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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 2: Obviously like what they heard out of Geneva and the

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Speaker 2: White House, Today's the US has confirmed that progress was

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Speaker 2: made in talks with China and Switzerland over the weekend.

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Speaker 2: In fact, tariff's going much lower than perhaps initially anticipated.

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Speaker 2: Remember at the end of last week President Trump was

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Speaker 2: talking about an eighty percent tariff on China, seeming right, Mike,

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Speaker 2: And instead what we get is the US taking from

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Speaker 2: one hundred and forty five percent all the way down

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Speaker 2: to thirty percent, and China goes from one twenty five

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Speaker 2: to ten.

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Speaker 3: And that's with the prospect of going even lower if

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Speaker 3: the FENTANNL tariffs are removed or reduced, if there's some

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Speaker 3: sort of sign of progress there with China. So there

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Speaker 3: was a lot left open there, and they even left

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Speaker 3: open the prospect of extending this ninety day pause. You

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Speaker 3: can't quite call it a deal, but it certainly is

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Speaker 3: as you put a truce or a moment of daytut

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Speaker 3: in this confrontation over tree with the world's second largest economy.

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Speaker 2: Yeah, and of course President Trump took his moment to

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Speaker 2: tout this truth if that's what we want to go

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Speaker 2: with here. He spoke from the White House earlier today.

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Speaker 4: In addition, yesterday we achieved a total reset with China

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Speaker 4: after productive talks in Geneva. Both sides now agreed to

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Speaker 4: reduce the tariffs imposed after April second to ten percent

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Speaker 4: for ninety days as negotiators continue in the largest structural issues.

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Speaker 4: The relationship is very, very good. I'll speak to Presidency

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Speaker 4: maybe at the end of the week. We have some

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Speaker 4: other things we're doing.

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Speaker 2: A total reset is how the President describes this. So

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Speaker 2: let's get more from the White House where we find

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Speaker 2: Bloomberg's Tyler Kendall on this Monday. But Tyler, to Mike's point,

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Speaker 2: this isn't yet a deal. We're still going to be

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Speaker 2: negotiating in this ninety day window. So this reset is

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Speaker 2: not yet final.

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Speaker 5: Right exactly, Kaylie. While it is a de escalation to

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Speaker 5: give the sides time to negotiate at the end of

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Speaker 5: the day, We're going to have to see how long

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Speaker 5: that lasts and if both sides can agree on a

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Speaker 5: finalized trade deal, because once Wednesday rolls around, that ninety

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Speaker 5: day pause goes into effect, and then from there the

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Speaker 5: countdown clock really is on now. Treasury Secretary Scott Besant

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Speaker 5: was asked earlier today what would it take to keep

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Speaker 5: tensions low after that ninety days. He said, ultimately it

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Speaker 5: would be good dialogue in good faith, but did confirm

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Speaker 5: to Bloomberg Television that at this point it is implausible

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Speaker 5: that tariffs would drop below that floor of ten percent. Importantly,

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Speaker 5: both sides here are really trying to highlight that they

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Speaker 5: have created what they have called a mechanism to keep

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Speaker 5: talks going, and as you're about to hear, the Treasury

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Speaker 5: Secretary told Bloomberg TV that this is going to be

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Speaker 5: important for negotiations going forward.

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Speaker 6: China was the only country who escalated their tariffs in

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Speaker 6: response to our reciprocal tarot level, so that resulted in

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Speaker 6: an unfortunate escalation. So we now have a mechanism to

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Speaker 6: deal with that. Neither side wants a generalized de coupling.

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Speaker 6: The US is going to do a strategic decoupling.

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Speaker 5: That reminds us that there's still a lot of negotiations

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Speaker 5: to have and some big differences on the table. A

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Speaker 5: few different threads that we're watching here, Kley and Mike,

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Speaker 5: one including a purchase agreements going forward. Both the Treasury

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Speaker 5: Secretary and the President today said that the Phase one

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Speaker 5: China deal could be used as a templates or we're

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Speaker 5: going to be watching when it comes to US ag

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Speaker 5: imports into China if that could make its way into

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Speaker 5: any sort of purchase agreements and what sort of enforcement

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Speaker 5: mechanisms would look like. The second, of course, is fetanyl.

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Speaker 5: As Mike had mentioned that twenty percent of that thirty

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Speaker 5: percent tariff is tied directly to the United States feentanyl concerns.

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Speaker 5: President Trump said that he believes China will act in

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Speaker 5: good faith on curbing fentanyl flows and the ingredients used

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Speaker 5: to make the drugs into the United States amid allegations

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Speaker 5: that they are contributing to the drug trafficking. And then,

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Speaker 5: of course, lastly, are those non a tariff barriers that

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Speaker 5: we're watching very closely. China did confirm earlier today that

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Speaker 5: they're going to remove non tariff counter measures. We have

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Speaker 5: taken that to mean that they are expected to suspend

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Speaker 5: or lift some of those heightened export controls on critical

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Speaker 5: minerals that came since April. Second, We're going to have

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Speaker 5: to see how these negotiations shake out. President Trump did

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Speaker 5: say earlier today he could hold a call with Chinese

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Speaker 5: President Jijingping as soon as this week.

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Speaker 2: All right, wonder where that's going to fit in the schedule,

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Speaker 2: as he has a busy few days in the Middle

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Speaker 2: East ahead of im. Bloomberg's Tyler Kendall, thank you so much,

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Speaker 2: And we want to take a look through the economic

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Speaker 2: lens of what difference these tariff changes really will make

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Speaker 2: between the US and China, and turned to Anna Wong.

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Speaker 2: She's our chief US economist at Bloomberg Economics and is

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Speaker 2: here with Mike and I in our Washington.

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Speaker 5: D C.

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Speaker 2: Studio. So, Anna, obviously, thirty percent is a whole lot

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Speaker 2: lower than one hundred and forty five percent. But I

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Speaker 2: know you've been watching cargo volumes. We've seen this massive

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Speaker 2: trade drop off between the US and China already. How

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Speaker 2: much is going to be revived by still an incredibly

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Speaker 2: high thirty percent terrify.

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Speaker 7: Yes, Kelly, Actually, we put out a note last Friday

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Speaker 7: that showed that in fact, container ships leaving China has

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Speaker 7: increased in the first week of May, and we connected

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Speaker 7: the dots. We think that several of the US retailers,

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Speaker 7: after a meeting of President Trump in late April, has

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Speaker 7: resumed their order and the ships carrying those orders potentially

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Speaker 7: have already been setting sail to the US, arriving today

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Speaker 7: starting today, with many of those ships arriving on the twentieth.

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Speaker 7: And this was why we had thought that, in fact,

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Speaker 7: they need to cut the tariff this week because those

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Speaker 7: ships carrying Walmart and Target goods are arriving. So if

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Speaker 7: you believe that that was the concerns about empty shells

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Speaker 7: was what motivated this cut. It also means that as

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Speaker 7: this ninety day comes to an end basically by mid August,

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Speaker 7: which covers the peak shipping period ahead of holiday seasons,

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Speaker 7: the stakes for escalating actually would reduce because you know,

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Speaker 7: the holidays is assured there won't be empty shelves, and

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Speaker 7: so Trump could easily re escalate again. And I just

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Speaker 7: think that what we saw this weekend is not consistent

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Speaker 7: with Trump's negotiation style, which is not straight, straight lined

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Speaker 7: down with the tariff fright. It usually comprises of escalation

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Speaker 7: and then some de escalation in the escalation back again

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Speaker 7: until a final deal is reached.

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Speaker 3: To what extent does this reflect a recognition on both sides,

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Speaker 3: not just here in Washington, but also in Beijing, that

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Speaker 3: the economic risk of carrying out this tip for economic

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Speaker 3: trade war to the level it reached was just so

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Speaker 3: dangerous to the economies of both countries.

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Speaker 7: That hits the nail on the head exactly. And the

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Speaker 7: reason why I think the US and China negotiations came

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Speaker 7: out and say that they've found agreement very quickly is

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Speaker 7: that the agreement is that they do not want the

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Speaker 7: worst case scenario, which is for trade to enter the

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Speaker 7: embargo state at the peak shipping season. Most of the

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Speaker 7: shipping in the holiday season, which accounts for over forty

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Speaker 7: percent of sales revenues for any US firms, happen from

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Speaker 7: now to end of August. So this is a critical

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Speaker 7: period that I think US and China both easily found

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Speaker 7: agreement on to not disrupt. But beyond that, who knows well.

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Speaker 2: Obviously none of us can predict the future, including Federal

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Speaker 2: Reserve policy makers. Hence why they keep emphasizing patients we've

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Speaker 2: seen today in the aftermath of this truce being reached

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Speaker 2: and the expectations for rate cuts being taken down this year.

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Speaker 2: Now I think just fifty five basis points are priced in.

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Speaker 2: Does this make a material difference in the amount of

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Speaker 2: easing you expect us to see?

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Speaker 7: Yes, So, I mean our base case has been for

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Speaker 7: only twenty five BIPs of rate cut this year, so

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Speaker 7: we were already lower than the rest of the market.

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Speaker 7: But right now what you could immediately see is that

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Speaker 7: the MAZE jobs report and June's jobs report would not

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Speaker 7: be as bad as in this situation where container volume

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Speaker 7: couldntinue to drop, because we're now already seeing this week

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Speaker 7: container volume is rising in the port of la and

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Speaker 7: with a lot more firms planning to front run in

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Speaker 7: this ninety day reprief period, it means that the logistics

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Speaker 7: sector just would not shed as much job as we thought.

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Speaker 7: So there you have May and June's payer all being

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Speaker 7: not as you know, possibly not negative as what it

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Speaker 7: could have been had, you know, the plunge in the

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Speaker 7: container ships continue on it.

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Speaker 3: There is a lot for the two sides to get

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Speaker 3: through over the next several weeks. Is ninety days going

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Speaker 3: to be enough to lock this in given how detailed

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Speaker 3: that fine print.

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Speaker 7: Is going to be not at all, not at all exactly.

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Speaker 7: That's why I thought the ninety day reprief is more

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Speaker 7: of a holiday Let's get through this holiday season first.

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Speaker 7: Let's make sure that not a lot of small businesses

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Speaker 7: are going bankrupt in the US and China. Factories are

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Speaker 7: not all going out of business because the US and

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Speaker 7: China's tariff problem, trade barriers, this problem goes really deep

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Speaker 7: and it takes years. Even in the Phase one deal,

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Speaker 7: it took a whole year, and during that year President

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Speaker 7: Trump was kind of fluctuating whether they should take it

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Speaker 7: or not.

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Speaker 2: Well to the point you were making earlier, these things

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Speaker 2: tend to be a rollercoaster with this particular President. Anawon

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Speaker 2: of Bloomberg Economics, thank you so much for joining us.

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Speaker 2: And of course we have to keep in mind that

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Speaker 2: Scott Bessen, the Treasury Secretary, has said previously a full

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Speaker 2: deal with China could take two to three years, so

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Speaker 2: we have to keep that in mind. We want to

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Speaker 2: get more on that now and turn to Sam Sacks,

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Speaker 2: professor of China studies at Yale University. He was joining

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Speaker 2: us on Bloomberg TV and Radio Professor sax Welcome to

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Speaker 2: balance of power when we consider how different a place

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Speaker 2: we are and now compared to before these talks beginning

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Speaker 2: in Geneva over the weekend, from one hundred and forty

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Speaker 2: five percent and one hundred and twenty five percent respectively,

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Speaker 2: down to thirty and ten percent. Yes, both sides took

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Speaker 2: tariffs down by an equal amount. But do you actually

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Speaker 2: see this as a truce, that is that is equal

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Speaker 2: or did China actually kind of come out the winner here.

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Speaker 8: It's too soon to know. Both sides have essentially agreed

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Speaker 8: that talking is happening, and they couldn't even get that

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Speaker 8: basic point straight between the two of them. We were

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Speaker 8: engaged in this long game of chicken where Trump was

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Speaker 8: insisting that she wanted a deal and she didn't want

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Speaker 8: to look weak, potentially facing a president's Lensky moment in

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Speaker 8: the White House. So the fact that they have agreed

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Speaker 8: to announce that talks are beginning itself is a stabilizing factor,

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Speaker 8: but it tells us nothing about what the nature of

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Speaker 8: any agreement actually will look like.

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Speaker 3: Professor Sachs, what is the significance of the two sides

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Speaker 3: actually putting together a joint statement there is a lot

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Speaker 3: of optics in every trade negotiation, of course, but with

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Speaker 3: China the optics count even more. What do you make

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Speaker 3: of this after just two days of discussions between the

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Speaker 3: two sides.

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Speaker 8: Both sides want a deal, that's the bottom line, and

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Speaker 8: I think it's come from a a place of political

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Speaker 8: and economic weakness in both countries. What the joint statement

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Speaker 8: says so far doesn't actually tell us anything. By and large,

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Speaker 8: the statements are identical in Chinese and English, with the

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Speaker 8: exception of some word choicing. I think whether or not

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Speaker 8: they can get to a joint public agreement once we

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Speaker 8: get into the really hard issues like what would a

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Speaker 8: purchase agreement look like? What does fentanyl cooperation entail? The

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Speaker 8: Chinese side desperately wants the US to lift export controls.

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Speaker 8: I don't see that happening. The US side desperately wants

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Speaker 8: the Chinese to undertake deep reforms in its economy. I

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Speaker 8: don't see that happening. So once we get to the

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Speaker 8: harder part of the negotiation, I think having this kind

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Speaker 8: of joint communicate is going to be increasingly difficult and

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Speaker 8: could actually stall out altogether depending on what happens.

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Speaker 2: Well, as you tell a professor about what the US

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Speaker 2: wants to see in terms of changes really to the

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Speaker 2: structure of the Chinese economy. And this isn't unique to

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Speaker 2: the Trump administration. The Biden administration under Treasury Secretary Janeyellen

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Speaker 2: talked about this plenty as well, concern over China's manufacturing

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Speaker 2: over capacity and the idea that it's flooding the market

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Speaker 2: globally with cheap goods. What incentive does China have to

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Speaker 2: actually change that practice? Can the US really force that?

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Speaker 8: The incentive is going to have to come from internal sources,

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Speaker 8: And something that often happens is you'll have interlockutors in

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Speaker 8: China will use outside pressure from the US to force

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Speaker 8: changes to the domestic economy that politically wouldn't be possible

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Speaker 8: without an external US forcing event. But it needs to

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Speaker 8: come from the inside. So one thing we know about

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Speaker 8: the lead of the of the Chinese delegation right now,

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Speaker 8: the Vice Premier Hoo, he's somewhat more he's less of

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Speaker 8: a reformer than the interlocutor for the first round of talks, Leoha,

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Speaker 8: And so this is someone who's a staunch advocate of

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Speaker 8: a state led economy, not of more market liberalizations. And

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Speaker 8: so I think that's going to be another factor that's

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Speaker 8: going to make these kind of deep reforms more challenging.

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Speaker 8: But we have to remember she didn't. Ping is under

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Speaker 8: tremendous pressure right now in terms of Chinese jobs, Chinese

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Speaker 8: businesses in the private sector, and so this is going

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Speaker 8: to be something that's going to get them to the

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Speaker 8: negotiating table, not necessarily because the US is compelling them to.

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Speaker 8: It has to come from within.

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Speaker 3: Professor Sachs. One thing that came up this morning during

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Speaker 3: our conversation with Scott Bessett, the Treasury Secretary, was a

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Speaker 3: new baseline perhaps for tariffs. And we'll have a listen

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Speaker 3: to this, and I'd like to follow up a question

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Speaker 3: about it afterward. Let's bring them in.

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Speaker 9: Are you saying that tariff rates will only go up

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Speaker 9: from here? If this really is a floor of ten

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Speaker 9: percent on the Chinese side and thirty percent on the

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Speaker 9: US side.

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Speaker 6: I'm not saying that they're going to go up, but

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Speaker 6: it would be implausible that they would go below ten.

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Speaker 3: Professor sax, How does this reset the US China trade

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Speaker 3: relationship when it comes to tariffs If we're talking now

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Speaker 3: about a baseline that could perhaps go a little bit higher.

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Speaker 8: You know, we don't really know yet. I think they're

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Speaker 8: just trying to send a signal to consumers, to voters,

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Speaker 8: to US stock markets. On the Trump administration side, today,

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Speaker 8: the stock market rally was a huge political win and

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Speaker 8: Trump wants to take credit for that. So I think

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Speaker 8: that's what this baseline signaling is really about. But until again,

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Speaker 8: until we get into the nitty gritty, it's unclear. Now

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Speaker 8: could China just go back to the ten percent baseline

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Speaker 8: and be the same treated the same essentially as the

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Speaker 8: other countries that are all in the process of potentially

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Speaker 8: looking for deals or not. It's possible, but I think

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Speaker 8: the idea is there's going to be for it's going

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Speaker 8: to be impossible to fully recover to before Liberation Day.

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Speaker 8: We're not going to go back to that at And

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Speaker 8: it's a question of how far we're going to go.

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Speaker 8: Is this just going to be strategic sectors or is

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Speaker 8: this going to be a sort of wholesale trade embargo.

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Speaker 8: And I think we're we're looking now at a more narrow,

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Speaker 8: narrow tailored decoupling. But what that means again, what is

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Speaker 8: the US side actually going to offer up here?

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Speaker 10: Is really what we have to watch Professor Sachs.

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Speaker 3: What sort of signal is this sending to other US

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Speaker 3: trading partners that are also locked in their own negotiations

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Speaker 3: with the Trump administration even as we speak.

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Speaker 8: I think that you know, they don't want No one

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Speaker 8: wants to have a I think no one wants to

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Speaker 8: be like China in this situation. So maybe it opens

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Speaker 8: the door to more deal making. If China was the

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Speaker 8: most intractable, I think we could potentially see a flood

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Speaker 8: of other deals, maybe looking like the US, UK or Mexico.

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Speaker 8: But China certainly has always been the elephant in the

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Speaker 8: room and set the tenor for others to come.

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Speaker 2: Can we consider trading partners in Asia, specifically which the

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Speaker 2: administration has put a lot of emphasis and prioritization on India, Japan,

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Speaker 2: South Korea? How does that also influence ultimately how reliant

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Speaker 2: the US actually will be on China for trade and

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Speaker 2: for goods going forward.

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Speaker 8: This gets at the question what does the Trump administration

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Speaker 8: actually want? Do they want to close the loopholes for example,

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Speaker 8: that have just squeezed trade and exports to places like India, Vietnam, Mexico.

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Speaker 8: Because what happened is you have manufacturing diversification. No longer

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Speaker 8: can export from China. Let's shift those supply chains to Vietnam, Indonesia, India.

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Speaker 8: But then all of a sudden, those tariffs were just

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Speaker 8: as high. So if the goal here is to gen

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Speaker 8: is to reshore US manufacturing and restore America's place in

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Speaker 8: those supply chains, I think we're going to still see

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Speaker 8: significant pressure on some of those other parts of the world.

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Speaker 8: But at the same time, the US is not going

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Speaker 8: to want to alienate key trading partners at a moment

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Speaker 8: when it wants to sort of bandwagon, it wants out

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Speaker 8: East Asian countries, for example, to come on board and

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Speaker 8: be an economic counterweight to China.

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Speaker 2: All right, Professor Sam Sachs of Yale University, where she

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Speaker 2: is a professor of China Studies, thank you so much

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Speaker 2: for being here on Bloomberg TV and radio. And it

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Speaker 2: was interesting, Mike to hear the Treasury Secretary Scott Besson

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Speaker 2: in his interview on Bloomberg Surveillance earlier, characterizing what the

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Speaker 2: US is trying to do here as being a strategic

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Speaker 2: decoupling from China. The prior administration didn't want to use

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Speaker 2: the decoupling language at all, but I guess this one

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Speaker 2: is looking at it in the.

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Speaker 3: Target, but in a few areas. And they talked about pharmaceuticals,

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Speaker 3: and they also talked about semiconductors, and that, of course

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Speaker 3: is an area of key contention, and Professor Sachs even

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Speaker 3: brought that up in passing. And it is crucial to

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Speaker 3: note the differences between the two sides, including with export

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Speaker 3: controls over sales of US ships through China.

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Speaker 2: Yep, those non tariff barriers. We keep hearing about our

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Speaker 2: non tariff mechanisms or what have you. Export controls theoretically

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Speaker 2: fall into that. So we'll continue to follow this story

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Speaker 2: here on Balance of Power. But up next we have

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Speaker 2: to turn to other geopolitics as well, as President Trump

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Speaker 2: makes tracks to the Middle East and potentially has a

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Speaker 2: visit to Turkey that could happen. We'll have the details

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Speaker 2: next here on Bloomberg.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch

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Speaker 1: us live weekdays at noon and five pm e's durn

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Speaker 1: on Apple Cocklay and Android Auto with the Bloomberg Business app.

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Speaker 1: You can also listen live on Amazon Alexa from our

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Speaker 1: flagship New York station, just Say Alexa played Bloomberg eleven thirty.

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Speaker 2: Welcome back to Balance of Power on Bloomberg TV and Radio.

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Speaker 2: I am Kayley Lines alongside Mike Shephard here in Washington, where,

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Speaker 2: of course we've been following a number of stories that

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Speaker 2: broke over the weekend, but perhaps none sent the city

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Speaker 2: quite as a buzz as the reporting from ABC that

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Speaker 2: hit yesterday that the government and Royal family of Cutter,

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Speaker 2: where President Trump is visiting on his trip to the

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Speaker 2: Middle East this weekend, was preparing to offer him for

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Speaker 2: free a luxury Boeing seven forty seven jumbo jet for

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Speaker 2: him to effectively use as the new Air Force one.

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Speaker 2: This is something the President himself has confirmed and talked

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Speaker 2: about from the White House earlier today.

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Speaker 4: I think it's a great gesture from Guitar. I appreciated

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Speaker 4: very much. I would never be one to turn down

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Speaker 4: that kind of an offer. I think it was a

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Speaker 4: gesture because of the fact that we have helped and

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Speaker 4: continue to We will continue to all of those countries,

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Speaker 4: Saudi Arabia, uae Qatar, and others. We keep them safe.

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Speaker 4: If it wasn't for us, they probably wouldn't exist right now.

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Speaker 4: And I think this was just a gesture of good faith.

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Speaker 2: And Mike. We should note that the President says this

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Speaker 2: is not a gift to him personally, it's a gift

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Speaker 2: specifically to the US Defense Department. But when we're talking

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Speaker 2: about the size of this gift, this is an airplane

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Speaker 2: that costs hundreds of millions of dollars. There are massive

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Speaker 2: legal and ethical questions around.

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Speaker 3: Thistrategic questions too. What would the government of Cutter want

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Speaker 3: in return or perhaps expect in return, Not even so

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Speaker 3: much as a quid pro quo per se, but if

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Speaker 3: they are offering something, eventually they might want something in return.

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Speaker 3: And the question remains, what is it? Is it perhaps

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Speaker 3: an easing of restrictions on access to nvidio chips? Is

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Speaker 3: it something else? Is it just a better understanding with

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Speaker 3: the US. And the President sought to make clear that

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Speaker 3: he would not be using this luxury jumbo jet after

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Speaker 3: he left offices, ABC had reported, but nonetheless it did

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Speaker 3: raise the question about whether this was some sort of

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Speaker 3: emolument which is prohibited above a very nominal level to him.

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Speaker 2: So we want to get into this now because it's

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Speaker 2: a fascinating story and there's other topics to discuss around

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Speaker 2: it too, and turn to our political panel. Bloomberg Politics

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Speaker 2: contributors Rick Davis and Genie Shanzano are with us Rick

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Speaker 2: of course stonecard Stone Court, Capital partner and Republican strategists.

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Speaker 2: Genie democratic analyst and senior Democracy Fellow at the Center

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Speaker 2: for the Study of the Presidency and Congress, Jeanie. I

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Speaker 2: was struck by the reaction of Laura Lumer, who of

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Speaker 2: course is somewhat of a diehard for the President of fact,

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Speaker 2: in her critique of this gifted airplane, she mentioned that

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Speaker 2: she would take a bullet for President Trump to use

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Speaker 2: her words, but even she doesn't like the notion of

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Speaker 2: this very expensive gift from a foreign government. And I

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Speaker 2: wonder if you think that backlash maybe enough to make

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Speaker 2: this not happen.

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Speaker 9: It absolutely could be. It's Laura Lumer, very close to

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Speaker 9: the president. It is Ari Fleischer, He's on Fox News

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Speaker 9: all the time. There are other conservative Republicans who have

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Speaker 9: come out and said, no, mister President, do not do this.

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Speaker 9: And of course, while you and Mike were talking about this,

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Speaker 9: I'm thinking what happened to mayde in America. We can't

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Speaker 9: have dolls and pencils made overseas, but he can have

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Speaker 9: a plane. I mean, you know, putting aside the real

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Speaker 9: serious consequential security issues, the constitutional issues, the legal questions.

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Speaker 9: What about made in America, mister President, I guess that's

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Speaker 9: gone by the wayside when it comes to his jumbo jet.

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Speaker 3: Well, Rick, is there anybody in the President's inner circle

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Speaker 3: who might be in a position to actually talk him

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Speaker 3: out of this? He really made it seem like a

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Speaker 3: done deal and it would be pretty hard to turn

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Speaker 3: it down on his way to Cutter to meet with

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Speaker 3: the leaders there.

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Speaker 11: Yeah, let me think Susie Wiles talking him out of

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Speaker 11: a four hundred million dollar gift.

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Speaker 12: Now, don't think so.

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Speaker 11: Look, it is a Boeing jet. It was made in America.

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Speaker 11: I mean, we got a piece of that. Although maybe

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Speaker 11: designed and outfitted and Cutter, this is going to be

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Speaker 11: a story that lasts a while because even though very

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Speaker 11: generous gift by Cutter, I mean, you know, very inappropriate

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Speaker 11: for the President to say, yes, we still he can't

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Speaker 11: fly on that thing until it's outfitted with all the

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Speaker 11: most stead of the art electronics, redundancy in every facet

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Speaker 11: of it, and significant alterations to its ability to.

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Speaker 12: Defend against an attack.

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Speaker 11: These are all the reasons why the current new air

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Speaker 11: Force one is slow to get going because there are

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Speaker 11: a lot of changes all that's got to be done

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Speaker 11: to this plane before he flies in it for one hour,

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Speaker 11: and that is a new charge to the American taxpayer.

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Speaker 11: The reason it's going to the Department Offense is because

438
00:23:24,560 --> 00:23:28,600
Speaker 11: they have the budget to actually retrofit it. So you know,

439
00:23:29,119 --> 00:23:30,639
Speaker 11: it's going to be a story we're going to be

440
00:23:30,640 --> 00:23:32,960
Speaker 11: talking about all summer long because someone's going to.

441
00:23:32,960 --> 00:23:35,520
Speaker 12: Say, Gee, how much did that cost the American.

442
00:23:35,119 --> 00:23:38,480
Speaker 11: Taxpayer to retrofit in addition to the new one that

443
00:23:38,520 --> 00:23:40,760
Speaker 11: we're building before the end of the administration.

444
00:23:42,640 --> 00:23:45,199
Speaker 2: It's an excellent point, Rick, And obviously this story is

445
00:23:45,240 --> 00:23:46,560
Speaker 2: going to be kept in the news at least for

446
00:23:46,600 --> 00:23:48,800
Speaker 2: this week because President Trump is going to be spending

447
00:23:48,880 --> 00:23:51,760
Speaker 2: time in Cutter this week and Saudi Arabia and the UAE.

448
00:23:51,800 --> 00:23:54,200
Speaker 2: He is on board the current Air Force one heading

449
00:23:54,240 --> 00:23:56,440
Speaker 2: to the Middle East right now. And Rick, I wonder

450
00:23:56,480 --> 00:24:00,280
Speaker 2: what outcome you really expect from this first big trip

451
00:24:00,280 --> 00:24:06,320
Speaker 2: abroad of his second administration, not focusing necessarily on geopolitical

452
00:24:06,359 --> 00:24:09,960
Speaker 2: issues or regional conflict. Instead, we understand he's mostly there

453
00:24:09,960 --> 00:24:13,520
Speaker 2: to try to secure money investments into the United States.

454
00:24:13,560 --> 00:24:14,879
Speaker 2: This just about deal making.

455
00:24:16,119 --> 00:24:17,199
Speaker 12: Yeah, I think a lot of it is.

456
00:24:17,880 --> 00:24:20,880
Speaker 11: I was actually on the president's trip to Saudi Arabia

457
00:24:20,880 --> 00:24:23,840
Speaker 11: in May of twenty seventeen, when you know, he basically

458
00:24:24,040 --> 00:24:29,320
Speaker 11: was trying to reopen Saudi Arabia for investment in foreign

459
00:24:29,320 --> 00:24:33,080
Speaker 11: direct investment into the United States and that worked for

460
00:24:33,119 --> 00:24:36,359
Speaker 11: a little while, but the Biden administration kind of chilled

461
00:24:36,400 --> 00:24:39,119
Speaker 11: that out. So I think this is to retro start

462
00:24:39,160 --> 00:24:41,800
Speaker 11: that right, get it going again. Let's get those Saudi dollars,

463
00:24:41,840 --> 00:24:47,120
Speaker 11: the UAE cutter dollars, you know, get the GCC into

464
00:24:47,359 --> 00:24:49,679
Speaker 11: investing in the United States. And I'm sure there'll be

465
00:24:49,760 --> 00:24:53,159
Speaker 11: questions with these folks about price of oil.

466
00:24:53,040 --> 00:24:54,400
Speaker 12: How much pumping's going on.

467
00:24:55,000 --> 00:24:58,120
Speaker 11: Nothing is more obsessive to Donald Trump than the price

468
00:24:58,160 --> 00:25:01,560
Speaker 11: of a gallon of gasoline, and these folks in the

469
00:25:01,680 --> 00:25:03,679
Speaker 11: Middle East have a lot to do with that. So

470
00:25:04,440 --> 00:25:06,639
Speaker 11: my guess is the one thing that's probably not going

471
00:25:06,680 --> 00:25:08,399
Speaker 11: to be a news story, and it'd be interesting if

472
00:25:08,440 --> 00:25:10,480
Speaker 11: it was, is whether or not he can convince the

473
00:25:10,480 --> 00:25:14,600
Speaker 11: Saudis to enter into an Abraham accord, and something he

474
00:25:14,680 --> 00:25:18,120
Speaker 11: was very proud of in his first term with Israel,

475
00:25:18,440 --> 00:25:21,520
Speaker 11: but it just seems Israel's not on this agenda this.

476
00:25:21,440 --> 00:25:25,919
Speaker 3: Week, Genie, how critical is it for the president to

477
00:25:25,960 --> 00:25:29,520
Speaker 3: show continued progress when it comes to those investments. He

478
00:25:29,680 --> 00:25:33,240
Speaker 3: started really on his first full day in office announcing

479
00:25:33,320 --> 00:25:36,480
Speaker 3: that kind of an economic push from abroad into the US.

480
00:25:36,600 --> 00:25:40,240
Speaker 3: He'll remember that big Softgate AI Data center announcement, and

481
00:25:40,359 --> 00:25:42,880
Speaker 3: from there it's been off to the races. How much

482
00:25:42,920 --> 00:25:45,240
Speaker 3: more are we looking for and how much more will

483
00:25:45,280 --> 00:25:47,719
Speaker 3: he be able to follow through with all of it?

484
00:25:49,600 --> 00:25:52,000
Speaker 9: Yeah, you know, I think the concern of many of

485
00:25:52,080 --> 00:25:55,280
Speaker 9: us is the question of whether this is about investment

486
00:25:55,520 --> 00:25:59,639
Speaker 9: in the United States or investment in Donald Trump, his companies,

487
00:25:59,720 --> 00:26:03,960
Speaker 9: his his family, Steve Whitcoff's family. I mean, you know,

488
00:26:04,080 --> 00:26:07,600
Speaker 9: he is famously not going to Israel this trip. He

489
00:26:07,760 --> 00:26:10,600
Speaker 9: is going to cut our He is going to Saudi Arabia.

490
00:26:11,080 --> 00:26:14,160
Speaker 9: These are places where just in the last few weeks

491
00:26:14,280 --> 00:26:17,720
Speaker 9: and months, his sons have talked about deals they have

492
00:26:17,840 --> 00:26:21,040
Speaker 9: struck in the interest of the Trump family and the

493
00:26:21,080 --> 00:26:25,160
Speaker 9: Trump business. They have talked about this golf agreement. They

494
00:26:25,160 --> 00:26:29,840
Speaker 9: have talked about this crypto agreement that was made and

495
00:26:29,840 --> 00:26:32,800
Speaker 9: that they have benefited from. So yes, I mean, if

496
00:26:32,800 --> 00:26:35,560
Speaker 9: the focus is on investment in the US, that is

497
00:26:35,680 --> 00:26:39,400
Speaker 9: absolutely something to be welcome. But I think the concern here,

498
00:26:39,720 --> 00:26:42,800
Speaker 9: just like the concern about the airplane, is is this

499
00:26:42,880 --> 00:26:45,399
Speaker 9: really about the US and what's in the interest of

500
00:26:45,520 --> 00:26:48,680
Speaker 9: US security or is it about Donald Trump and his

501
00:26:48,840 --> 00:26:52,800
Speaker 9: family and friends. And you see real evidence if you

502
00:26:52,960 --> 00:26:55,440
Speaker 9: just look at where they've been traveling and what they've

503
00:26:55,480 --> 00:26:58,520
Speaker 9: been posting that a lot of the focus is on

504
00:26:58,880 --> 00:26:59,359
Speaker 9: the latter.

505
00:26:59,480 --> 00:27:04,160
Speaker 2: Unfortunately, Rick, I want to return to where you ended

506
00:27:04,200 --> 00:27:07,080
Speaker 2: your last answer, as you mentioned Israel perhaps not being

507
00:27:07,119 --> 00:27:09,080
Speaker 2: as much in focus, and we should point out that

508
00:27:09,160 --> 00:27:13,800
Speaker 2: today back in Israeli territories, the last living American Israeli

509
00:27:13,840 --> 00:27:17,320
Speaker 2: hostage that was being held by hamas a Don Alexander.

510
00:27:17,359 --> 00:27:20,760
Speaker 2: This appears to be a release that was essentially negotiated

511
00:27:20,800 --> 00:27:25,600
Speaker 2: singularly without necessarily Israel being involved. And whether you're looking

512
00:27:25,680 --> 00:27:28,679
Speaker 2: at this particular instance knowing there are still remaining hostages

513
00:27:28,720 --> 00:27:31,240
Speaker 2: in Gaza, whether you look at the kind of truth

514
00:27:31,240 --> 00:27:35,240
Speaker 2: that has been gotten to by the US and the

515
00:27:35,280 --> 00:27:38,000
Speaker 2: who thies the US talking to Iran, all of it

516
00:27:38,080 --> 00:27:41,560
Speaker 2: kind of paints a picture of President Trump being, if

517
00:27:41,560 --> 00:27:44,000
Speaker 2: not at odds, at the very least not as an

518
00:27:44,040 --> 00:27:47,359
Speaker 2: alignment with the Netnyahu government. As was thought when he

519
00:27:47,400 --> 00:27:49,640
Speaker 2: came into office, Is he still the best friend Israel's

520
00:27:49,640 --> 00:27:50,080
Speaker 2: ever had?

521
00:27:51,440 --> 00:27:53,399
Speaker 11: You know, I think he's still probably the best friend

522
00:27:53,440 --> 00:27:58,080
Speaker 11: Israel's ever had. But I'm just not sure bb Netnyah,

523
00:27:58,080 --> 00:27:59,840
Speaker 11: who's going to think of him as the best friend

524
00:27:59,880 --> 00:28:00,720
Speaker 11: he's ever had?

525
00:28:01,119 --> 00:28:03,480
Speaker 12: You you've you, you struck a good court.

526
00:28:03,600 --> 00:28:03,719
Speaker 6: Uh.

527
00:28:03,880 --> 00:28:06,040
Speaker 11: Donald Trump's out doing his own deals with the hoodies

528
00:28:06,119 --> 00:28:09,560
Speaker 11: and and and with with the Hamas, and and and

529
00:28:09,600 --> 00:28:14,080
Speaker 11: the realities. You'd never hear about that beautiful UH development

530
00:28:14,200 --> 00:28:17,400
Speaker 11: in Gaza anymore. That was a real lift to uh

531
00:28:17,520 --> 00:28:20,040
Speaker 11: Bibing Nyahu's war plans to be able to clean that

532
00:28:20,119 --> 00:28:23,720
Speaker 11: out and actually move Palestinians out of there. Uh So,

533
00:28:23,720 --> 00:28:27,160
Speaker 11: so much of that early, you know, first month in office,

534
00:28:27,240 --> 00:28:30,880
Speaker 11: when UH there seemed to be an incredible link between

535
00:28:30,880 --> 00:28:34,440
Speaker 11: the two countries and the two presidents, has seemed to

536
00:28:34,640 --> 00:28:37,359
Speaker 11: pretty much vanish. Now there are other priorities, And it

537
00:28:37,359 --> 00:28:41,040
Speaker 11: doesn't mean that the President has lost his affinity for

538
00:28:41,720 --> 00:28:42,280
Speaker 11: uh for.

539
00:28:42,280 --> 00:28:42,920
Speaker 12: The Prime Minister.

540
00:28:43,000 --> 00:28:46,200
Speaker 11: But the reality of it is is that this was

541
00:28:46,240 --> 00:28:48,560
Speaker 11: a week where you would have thought the President would

542
00:28:48,600 --> 00:28:52,640
Speaker 11: have ended his Middle East tour in Jerusalem a big

543
00:28:52,800 --> 00:28:57,280
Speaker 11: victory lap based on his relationship with the Israeli people

544
00:28:57,440 --> 00:29:00,920
Speaker 11: and with Bibi nt Yahoo, but didn't seem to come pass.

545
00:29:02,400 --> 00:29:05,240
Speaker 3: Genie without about a minute left. We also may see

546
00:29:05,280 --> 00:29:08,760
Speaker 3: the President take a detour to Turkey for talks on Ukraine.

547
00:29:08,880 --> 00:29:12,200
Speaker 3: How much pressure is he under to deliver and show

548
00:29:12,240 --> 00:29:13,400
Speaker 3: some more progress there.

549
00:29:14,760 --> 00:29:17,040
Speaker 9: Yeah, he's under a lot of pressure, a lot of

550
00:29:17,080 --> 00:29:20,080
Speaker 9: it self imposed because we're long past his twenty four

551
00:29:20,080 --> 00:29:22,280
Speaker 9: to forty eight hour window mic for him to get

552
00:29:22,280 --> 00:29:25,320
Speaker 9: this deal done. But weirdly over the weekend he seems

553
00:29:25,320 --> 00:29:27,960
Speaker 9: to be negotiating with Zelensky on his own. I mean,

554
00:29:28,000 --> 00:29:30,440
Speaker 9: Putin seems to be out of it. He's saying, do Zelenski,

555
00:29:30,800 --> 00:29:33,360
Speaker 9: you know, just just make a deal just you know,

556
00:29:33,560 --> 00:29:36,240
Speaker 9: and the war yourself, don't wait for Putin. So I

557
00:29:36,240 --> 00:29:38,440
Speaker 9: think Zelensky has done the right thing saying he's going

558
00:29:38,480 --> 00:29:42,640
Speaker 9: to go to Istanbul, invited Putin to come. It doesn't

559
00:29:42,640 --> 00:29:45,000
Speaker 9: look like Putin will come, and that will open him

560
00:29:45,080 --> 00:29:48,640
Speaker 9: up to continue to get support militarily, intelligence and otherwise

561
00:29:48,680 --> 00:29:52,840
Speaker 9: from the US as Putin continues to be the sort

562
00:29:52,880 --> 00:29:56,239
Speaker 9: of problem in these negotiations, not Zelensky.

563
00:29:57,360 --> 00:30:00,360
Speaker 2: All right, Genie Shanzano and Rick Davis, our Political Panel

564
00:30:00,400 --> 00:30:02,880
Speaker 2: on this Monday, Thanks for being here as always on

565
00:30:03,040 --> 00:30:04,960
Speaker 2: Balance of Power and still Ahead, will be joined by

566
00:30:05,000 --> 00:30:07,600
Speaker 2: the former Chair of the House Financial Services Committee, Patrick

567
00:30:07,640 --> 00:30:10,360
Speaker 2: McHenry as we turn our focus to Congress in the

568
00:30:10,400 --> 00:30:13,719
Speaker 2: budget reconciliation package, what exactly is going to be in

569
00:30:13,760 --> 00:30:16,560
Speaker 2: these tax cuts. We'll have the details ahead here on Bloomberg.

570
00:30:19,960 --> 00:30:23,440
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

571
00:30:23,480 --> 00:30:26,920
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

572
00:30:27,000 --> 00:30:30,360
Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. Listen

573
00:30:30,440 --> 00:30:33,520
Speaker 1: on demand wherever you get your podcasts, or watch us

574
00:30:33,560 --> 00:30:35,440
Speaker 1: live on YouTube.

575
00:30:36,320 --> 00:30:38,680
Speaker 2: Kicking off the week in Washington, which is going to

576
00:30:38,720 --> 00:30:41,480
Speaker 2: be a very big one for Republicans in the House

577
00:30:41,520 --> 00:30:45,720
Speaker 2: of Representatives specifically, is tomorrow, about twenty four hours from now. Actually,

578
00:30:45,760 --> 00:30:48,800
Speaker 2: two key markups are going to happen in crucial House committees,

579
00:30:48,840 --> 00:30:51,320
Speaker 2: the Energy and Commerce Committee, which has released a bill

580
00:30:51,320 --> 00:30:53,920
Speaker 2: that includes what the Comreational Budget Office says is more

581
00:30:53,960 --> 00:30:57,240
Speaker 2: than eight hundred and eighty billion dollars in cost savings,

582
00:30:57,280 --> 00:30:59,680
Speaker 2: in part because nearly fourteen million people could get kicked

583
00:30:59,680 --> 00:31:02,320
Speaker 2: off metakid roles in the next decade. Then there's the

584
00:31:02,360 --> 00:31:04,840
Speaker 2: ways and means Committee, which of course is charged with

585
00:31:04,880 --> 00:31:07,600
Speaker 2: outlining the broad tax package, all the tax cuts the

586
00:31:07,600 --> 00:31:10,560
Speaker 2: president wants, and perhaps trying to find a number that

587
00:31:10,640 --> 00:31:13,600
Speaker 2: is going to make the Salt Caucus happy. According to

588
00:31:13,640 --> 00:31:16,760
Speaker 2: our reporting here at Bloomberg Today, the number they're looking

589
00:31:16,760 --> 00:31:19,720
Speaker 2: at for married couples in high tax states at California

590
00:31:19,760 --> 00:31:22,600
Speaker 2: and New York thirty thousand dollars, so you remove the

591
00:31:22,600 --> 00:31:24,920
Speaker 2: marriage penalty. It's up from ten thousand, but it still

592
00:31:24,960 --> 00:31:27,440
Speaker 2: might not be enough. Mike Shephard for some of those

593
00:31:27,480 --> 00:31:29,920
Speaker 2: Salt cock his members who've been pushing for numbers more

594
00:31:29,960 --> 00:31:31,120
Speaker 2: than double that, Well.

595
00:31:30,960 --> 00:31:33,440
Speaker 3: That's right, and Mike Johnson can't afford to lose too

596
00:31:33,480 --> 00:31:35,800
Speaker 3: many votes given the margin in the House right now,

597
00:31:36,160 --> 00:31:38,920
Speaker 3: and everything is riding on this, the big beautiful bill

598
00:31:38,960 --> 00:31:41,680
Speaker 3: we've heard the President talk about so much, and there

599
00:31:41,760 --> 00:31:44,240
Speaker 3: is a lot more than just salt going into this.

600
00:31:44,400 --> 00:31:47,480
Speaker 3: We're also looking at some of his campaign priorities, including

601
00:31:47,840 --> 00:31:53,400
Speaker 3: exempting Social Security income and exempting tax exempting tip income as.

602
00:31:53,320 --> 00:31:54,200
Speaker 10: Well from taxes.

603
00:31:54,400 --> 00:31:56,600
Speaker 3: So we're going to be looking for a lot and

604
00:31:56,760 --> 00:31:59,040
Speaker 3: lawmakers have a lot of angels to stand on the

605
00:31:59,040 --> 00:31:59,840
Speaker 3: head of a pen here.

606
00:32:00,120 --> 00:32:00,640
Speaker 12: Yeah, they do.

607
00:32:00,880 --> 00:32:02,400
Speaker 2: Keeping in mind they want to do this in just

608
00:32:02,480 --> 00:32:05,080
Speaker 2: a handful of legislative days, as the Speaker wants to

609
00:32:05,080 --> 00:32:07,960
Speaker 2: see this thing passed on the floor by Memorial Day.

610
00:32:08,040 --> 00:32:10,960
Speaker 2: So we want to get into this wider reconciliation process

611
00:32:10,960 --> 00:32:12,640
Speaker 2: now and turn to someone who was in of course

612
00:32:12,640 --> 00:32:16,239
Speaker 2: the House of Representatives until recently, former Republican Congressman from

613
00:32:16,280 --> 00:32:19,640
Speaker 2: North Carolina and former chair of the House Financial Services Committee,

614
00:32:19,680 --> 00:32:22,400
Speaker 2: now Bloomberg contributor as well. Patrick McHenry is here with

615
00:32:22,480 --> 00:32:26,400
Speaker 2: us in Washington. Welcome. So when we consider this Salt

616
00:32:26,440 --> 00:32:30,160
Speaker 2: issue in particular, knowing that there are a number of

617
00:32:30,200 --> 00:32:32,680
Speaker 2: moderate members who make or break the House majority who

618
00:32:32,680 --> 00:32:34,480
Speaker 2: are going to have a very difficult time with this

619
00:32:34,600 --> 00:32:37,520
Speaker 2: considering their constituencies, is this actually what is going to

620
00:32:37,560 --> 00:32:39,920
Speaker 2: make or break an ultimate floor vote.

621
00:32:40,040 --> 00:32:40,880
Speaker 10: Absolutely so.

622
00:32:41,200 --> 00:32:44,760
Speaker 13: The Salt Caucus has been hard at work for years

623
00:32:44,840 --> 00:32:46,960
Speaker 13: on this. The reason why we're able to pass the

624
00:32:46,960 --> 00:32:50,280
Speaker 13: original Tax Cuts and Jobs Action in twenty seventeen is

625
00:32:50,280 --> 00:32:56,760
Speaker 13: because we overcame those votes, those Republicans from Salt States

626
00:32:57,240 --> 00:32:59,920
Speaker 13: New York being the biggest and the loudest group of

627
00:33:00,600 --> 00:33:04,959
Speaker 13: Republican legislators here. The Salt does not model out as

628
00:33:05,000 --> 00:33:07,960
Speaker 13: a Senate problem at all, there are no Republican senators

629
00:33:08,000 --> 00:33:11,240
Speaker 13: from states where the state and local tax is a

630
00:33:11,600 --> 00:33:17,360
Speaker 13: big issue for ratepayers. New York holds the balance for Republicans,

631
00:33:17,720 --> 00:33:20,080
Speaker 13: and they're the majority makers in the House Representatives.

632
00:33:20,080 --> 00:33:21,480
Speaker 10: They gave us the majority.

633
00:33:21,640 --> 00:33:25,640
Speaker 13: Three years ago and in last year, and so they

634
00:33:25,680 --> 00:33:27,400
Speaker 13: need to be taken care of. They need to be

635
00:33:27,440 --> 00:33:29,840
Speaker 13: taken care of in a way that's sufficient for their constituents.

636
00:33:30,040 --> 00:33:31,680
Speaker 13: They can't go home and say, you know, I raise

637
00:33:31,720 --> 00:33:35,840
Speaker 13: your taxes. That's not a good message for Republicans anywhere,

638
00:33:36,320 --> 00:33:38,600
Speaker 13: but most especially in state like New York. So you

639
00:33:38,640 --> 00:33:42,800
Speaker 13: have really competent, smart legislators here. The question of whether

640
00:33:42,840 --> 00:33:44,960
Speaker 13: or not thirty thousand is going to be sufficient for them,

641
00:33:45,200 --> 00:33:46,479
Speaker 13: we're going to see, and we're going to see in

642
00:33:46,480 --> 00:33:50,240
Speaker 13: a very public way. These are the most public Republicans

643
00:33:51,480 --> 00:33:52,640
Speaker 13: in the House Representatives.

644
00:33:52,640 --> 00:33:53,520
Speaker 12: They are allowed.

645
00:33:53,800 --> 00:33:55,800
Speaker 10: They know how mike law, they know.

646
00:33:55,840 --> 00:33:57,880
Speaker 13: How to get media attention, they know how to draw

647
00:33:57,920 --> 00:34:01,200
Speaker 13: attention the issues they care about and draw people in.

648
00:34:01,360 --> 00:34:02,800
Speaker 13: So we're going to be drawn in and we're going

649
00:34:02,840 --> 00:34:05,440
Speaker 13: to be live with them every step of the way.

650
00:34:06,000 --> 00:34:08,799
Speaker 3: Based on your experience, what sounds like a level that

651
00:34:08,840 --> 00:34:12,400
Speaker 3: will get these members over into the yes column.

652
00:34:12,480 --> 00:34:14,879
Speaker 10: So this is the difficulty of negotiating on this.

653
00:34:15,360 --> 00:34:18,480
Speaker 13: More is the number, right, So you say a number

654
00:34:18,520 --> 00:34:22,000
Speaker 13: and they say more, and eventually we'll find that number.

655
00:34:22,040 --> 00:34:23,640
Speaker 13: I don't think it's going to be a round number

656
00:34:23,760 --> 00:34:26,200
Speaker 13: at the end of the day. It will be something

657
00:34:26,239 --> 00:34:29,160
Speaker 13: different than what we tend to do in the Congress,

658
00:34:29,200 --> 00:34:31,600
Speaker 13: which is like a nice round number.

659
00:34:32,600 --> 00:34:33,839
Speaker 10: So we're going to see this.

660
00:34:33,960 --> 00:34:35,959
Speaker 13: I don't think this is a fully big product coming

661
00:34:35,960 --> 00:34:37,120
Speaker 13: out of the committee.

662
00:34:37,680 --> 00:34:40,320
Speaker 2: Well, and I guess the markup will we be revealing.

663
00:34:40,360 --> 00:34:42,160
Speaker 2: We've heard tell that it's going to go into way

664
00:34:42,239 --> 00:34:44,840
Speaker 2: late in the night tomorrow and something we'll have to

665
00:34:44,840 --> 00:34:46,640
Speaker 2: continue to follow throughout the week. I also want to

666
00:34:46,640 --> 00:34:48,000
Speaker 2: talk about what's going to get marked up in the

667
00:34:48,120 --> 00:34:50,719
Speaker 2: Energy and Commerce Committee though, because of course medicaid was

668
00:34:50,719 --> 00:34:54,239
Speaker 2: the other massive question they have, according to the Congressional

669
00:34:54,280 --> 00:34:56,200
Speaker 2: Budget Office, come up with a package here that is

670
00:34:56,200 --> 00:34:58,360
Speaker 2: actually going to save more than they were charged with,

671
00:34:58,440 --> 00:35:00,840
Speaker 2: saving more than the eight hundred and eighty billion dollars,

672
00:35:01,080 --> 00:35:03,399
Speaker 2: but the cost of doing so is potentially thirteen point

673
00:35:03,440 --> 00:35:06,640
Speaker 2: seven million people losing their benefits over the next decade.

674
00:35:06,680 --> 00:35:10,520
Speaker 2: Senator Josh Holly, a Republican, says this argument is both

675
00:35:10,560 --> 00:35:14,160
Speaker 2: morally wrong and politically suicidal. Do you see this as

676
00:35:14,239 --> 00:35:15,720
Speaker 2: political suicide if it passes?

677
00:35:15,800 --> 00:35:20,080
Speaker 13: No, because savings to healthcare programs does not necessarily mean

678
00:35:20,640 --> 00:35:24,360
Speaker 13: those that benefit from the healthcare program get less of it.

679
00:35:24,360 --> 00:35:27,400
Speaker 13: It may mean that somebody in the middle has their

680
00:35:28,000 --> 00:35:33,480
Speaker 13: wonderful profit box that it gets goreed. And so we

681
00:35:33,560 --> 00:35:37,279
Speaker 13: see this with payment issues through CMS. This is a

682
00:35:37,520 --> 00:35:41,160
Speaker 13: very standard challenge with health care policy is that they

683
00:35:41,360 --> 00:35:43,839
Speaker 13: always go back to a number of people that are

684
00:35:43,880 --> 00:35:48,080
Speaker 13: directly benefited, and it never is the case. So let's

685
00:35:48,080 --> 00:35:51,000
Speaker 13: step back. What is the package that House Republicans are

686
00:35:51,000 --> 00:35:53,400
Speaker 13: proposing here? First, Brett Guthrie is the chair of the

687
00:35:53,480 --> 00:35:57,080
Speaker 13: Energy and Commerce Committee. He is an expert in healthcare policy.

688
00:35:57,280 --> 00:35:59,600
Speaker 13: He has worked with as their members to dial in

689
00:35:59,640 --> 00:36:01,520
Speaker 13: this space the civics of the policy that they think

690
00:36:01,560 --> 00:36:06,239
Speaker 13: will have the greatest savings to the taxpayer and the

691
00:36:06,320 --> 00:36:08,759
Speaker 13: least amount of harm to those that benefit from these

692
00:36:08,760 --> 00:36:09,719
Speaker 13: healthcare programs.

693
00:36:09,880 --> 00:36:10,480
Speaker 10: Number one.

694
00:36:10,719 --> 00:36:14,000
Speaker 13: Number two, they're going to reform these programs so you

695
00:36:14,000 --> 00:36:17,279
Speaker 13: have better delivery and better quality of those that are

696
00:36:17,560 --> 00:36:20,400
Speaker 13: getting healthcare benefits through Medicaid. So I think some of

697
00:36:20,400 --> 00:36:23,920
Speaker 13: these things are quite sensible. And I think the shock

698
00:36:23,960 --> 00:36:27,479
Speaker 13: and a number of people getting thrown out, thrown off

699
00:36:27,719 --> 00:36:30,440
Speaker 13: of the plan, I think it will not end up

700
00:36:30,480 --> 00:36:31,200
Speaker 13: that way.

701
00:36:31,520 --> 00:36:33,440
Speaker 10: I think it'll be a much set.

702
00:36:33,280 --> 00:36:36,839
Speaker 13: Of sharper outcomes that will be beneficial to the taxpayer

703
00:36:36,920 --> 00:36:37,600
Speaker 13: and to the public.

704
00:36:37,880 --> 00:36:41,040
Speaker 3: Are the work requirements that are being discussed right now

705
00:36:41,120 --> 00:36:44,719
Speaker 3: even practical? Will people be able to follow through and

706
00:36:45,040 --> 00:36:49,239
Speaker 3: follow all the steps necessary to continue qualifying if they

707
00:36:49,280 --> 00:36:52,319
Speaker 3: are put in a position of having to make sure

708
00:36:52,360 --> 00:36:54,920
Speaker 3: that they verify employment receive Medicaid benefits?

709
00:36:55,520 --> 00:37:01,160
Speaker 13: Traditionally, Yes, those people that are receiving these benefits tend

710
00:37:01,160 --> 00:37:04,640
Speaker 13: to be experts in how to receive these benefits. So

711
00:37:05,120 --> 00:37:07,799
Speaker 13: let's step back on work requirements. Republicans have been for

712
00:37:07,960 --> 00:37:11,560
Speaker 13: work requirements for our social safety net for generations.

713
00:37:11,600 --> 00:37:13,200
Speaker 10: This is not a new set of policies.

714
00:37:13,440 --> 00:37:16,480
Speaker 13: And in fact, this work requirement we put in place

715
00:37:17,640 --> 00:37:24,080
Speaker 13: for food stamps during the debt sealing negotiations two years

716
00:37:24,080 --> 00:37:27,000
Speaker 13: ago at this time that got a two thirds majority

717
00:37:27,000 --> 00:37:29,480
Speaker 13: in the House the Senate and signed by Joe Biden.

718
00:37:29,600 --> 00:37:33,320
Speaker 13: Some of these work requirements are not right wing policy

719
00:37:34,680 --> 00:37:38,640
Speaker 13: or some ideal set of right wing policy. Some of

720
00:37:38,640 --> 00:37:41,520
Speaker 13: them just very practical things that could be achieved in

721
00:37:41,520 --> 00:37:42,840
Speaker 13: a bipartisan vote.

722
00:37:43,200 --> 00:37:45,120
Speaker 2: Just because you mentioned the debt ceiling, we also should

723
00:37:45,160 --> 00:37:47,399
Speaker 2: point out on Friday, the Treasury Secretary send a letter

724
00:37:47,440 --> 00:37:49,080
Speaker 2: to the Speaker that says, you need to get that

725
00:37:49,120 --> 00:37:51,840
Speaker 2: thing raised before the August recess, because at that point

726
00:37:52,040 --> 00:37:53,880
Speaker 2: is when the Treasury might no longer be able to

727
00:37:53,920 --> 00:37:57,440
Speaker 2: meet its obligations. Does that timeframe make you nervous? If

728
00:37:57,440 --> 00:38:02,600
Speaker 2: the debt ceiling raising mechanism is to be the reconciliation package.

729
00:38:02,200 --> 00:38:03,120
Speaker 10: It makes me nervous.

730
00:38:03,160 --> 00:38:07,000
Speaker 13: But as a congressional leader, it is the welcome sign

731
00:38:07,480 --> 00:38:10,000
Speaker 13: that there's an end date for the pain and suffering

732
00:38:10,160 --> 00:38:13,400
Speaker 13: of going through the reconciliation process. We saw this with

733
00:38:13,440 --> 00:38:16,759
Speaker 13: a Biden administration trying to do two reconciliation bills, and

734
00:38:16,800 --> 00:38:18,760
Speaker 13: it drug on for months and months and months.

735
00:38:18,960 --> 00:38:20,960
Speaker 10: We have an end date now, and if you want to.

736
00:38:21,000 --> 00:38:24,040
Speaker 13: Leave town as a Congressional Republican, you better get your

737
00:38:24,040 --> 00:38:26,560
Speaker 13: stuff together in the month of July or you're going

738
00:38:26,640 --> 00:38:29,440
Speaker 13: to be sitting here roasting in the month of August.

739
00:38:30,160 --> 00:38:30,560
Speaker 12: I think that.

740
00:38:32,719 --> 00:38:35,200
Speaker 13: It condences the timeline that is a good thing for

741
00:38:35,239 --> 00:38:38,360
Speaker 13: the safety and health and happiness of the American people.

742
00:38:39,200 --> 00:38:42,960
Speaker 3: Chairman, does The need for speed, though, mean perhaps that

743
00:38:43,600 --> 00:38:45,960
Speaker 3: the president may have to let go of one or

744
00:38:46,000 --> 00:38:49,200
Speaker 3: two of the big priorities he outlined during the campaign,

745
00:38:49,239 --> 00:38:51,120
Speaker 3: And we were just talking about this in the open

746
00:38:51,640 --> 00:38:56,200
Speaker 3: exempting Social Security income and tipped income. Does something have

747
00:38:56,280 --> 00:39:00,360
Speaker 3: to give? As the push and chuve gets more intense.

748
00:39:00,160 --> 00:39:02,359
Speaker 13: I think what you see from this administration. I think

749
00:39:02,400 --> 00:39:04,640
Speaker 13: what you see from this president he's going to get

750
00:39:04,640 --> 00:39:08,800
Speaker 13: his way with congressional Republicans. He didn't make fifty campaign

751
00:39:08,800 --> 00:39:12,480
Speaker 13: pledges on tax policy. He made two or three. He's

752
00:39:12,520 --> 00:39:13,719
Speaker 13: going to get those two or three.

753
00:39:14,640 --> 00:39:16,200
Speaker 2: Something else that he talked about a lot on the

754
00:39:16,239 --> 00:39:19,279
Speaker 2: campaign trail as being a super pro crypto president. He

755
00:39:19,280 --> 00:39:21,520
Speaker 2: wants to make the US the bitcoin capital of the world.

756
00:39:21,600 --> 00:39:24,279
Speaker 2: He seemed widely supportive of legislative efforts on the hill,

757
00:39:24,280 --> 00:39:26,480
Speaker 2: and yet we saw one of those efforts fail on

758
00:39:26,520 --> 00:39:29,399
Speaker 2: the Senate floor last week, as the stable coin bill

759
00:39:29,400 --> 00:39:32,279
Speaker 2: failed to get adequate support. Knowing you spent a lot

760
00:39:32,280 --> 00:39:35,359
Speaker 2: of your time leading the Financial Services Committee on this issue,

761
00:39:35,400 --> 00:39:36,880
Speaker 2: what is that signal to you, not just about the

762
00:39:36,920 --> 00:39:39,279
Speaker 2: future of stable coin legislation, but if you can't do that,

763
00:39:39,640 --> 00:39:42,160
Speaker 2: what hope is there of getting something on market structure.

764
00:39:42,280 --> 00:39:45,040
Speaker 13: Oh, that's right, So this is the easier go of it.

765
00:39:45,239 --> 00:39:47,719
Speaker 13: A stable coin is a payment mechanism. We have a

766
00:39:47,719 --> 00:39:50,920
Speaker 13: payments regulatory regime. We haven't defined what is a payment

767
00:39:50,960 --> 00:39:53,560
Speaker 13: stable coin in federal law yet. It is a very

768
00:39:53,560 --> 00:39:57,120
Speaker 13: simple undertaking for a stable coin bill. Market structure is

769
00:39:57,160 --> 00:40:00,280
Speaker 13: a little more complex because we're talking about a a

770
00:40:00,320 --> 00:40:04,839
Speaker 13: new decentralized object and various pieces of technology that do

771
00:40:04,880 --> 00:40:08,040
Speaker 13: different things. Right, so it's defining the Internet. Well, the

772
00:40:08,080 --> 00:40:10,919
Speaker 13: Internet is many things and many layers to it. It's

773
00:40:10,920 --> 00:40:14,279
Speaker 13: harder do that one bill. So market structure is the

774
00:40:14,280 --> 00:40:16,640
Speaker 13: thing that is necessary for crypto to flourish here in

775
00:40:16,640 --> 00:40:19,880
Speaker 13: the United States. The Pavement sample Coin bill that the

776
00:40:19,920 --> 00:40:22,399
Speaker 13: Senate has worked on, they marked it up, welcome signed

777
00:40:22,440 --> 00:40:25,799
Speaker 13: for the Senate Banking Committee commitment. Senator Scott for his

778
00:40:26,520 --> 00:40:29,319
Speaker 13: adept handling of this, and Senator Haggerty and Lumus and

779
00:40:29,520 --> 00:40:29,960
Speaker 13: jail Brand.

780
00:40:30,040 --> 00:40:34,040
Speaker 10: They did a fabulous job. But you have almost all Republicans.

781
00:40:33,520 --> 00:40:37,200
Speaker 13: Together on crypto, and you have a remnant of Senate

782
00:40:37,520 --> 00:40:42,160
Speaker 13: Democratic members. So you have ten to fifteen pro crypto

783
00:40:42,520 --> 00:40:45,960
Speaker 13: Democratic senators and they're fighting against the base of their party,

784
00:40:46,080 --> 00:40:49,879
Speaker 13: especially the ranking member of the Senate Banking Committee, who

785
00:40:49,960 --> 00:40:54,759
Speaker 13: is a real problem crypto. Well, what they understand is

786
00:40:54,800 --> 00:40:57,200
Speaker 13: that crypto is popular. They want to be for it.

787
00:40:57,320 --> 00:41:00,279
Speaker 13: They also want to get bludgeoned by their fellow Democrat.

788
00:41:00,680 --> 00:41:02,799
Speaker 13: It has been a very tough set of politics for

789
00:41:02,800 --> 00:41:06,759
Speaker 13: these Senate Democrats to be pro crypto. What we'll see

790
00:41:06,800 --> 00:41:10,160
Speaker 13: though this week, maybe even next week, but probably this week,

791
00:41:10,400 --> 00:41:12,080
Speaker 13: is they'll come to terms with a reasonable set of

792
00:41:12,120 --> 00:41:15,719
Speaker 13: policies and they'll have enough cover from their colleagues, Democratic

793
00:41:15,760 --> 00:41:18,200
Speaker 13: colleagues that they can do this. I think they need

794
00:41:18,239 --> 00:41:21,879
Speaker 13: a little political cover, frankly, to come to a regionable spot, and.

795
00:41:21,840 --> 00:41:23,040
Speaker 10: That's what we got last week.

796
00:41:23,360 --> 00:41:26,040
Speaker 3: Chairman, speaking of political cover on crypto, what are you

797
00:41:26,160 --> 00:41:29,239
Speaker 3: expecting from the White House in its policy blueprint? From

798
00:41:29,320 --> 00:41:34,120
Speaker 3: David Sachs on cryptocurrencies and digital coin? Are you expecting

799
00:41:34,120 --> 00:41:36,120
Speaker 3: this to really shape things on Capitol Hill?

800
00:41:36,600 --> 00:41:38,680
Speaker 10: I think these products are largely baked.

801
00:41:39,120 --> 00:41:42,239
Speaker 13: We spent four years crafting the market Structure bill we

802
00:41:42,280 --> 00:41:44,320
Speaker 13: passed out of the House with a two thirds majority.

803
00:41:44,560 --> 00:41:46,200
Speaker 10: I think it's going to look a lot like that.

804
00:41:46,560 --> 00:41:50,359
Speaker 13: The key attributes, though for a market structure bill are

805
00:41:51,160 --> 00:41:52,920
Speaker 13: the definition of decentralization.

806
00:41:53,680 --> 00:41:57,000
Speaker 10: Is it narrowly controlled. If it's narrowly controlled, that's not decentralized.

807
00:41:57,280 --> 00:41:57,680
Speaker 12: We have a.

808
00:41:57,640 --> 00:42:00,200
Speaker 10: Regime for that. United States, it's undersecurities law.

809
00:42:00,520 --> 00:42:03,640
Speaker 13: Good luck, right, go try it out the sec You

810
00:42:03,680 --> 00:42:05,720
Speaker 13: don't need a new regime for that. If you're truly

811
00:42:05,760 --> 00:42:08,960
Speaker 13: decentralized and you don't have a neuro group controlling, you

812
00:42:09,000 --> 00:42:12,120
Speaker 13: need to have your own regulatory regime. That's our baked in.

813
00:42:12,239 --> 00:42:16,560
Speaker 13: That's understood from all branches. Everybody's engaged in this. The

814
00:42:16,600 --> 00:42:19,960
Speaker 13: second piece of this is the classification based off of

815
00:42:20,320 --> 00:42:21,520
Speaker 13: the technology.

816
00:42:21,960 --> 00:42:22,920
Speaker 10: What does this token do?

817
00:42:23,280 --> 00:42:26,239
Speaker 13: We should regulate it based off of its functionality and

818
00:42:26,280 --> 00:42:29,400
Speaker 13: its purpose, and those two things are baked into all

819
00:42:29,480 --> 00:42:34,640
Speaker 13: these bills. A Democratic Republican over this Congress and the

820
00:42:34,680 --> 00:42:35,640
Speaker 13: previous congresses.

821
00:42:35,680 --> 00:42:37,319
Speaker 10: So I think it's going to be baked in, and

822
00:42:37,520 --> 00:42:38,400
Speaker 10: I think we'll get.

823
00:42:38,280 --> 00:42:41,160
Speaker 13: To I think we'll get to a reasonable outcome, but

824
00:42:41,760 --> 00:42:44,279
Speaker 13: with some drama to get a market structure bill, and

825
00:42:44,320 --> 00:42:47,360
Speaker 13: that's going to take longer, perhaps July, maybe into the fall.

826
00:42:47,520 --> 00:42:48,600
Speaker 10: Before that's resulved.

827
00:42:48,680 --> 00:42:50,319
Speaker 2: We only have a minute left. So this is going

828
00:42:50,360 --> 00:42:52,600
Speaker 2: to be unfair, and I apologize in advance, but today

829
00:42:52,600 --> 00:42:54,759
Speaker 2: we're seeing a massive market rally on the US and

830
00:42:54,840 --> 00:42:58,080
Speaker 2: China taking their terror freates on each other lower after

831
00:42:58,120 --> 00:43:00,880
Speaker 2: talks in Geneva over this past weekend. Was it the

832
00:43:00,880 --> 00:43:03,960
Speaker 2: Trump administration that really is the one that blinked here?

833
00:43:05,120 --> 00:43:07,799
Speaker 13: It's unclear yet, and I think there's a lot of

834
00:43:08,160 --> 00:43:12,480
Speaker 13: there's a rally and hope. Hope is not reality, right,

835
00:43:12,600 --> 00:43:15,800
Speaker 13: Hope is not well it is today actually, But Hope

836
00:43:15,840 --> 00:43:20,080
Speaker 13: is not a set of policies, and it's not a tariff.

837
00:43:20,440 --> 00:43:22,880
Speaker 13: We have to actually see the finer details of the outcome.

838
00:43:23,200 --> 00:43:25,960
Speaker 13: And if this gets resolved soon in a permanent way,

839
00:43:26,000 --> 00:43:27,520
Speaker 13: that is going to be long term good for the

840
00:43:27,600 --> 00:43:30,760
Speaker 13: United States and our trading partners. And the longer it takes,

841
00:43:31,080 --> 00:43:32,239
Speaker 13: we're just extending paying.

842
00:43:32,600 --> 00:43:34,439
Speaker 2: All right, Well, we have a ninety day window to start.

843
00:43:34,480 --> 00:43:35,319
Speaker 10: We'll see where we are.

844
00:43:35,719 --> 00:43:39,000
Speaker 2: By August Bloomberg contributor and former House Financial Services Chair

845
00:43:39,000 --> 00:43:41,839
Speaker 2: Patrick with Henry, thank you so much for joining us.

846
00:43:46,640 --> 00:43:49,120
Speaker 10: Thanks for listening to the Balance of Power podcast.

847
00:43:49,719 --> 00:43:52,160
Speaker 6: Make sure to subscribe if you haven't already, at Apple,

848
00:43:52,239 --> 00:43:52,839
Speaker 6: Spotify

849
00:43:52,960 --> 00:43:55,520
Speaker 11: Or wherever you get your podcasts, and you can find

850
00:43:55,600 --> 00:43:58,840
Speaker 11: us live every weekday from Washington, DC at noontime Eastern

851
00:43:59,120 --> 00:44:00,560
Speaker 11: at Bloomberg car