over again, not only from China

900
00:44:55,840 --> 00:44:58,359
Speaker 3: but from Russia as well. And I know you're you're

901
00:44:58,400 --> 00:45:01,880
Speaker 3: criticizing what you call President Biden's weakness and lack of resolve,

902
00:45:02,520 --> 00:45:05,160
Speaker 3: But how should we respond to an event like that?

903
00:45:06,360 --> 00:45:10,120
Speaker 7: Look, the reason that the Chinese and the Russians, you know,

904
00:45:10,200 --> 00:45:15,160
Speaker 7: are are being more adventurous. Let's put it that way.

905
00:45:15,520 --> 00:45:18,359
Speaker 7: Is because they don't think that the United States has

906
00:45:18,360 --> 00:45:21,279
Speaker 7: a result they're becoming stronger. They believe that we were

907
00:45:21,320 --> 00:45:24,560
Speaker 7: becoming weaker. That's why we need to strengthen our Defense

908
00:45:24,600 --> 00:45:27,520
Speaker 7: department budget. We need to strengthen our military. It's a

909
00:45:27,560 --> 00:45:31,279
Speaker 7: new threat, it's a different threat we were. We were

910
00:45:31,360 --> 00:45:35,200
Speaker 7: focused on more regional conflicts more so, things like in

911
00:45:35,520 --> 00:45:39,320
Speaker 7: Afghanistan or Iraq. We thought that that's going to be

912
00:45:39,360 --> 00:45:44,320
Speaker 7: the future, and not really theater wide conflict with a

913
00:45:44,360 --> 00:45:47,600
Speaker 7: with a major power like Russia or China. And so

914
00:45:49,040 --> 00:45:55,240
Speaker 7: for many years the US military was I guess prepared

915
00:45:55,280 --> 00:45:57,759
Speaker 7: for that and geared up for that. Now we need

916
00:45:57,800 --> 00:45:59,839
Speaker 7: to need to gear up for a different kind of fight.

917
00:46:00,040 --> 00:46:02,759
Speaker 7: We don't want to have that fight, but we have

918
00:46:02,840 --> 00:46:05,400
Speaker 7: to be prepared for that fight. You know, history teaches

919
00:46:05,520 --> 00:46:08,720
Speaker 7: us that the way to avoid and the way to

920
00:46:08,719 --> 00:46:11,880
Speaker 7: get peace is through strength. And so we need to

921
00:46:11,920 --> 00:46:14,360
Speaker 7: strengthen our military to make sure that we're prepared for

922
00:46:14,680 --> 00:46:19,200
Speaker 7: your theater wide conflict, but a conflict that we never want,

923
00:46:19,560 --> 00:46:21,560
Speaker 7: but one that can we will be prepared for in

924
00:46:21,600 --> 00:46:22,560
Speaker 7: our adversary to.

925
00:46:22,440 --> 00:46:26,080
Speaker 8: Know that we're prepared for great Congressman, we have to

926
00:46:26,160 --> 00:46:27,840
Speaker 8: leave it there, but thank you so much for joining

927
00:46:27,880 --> 00:46:31,440
Speaker 8: us today. That's Congressman Carlos Amenez, Republican from Florida. We

928
00:46:31,520 --> 00:46:34,040
Speaker 8: appreciate it and we're going to get the Democratic perspective

929
00:46:34,120 --> 00:46:34,640
Speaker 8: up next show.

930
00:46:35,480 --> 00:46:38,960
Speaker 1: You're listening to The Bloomberg Sound on podcast. Catch us

931
00:46:39,000 --> 00:46:42,160
Speaker 1: live weekdays at one Eastern on Bloomberg dot Com, the

932
00:46:42,239 --> 00:46:44,600
Speaker 1: iHeartRadio app, and the Bloomberg Business app.

933
00:46:44,760 --> 00:46:47,359
Speaker 2: We're listening on demand wherever you get your podcasts.

934
00:46:47,920 --> 00:46:50,640
Speaker 8: We just heard from Congressman Jimenez that he is a

935
00:46:50,719 --> 00:46:53,719
Speaker 8: yes on the Republican side, and the Congressman Sherman, who's

936
00:46:53,760 --> 00:46:56,160
Speaker 8: joining us now, I believe, also is a yes on

937
00:46:56,239 --> 00:46:58,960
Speaker 8: this vote. But Congressman first, thank you for your time today.

938
00:46:58,960 --> 00:47:01,880
Speaker 8: But we know that your entire party is not along

939
00:47:01,960 --> 00:47:04,719
Speaker 8: with you. There are plenty of progressives who have said

940
00:47:04,760 --> 00:47:07,320
Speaker 8: they will vote no on this deal. I just wonder

941
00:47:07,320 --> 00:47:10,640
Speaker 8: if they're sending the wrong message to Democratic voters not

942
00:47:10,680 --> 00:47:12,080
Speaker 8: siding with the president on this thing.

943
00:47:13,600 --> 00:47:18,240
Speaker 13: I think they want to express themselves. People will remember,

944
00:47:18,360 --> 00:47:20,480
Speaker 13: for the most part, whether the deal passed or not,

945
00:47:20,600 --> 00:47:23,000
Speaker 13: and it is going to pass, and I think a

946
00:47:23,120 --> 00:47:25,879
Speaker 13: number of people are going to vote no to say

947
00:47:25,920 --> 00:47:29,840
Speaker 13: that they didn't like the process and they don't like

948
00:47:29,880 --> 00:47:32,160
Speaker 13: many aspects of the bill. But I think there are

949
00:47:32,239 --> 00:47:35,480
Speaker 13: far fewer that actually want the bill to fail. So

950
00:47:35,520 --> 00:47:38,000
Speaker 13: I think you, when all is said and done, if

951
00:47:38,040 --> 00:47:42,120
Speaker 13: you see fifty or even more no votes, maybe half

952
00:47:42,160 --> 00:47:44,920
Speaker 13: of those would have changed yes if their vote had

953
00:47:44,920 --> 00:47:45,400
Speaker 13: been needed.

954
00:47:46,440 --> 00:47:49,000
Speaker 3: Depends you ask, of course, as always, as to whether

955
00:47:49,040 --> 00:47:51,000
Speaker 3: this is a good deal or not. There are members

956
00:47:51,000 --> 00:47:53,640
Speaker 3: of the Freedom Caucus saying that Speaker McCarthy got rolled.

957
00:47:54,120 --> 00:47:57,000
Speaker 3: As more time goes on, though, Congressman, it does seem

958
00:47:57,000 --> 00:47:59,680
Speaker 3: that President Biden, while having not been talking a lot

959
00:47:59,719 --> 00:48:02,799
Speaker 3: about it in the media, actually secured a pretty good

960
00:48:02,840 --> 00:48:05,480
Speaker 3: hand for the Democratic Caucus. You obviously agree if you're

961
00:48:05,520 --> 00:48:07,879
Speaker 3: voting as well.

962
00:48:07,920 --> 00:48:11,160
Speaker 13: I'm voting yes, not because you know I would vote

963
00:48:11,160 --> 00:48:13,800
Speaker 13: for this bill if it didn't it wasn't necessary to

964
00:48:13,880 --> 00:48:16,319
Speaker 13: raise the dead limit. But failure to raise the dead

965
00:48:16,360 --> 00:48:19,560
Speaker 13: limit would not only impact the portfolios of everyone listening

966
00:48:19,640 --> 00:48:22,880
Speaker 13: and three hundred and twenty million Americans, it would probably

967
00:48:22,880 --> 00:48:27,359
Speaker 13: cause a worldwide recession. And I mean, when you can

968
00:48:27,440 --> 00:48:31,000
Speaker 13: visualize what happens to people trying to make it on

969
00:48:31,040 --> 00:48:33,239
Speaker 13: two meals a day, living on a dollar a day

970
00:48:33,239 --> 00:48:35,279
Speaker 13: in some of the poorest parts of the world. It's

971
00:48:35,360 --> 00:48:36,640
Speaker 13: very hard to vote against this deal.

972
00:48:38,360 --> 00:48:42,399
Speaker 8: As Joe alluded to the President being less vocal on this,

973
00:48:42,560 --> 00:48:45,600
Speaker 8: we haven't heard as much from him, it seems, as

974
00:48:45,600 --> 00:48:49,760
Speaker 8: we have heard from Speaker McCarthy, and during the negotiations

975
00:48:49,760 --> 00:48:52,960
Speaker 8: it was arguably the Republicans that were much more vocal.

976
00:48:52,960 --> 00:48:55,720
Speaker 8: It seems like McCarthy and McHenry and Graves were gaggling

977
00:48:55,760 --> 00:48:59,920
Speaker 8: every two seconds. How do you view the administration's handling

978
00:49:00,719 --> 00:49:03,840
Speaker 8: of this entire entire process, Congressman.

979
00:49:04,200 --> 00:49:07,160
Speaker 13: We want the deal to pass. We don't want to

980
00:49:07,160 --> 00:49:13,440
Speaker 13: do a victory dance before the game is over. I

981
00:49:13,440 --> 00:49:16,000
Speaker 13: think you'll hear an awful lot more from the President

982
00:49:16,640 --> 00:49:20,480
Speaker 13: next week as we point out some of the some

983
00:49:20,560 --> 00:49:24,719
Speaker 13: of the difference between what the Republicans originally proposed and

984
00:49:24,760 --> 00:49:25,560
Speaker 13: what's in this deal.

985
00:49:27,000 --> 00:49:28,880
Speaker 3: Are you concerned at all about the Senate or if

986
00:49:28,880 --> 00:49:30,880
Speaker 3: this gets through the House, we're pretty much done.

987
00:49:32,600 --> 00:49:37,279
Speaker 13: I could imagine the Senate somehow pushing this to June

988
00:49:37,440 --> 00:49:43,879
Speaker 13: sixth instead of June fifth, but I have little doubt

989
00:49:43,920 --> 00:49:45,080
Speaker 13: that it's going to pass the Senate.

990
00:49:45,239 --> 00:49:47,080
Speaker 3: Well, I ask you that because there is an effort

991
00:49:47,120 --> 00:49:51,680
Speaker 3: by Senator Tim Kaine to strip this pipeline. This the

992
00:49:51,800 --> 00:49:55,600
Speaker 3: MVP pipeline that Senator Manchiin got inside the bill that

993
00:49:55,640 --> 00:49:58,840
Speaker 3: crosses West Virginia. The White House seemed to think this

994
00:49:59,000 --> 00:50:02,279
Speaker 3: was a chip to play here. They said it was

995
00:50:02,360 --> 00:50:04,719
Speaker 3: ninety five percent approve. But Tim Kaine says he wants

996
00:50:04,719 --> 00:50:07,399
Speaker 3: to kill the pipeline. Would you consider that a good

997
00:50:07,440 --> 00:50:10,880
Speaker 3: idea or a dangerous one? With so little time, we're.

998
00:50:10,800 --> 00:50:16,040
Speaker 13: Talking about the risk of a worldwide recession, with increased

999
00:50:16,080 --> 00:50:19,920
Speaker 13: deaths in every poor country and hungary Americans on the

1000
00:50:19,960 --> 00:50:29,399
Speaker 13: streets of the United States. The one pipeline seems less

1001
00:50:29,400 --> 00:50:30,160
Speaker 13: significant than that.

1002
00:50:30,719 --> 00:50:31,520
Speaker 3: I think we read you.

1003
00:50:32,280 --> 00:50:36,120
Speaker 8: Yeah, well, as we talk about recession risk, Congressman, obviously,

1004
00:50:36,160 --> 00:50:38,760
Speaker 8: there has been a lot of analysis of this package,

1005
00:50:38,760 --> 00:50:42,920
Speaker 8: the economic toll that it would take, and our economists

1006
00:50:42,920 --> 00:50:45,800
Speaker 8: here Atloomberg Economics, they're talking about how this could shave

1007
00:50:46,120 --> 00:50:48,160
Speaker 8: half a percent off of GDP by the end of

1008
00:50:48,200 --> 00:50:50,719
Speaker 8: twenty twenty four. It could mean the equivalent of three

1009
00:50:50,800 --> 00:50:54,720
Speaker 8: hundred and fifty thousand additional job losses, and of course

1010
00:50:54,880 --> 00:50:57,759
Speaker 8: that would coincide with a Federal Reserve that still is

1011
00:50:57,920 --> 00:51:00,719
Speaker 8: potentially going to continue to high rate the Would you

1012
00:51:00,800 --> 00:51:03,120
Speaker 8: like to see the Fed pull back here, because we

1013
00:51:03,160 --> 00:51:05,720
Speaker 8: are going to start to see spending cuts and spending

1014
00:51:05,719 --> 00:51:06,880
Speaker 8: caps affect the economy.

1015
00:51:09,680 --> 00:51:13,520
Speaker 13: I think Pal's got a difficult job. I would make

1016
00:51:13,560 --> 00:51:17,120
Speaker 13: a decision on how to vote until right before the meeting,

1017
00:51:17,120 --> 00:51:20,160
Speaker 13: when you see all the data that exists before that meeting.

1018
00:51:21,600 --> 00:51:23,759
Speaker 13: It's a close call, and all the argument is on

1019
00:51:23,760 --> 00:51:30,080
Speaker 13: a quarter point one way or the other. It's hard

1020
00:51:30,080 --> 00:51:32,320
Speaker 13: to have an opinion that's stronger than the experts.

1021
00:51:32,360 --> 00:51:36,360
Speaker 3: Of spending some time with Congressman Brad Sherman, the Democrat

1022
00:51:36,360 --> 00:51:38,759
Speaker 3: from California, I want to get on the way back

1023
00:51:38,840 --> 00:51:40,960
Speaker 3: machine with you for a moment here, Congressman, because we

1024
00:51:41,080 --> 00:51:43,480
Speaker 3: learned today that Harvey Pitt, who of course led the

1025
00:51:43,520 --> 00:51:48,640
Speaker 3: Securities in Exchange Commission through a tumultuous eighteen month period,

1026
00:51:49,440 --> 00:51:53,080
Speaker 3: died today. He's died at seventy eight years old. And

1027
00:51:53,120 --> 00:51:58,000
Speaker 3: I remember amazingly and went back to rewatch the House

1028
00:51:58,040 --> 00:52:02,879
Speaker 3: Financial Services Committee hearing with Chairman Pitt in the wake

1029
00:52:02,920 --> 00:52:05,760
Speaker 3: of the Enron bankruptcy nine to eleven had also just happened.

1030
00:52:05,800 --> 00:52:09,560
Speaker 3: This is February fourth of two thousand and two. He

1031
00:52:09,680 --> 00:52:14,000
Speaker 3: was new on the job, and a somewhat younger Congressman

1032
00:52:14,040 --> 00:52:17,719
Speaker 3: Brad Sherman on that panel had a question for him

1033
00:52:17,760 --> 00:52:20,120
Speaker 3: several in fact. But I just want to play this

1034
00:52:20,200 --> 00:52:21,360
Speaker 3: and bring you back for a moment.

1035
00:52:21,440 --> 00:52:25,200
Speaker 17: What is the largest increase that you could imagine that

1036
00:52:25,239 --> 00:52:28,920
Speaker 17: you would need to do everything possible to give us

1037
00:52:29,200 --> 00:52:33,480
Speaker 17: the maximum possible confidence in our financial and capital markets.

1038
00:52:35,400 --> 00:52:39,360
Speaker 14: I'm going to answer what I think you the substance

1039
00:52:39,360 --> 00:52:41,319
Speaker 14: of your question is. But I have to start by

1040
00:52:41,360 --> 00:52:44,320
Speaker 14: telling you I don't think there's a number big enough

1041
00:52:44,320 --> 00:52:47,839
Speaker 14: to give us what you're asking. I just don't think

1042
00:52:47,880 --> 00:52:52,600
Speaker 14: it is possible for a government agency to provide a

1043
00:52:52,680 --> 00:52:54,760
Speaker 14: guarantee of the entire system.

1044
00:52:55,080 --> 00:52:57,239
Speaker 17: I didn't ask for, Garrett, I just said what would

1045
00:52:57,280 --> 00:52:59,480
Speaker 17: it take to do the best job that could be done?

1046
00:53:00,239 --> 00:53:03,000
Speaker 3: Love this exchange, Congressman, because you could also have it

1047
00:53:03,040 --> 00:53:05,439
Speaker 3: again today. And I wonder, with everything going on today

1048
00:53:05,480 --> 00:53:08,440
Speaker 3: you've joined us to talk about everything from FTX to

1049
00:53:08,480 --> 00:53:11,760
Speaker 3: crypto and some very difficult times here in the financial

1050
00:53:11,800 --> 00:53:15,360
Speaker 3: services sector, if that is still in fact the question

1051
00:53:15,480 --> 00:53:16,120
Speaker 3: worth asking.

1052
00:53:17,280 --> 00:53:20,160
Speaker 13: I think it's not just a matter of staffing the SEC.

1053
00:53:20,480 --> 00:53:24,760
Speaker 13: It's a matter of having accounting rules that make sense

1054
00:53:24,840 --> 00:53:29,040
Speaker 13: and enforcement that makes sense. We now have a deal

1055
00:53:29,320 --> 00:53:33,280
Speaker 13: on a proper auditing for Chinese based companies. We need

1056
00:53:33,320 --> 00:53:38,680
Speaker 13: to change, particularly the regulatory accounting for banks that have

1057
00:53:38,840 --> 00:53:45,280
Speaker 13: unrealized losses due to interest rate changes. But we also

1058
00:53:45,360 --> 00:53:48,960
Speaker 13: need to have an SEC that's robust and they react

1059
00:53:49,000 --> 00:53:52,720
Speaker 13: well to leeds when people but they don't even try

1060
00:53:53,239 --> 00:53:55,680
Speaker 13: to go on the Internet and find the scams that

1061
00:53:55,719 --> 00:53:57,680
Speaker 13: are out there. So I think they do a better

1062
00:53:57,760 --> 00:54:00,359
Speaker 13: job of protecting Wall Street than they do protecting dark

1063
00:54:00,400 --> 00:54:02,800
Speaker 13: alleys of the off main Street.

1064
00:54:03,520 --> 00:54:06,200
Speaker 3: I appreciate your dancing with us on that Congress from

1065
00:54:06,200 --> 00:54:08,839
Speaker 3: Brad Sherman, the Democrat from California, he's a yes, Kyley.

1066
00:54:08,880 --> 00:54:10,680
Speaker 3: We found a D, N and R. We live to

1067
00:54:10,680 --> 00:54:11,399
Speaker 3: see another day.

1068
00:54:11,920 --> 00:54:13,879
Speaker 8: You got to find two hundred and sixteen more.

1069
00:54:14,080 --> 00:54:21,640
Speaker 3: That's all. This is Bloomberg. Thanks for listening to the

1070
00:54:21,719 --> 00:54:24,640
Speaker 3: Sound on podcast. Make sure to subscribe if you haven't already,

1071
00:54:24,719 --> 00:54:27,560
Speaker 3: at Apple, Spotify, and anywhere else you get your podcasts.

1072
00:54:27,960 --> 00:54:30,640
Speaker 3: And you can find us live every weekday from Washington,

1073
00:54:30,719 --> 00:54:35,400
Speaker 3: DC at one pm Eastern Time at Bloomberg dot com.