1
00:00:02,640 --> 00:00:05,320
Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,

2
00:00:05,360 --> 00:00:07,640
Speaker 1: along with my co host Lisa Brahma wits. Each day

3
00:00:07,720 --> 00:00:10,240
Speaker 1: we bring you the most noteworthy and useful interviews for

4
00:00:10,280 --> 00:00:12,520
Speaker 1: you and your money, whether at the grocery store or

5
00:00:12,560 --> 00:00:15,480
Speaker 1: the trading floor. Find a Bloomberg Penil podcast on Apple

6
00:00:15,520 --> 00:00:17,959
Speaker 1: podcast or wherever you listen to podcasts, as well as

7
00:00:17,960 --> 00:00:20,360
Speaker 1: at Bloomberg dot com. Police and I've been talking about

8
00:00:20,480 --> 00:00:23,280
Speaker 1: really over the last several days. You know, we're somewhat

9
00:00:23,320 --> 00:00:27,440
Speaker 1: surprised at how well the equity markets are kind of discounting,

10
00:00:27,480 --> 00:00:31,360
Speaker 1: if you will, the coronavirus and the economic income economic

11
00:00:31,440 --> 00:00:35,080
Speaker 1: impact that may have going forward. Help us kind of

12
00:00:35,120 --> 00:00:37,120
Speaker 1: put into perspective kind of what's going on out there

13
00:00:37,120 --> 00:00:38,720
Speaker 1: in the world. We welcome, as always, our good friend

14
00:00:38,720 --> 00:00:42,000
Speaker 1: Barry Ridholtz, Bloomberg Opinion columist and host of Masters in

15
00:00:42,080 --> 00:00:44,839
Speaker 1: Business on Bloomberg Radio, also the founder and chairman and

16
00:00:44,880 --> 00:00:47,920
Speaker 1: chief investment officer Rid Holtz Wealth Management, joining us here

17
00:00:47,960 --> 00:00:51,519
Speaker 1: on our Bloomberg Interactive Broker Studio. So, Barry, one of

18
00:00:51,560 --> 00:00:53,279
Speaker 1: the things that you know, people have been were ten

19
00:00:53,360 --> 00:00:55,520
Speaker 1: or eleven years into this economic cycle, and people were

20
00:00:55,560 --> 00:00:58,360
Speaker 1: thinking about what's going to cause or push us into

21
00:00:58,360 --> 00:01:00,880
Speaker 1: the next recession. What are your thoughts on that as

22
00:01:00,880 --> 00:01:03,080
Speaker 1: we think about the coronavirus and all the other crazy

23
00:01:03,120 --> 00:01:05,280
Speaker 1: things going on out in the world. So, the two

24
00:01:05,360 --> 00:01:11,600
Speaker 1: big things I keep hearing from pundits and investors and economists.

25
00:01:12,040 --> 00:01:16,039
Speaker 1: One is a geopolitical event, and certainly the coronavirus qualifies

26
00:01:16,080 --> 00:01:18,959
Speaker 1: as that. And the other is this. You know, look

27
00:01:19,000 --> 00:01:24,200
Speaker 1: at Tesla, This this crazy tech boom and bubble is

28
00:01:24,200 --> 00:01:26,440
Speaker 1: going to lead us to a recession. And I don't

29
00:01:26,440 --> 00:01:32,080
Speaker 1: think either of those are genuine recessionary factors. Let's start

30
00:01:32,080 --> 00:01:34,800
Speaker 1: with the coronavirus, which I know you guys can't get

31
00:01:34,920 --> 00:01:37,120
Speaker 1: enough of. You been talking about it for solidly for

32
00:01:37,120 --> 00:01:40,760
Speaker 1: a week. Look, this is gonna be the case. He well,

33
00:01:40,760 --> 00:01:43,000
Speaker 1: he wants to be. Version. The a version is the

34
00:01:43,240 --> 00:01:45,840
Speaker 1: is the problematic. Look at that. You think we're obsessed.

35
00:01:45,880 --> 00:01:52,960
Speaker 1: You actually light here. So when you look at the

36
00:01:53,000 --> 00:01:56,160
Speaker 1: impact of this, it's going to affect imports and exports

37
00:01:56,160 --> 00:02:00,520
Speaker 1: out of China, It'll affect Australia and Korea and Vietnam. Um,

38
00:02:00,560 --> 00:02:03,440
Speaker 1: there'll be some knock on effect in the United States.

39
00:02:03,480 --> 00:02:07,840
Speaker 1: But this isn't the sort of thing without its spiraling

40
00:02:08,120 --> 00:02:11,239
Speaker 1: wildly out of control. This isn't the sort of thing

41
00:02:11,360 --> 00:02:13,880
Speaker 1: that leads to a recession. So we have less than

42
00:02:13,880 --> 00:02:17,080
Speaker 1: a thousand deaths, right, which are tragic, and we have

43
00:02:17,560 --> 00:02:21,840
Speaker 1: about ten thousand cases, and I think the death rate

44
00:02:21,880 --> 00:02:25,480
Speaker 1: is somewhere around two p which is high. But last

45
00:02:25,560 --> 00:02:28,520
Speaker 1: year in the United States were ten thousand influenza deaths.

46
00:02:29,320 --> 00:02:32,480
Speaker 1: The flu kills ten thousand people a year out of

47
00:02:32,480 --> 00:02:35,400
Speaker 1: admittedly much higher infection rates. It's a it's about a

48
00:02:35,400 --> 00:02:40,160
Speaker 1: tenth or so. This doesn't cause a global recession. But

49
00:02:40,200 --> 00:02:42,920
Speaker 1: this is basically what's being priced into the market today

50
00:02:42,919 --> 00:02:45,680
Speaker 1: that people are saying, we hear you. Valuations in the

51
00:02:45,680 --> 00:02:49,079
Speaker 1: tech companies high, and yet this is the future, so well,

52
00:02:49,080 --> 00:02:51,320
Speaker 1: why not? And it seems to be justified to some

53
00:02:51,360 --> 00:02:53,639
Speaker 1: degree by some of the results. It's much it's more

54
00:02:53,680 --> 00:02:55,400
Speaker 1: than that. I'm gonna jump up right here, all right.

55
00:02:55,680 --> 00:02:57,359
Speaker 1: It's much more than that, because if you look at

56
00:02:57,360 --> 00:03:01,600
Speaker 1: the trailing five year returns, the SMP five hundred is

57
00:03:01,680 --> 00:03:05,880
Speaker 1: up sixty over the past five years. The tech sector

58
00:03:06,400 --> 00:03:09,080
Speaker 1: a lot more growth, a lot more potential. It's up

59
00:03:09,080 --> 00:03:12,959
Speaker 1: a hundred and twenty, which sounds like a lot. Look

60
00:03:13,000 --> 00:03:15,799
Speaker 1: at the exact same five year period only instead of

61
00:03:15,840 --> 00:03:21,040
Speaker 1: going back from February, look at it from February two thousand,

62
00:03:21,480 --> 00:03:24,960
Speaker 1: the previous five years, the NASDAC gained eight hundred and

63
00:03:25,000 --> 00:03:29,240
Speaker 1: sixty five seven times the past five years growth of

64
00:03:29,280 --> 00:03:32,040
Speaker 1: the NASDAC. Now. And let me also point out that

65
00:03:32,320 --> 00:03:36,640
Speaker 1: tech stocks are making bootles and bootles of money. They're

66
00:03:36,840 --> 00:03:41,360
Speaker 1: enormously profitable. Look at look at Apple, Microsoft, Amazon, go

67
00:03:41,440 --> 00:03:43,600
Speaker 1: down the list of the amount of cash on the

68
00:03:43,600 --> 00:03:47,200
Speaker 1: balance sheet. This is not the dot com era, This

69
00:03:47,280 --> 00:03:51,840
Speaker 1: isn't even remotely close. These are large, profitable companies, some

70
00:03:52,000 --> 00:03:57,040
Speaker 1: of which are monopolies Google, Facebook arguably monopolies or essentially

71
00:03:57,080 --> 00:04:00,880
Speaker 1: I just pointed out something that Danielle DiMartino booth um

72
00:04:01,000 --> 00:04:04,920
Speaker 1: Um just retweeted. She appears on our show often basically

73
00:04:04,960 --> 00:04:06,560
Speaker 1: just kind of referencing what's going on in the repo

74
00:04:06,640 --> 00:04:09,600
Speaker 1: market and the fact that the Fed's injecting money into

75
00:04:09,680 --> 00:04:11,880
Speaker 1: the short end of the market, and she says that

76
00:04:12,160 --> 00:04:15,240
Speaker 1: is what's driving the markets. Everybody is entitled to be

77
00:04:15,320 --> 00:04:17,839
Speaker 1: as wrong as they want, and I have been arguing

78
00:04:17,839 --> 00:04:21,719
Speaker 1: with daniel de Martino about this for a solid decade.

79
00:04:22,480 --> 00:04:25,080
Speaker 1: Let's assume she's right Okay, so the Fed is doing this.

80
00:04:25,520 --> 00:04:28,000
Speaker 1: Now you know the Fed is driving the market higher

81
00:04:28,040 --> 00:04:30,600
Speaker 1: than you must really like stocks because there is no

82
00:04:30,680 --> 00:04:33,279
Speaker 1: sign the Fed's gonna stop doing this. I don't believe

83
00:04:33,400 --> 00:04:37,880
Speaker 1: the repo market directly in equity value, but put the

84
00:04:37,880 --> 00:04:39,680
Speaker 1: repo market aside, because a lot of people say that

85
00:04:39,680 --> 00:04:42,400
Speaker 1: that's just completely a structural issue. It's not necessarily pumping

86
00:04:42,400 --> 00:04:44,520
Speaker 1: liquidity into markets. Uh. There have been a lot of

87
00:04:44,600 --> 00:04:47,880
Speaker 1: arguments build Dudley in particular, making it in a Bloomberg

88
00:04:47,880 --> 00:04:50,400
Speaker 1: opinion column recently in former New York FED president. But

89
00:04:50,480 --> 00:04:53,400
Speaker 1: just on a larger point here, this concept of Fed stimulus,

90
00:04:53,400 --> 00:04:55,599
Speaker 1: I think it's poignant at a time when Christine Lagarde

91
00:04:55,640 --> 00:04:59,159
Speaker 1: came out overnight the ECB president and said, we don't

92
00:04:59,240 --> 00:05:03,600
Speaker 1: have that much more leverage to lower rates to stimulate

93
00:05:03,600 --> 00:05:07,719
Speaker 1: the economy. Hey, lawmakers, it's your turn, and that's what

94
00:05:07,839 --> 00:05:10,440
Speaker 1: she was saying. And you're hearing this increasingly, this feeling

95
00:05:10,560 --> 00:05:13,360
Speaker 1: that yeah, they're in there supporting the market, but they're

96
00:05:13,400 --> 00:05:16,160
Speaker 1: running out of ammunition. That doesn't concern you. The fact

97
00:05:16,160 --> 00:05:18,200
Speaker 1: that they're running out of ammunition and they haven't gotten

98
00:05:18,320 --> 00:05:23,000
Speaker 1: inflation up further, and you're seeing capex go down. I mean,

99
00:05:23,000 --> 00:05:24,520
Speaker 1: there are a whole host of things you can point

100
00:05:24,520 --> 00:05:26,599
Speaker 1: to to be barished. So I have a post of

101
00:05:26,680 --> 00:05:29,960
Speaker 1: on the blog a couple of years ago with a quote,

102
00:05:30,000 --> 00:05:32,720
Speaker 1: the FETE is running out of ammunition. Central bankers running

103
00:05:32,720 --> 00:05:35,280
Speaker 1: out of communition. This is a slide in the presentation

104
00:05:35,320 --> 00:05:38,160
Speaker 1: I do. Every year for the past twelve years, someone

105
00:05:38,200 --> 00:05:39,720
Speaker 1: has come out and said the FETE is running out

106
00:05:39,720 --> 00:05:42,360
Speaker 1: of ammunition, And as far as I can tell, they

107
00:05:42,400 --> 00:05:47,000
Speaker 1: have an infinite amount of ammunition. Because they issue credit

108
00:05:47,040 --> 00:05:51,840
Speaker 1: and they affect rates ps. Nobody is making buy or

109
00:05:51,880 --> 00:05:55,760
Speaker 1: cell decisions these days, about capex, about homes, about any

110
00:05:56,960 --> 00:06:01,000
Speaker 1: large purchase um because of we're its are if rates

111
00:06:01,000 --> 00:06:04,320
Speaker 1: go up a percent, they're still historically cheap, so that

112
00:06:04,560 --> 00:06:07,640
Speaker 1: that's not the issue. When we'd say the FED is

113
00:06:07,720 --> 00:06:11,520
Speaker 1: running out of ammo, the question is how low are

114
00:06:11,560 --> 00:06:14,120
Speaker 1: they going to keep rates and for how long? And

115
00:06:14,160 --> 00:06:18,480
Speaker 1: how much is that affecting other people's UM purchase decisions,

116
00:06:18,560 --> 00:06:23,440
Speaker 1: consumer demand, etcetera. I don't like the entire FED argument,

117
00:06:23,560 --> 00:06:27,960
Speaker 1: the central bank argument. It's clear the economy is instill

118
00:06:28,000 --> 00:06:30,920
Speaker 1: in a post credit crisis state and it is not

119
00:06:31,080 --> 00:06:33,880
Speaker 1: the most robust. Contrary to what you may have heard

120
00:06:33,880 --> 00:06:37,080
Speaker 1: at the State of the Union address, the global economy

121
00:06:37,120 --> 00:06:40,200
Speaker 1: and the U S economy have been highly dependent on

122
00:06:40,320 --> 00:06:43,320
Speaker 1: monetary policy. I'll give that much to Danielle. She's right

123
00:06:43,360 --> 00:06:47,159
Speaker 1: about that. And where Christine Legard is half right is

124
00:06:47,200 --> 00:06:51,880
Speaker 1: that we understand the Kinsian playbook in a crisis, when

125
00:06:52,080 --> 00:06:56,000
Speaker 1: when demand from consumers and demand from UH the business

126
00:06:56,000 --> 00:07:00,000
Speaker 1: sector drops, the government should step in with fiscal stimulus.

127
00:07:00,040 --> 00:07:03,760
Speaker 1: The fact that we've gone so long relying mostly on

128
00:07:03,839 --> 00:07:07,719
Speaker 1: monetary policy is a giant policy mistake. It should have

129
00:07:07,720 --> 00:07:11,760
Speaker 1: been fiscal stimulus from day one, with monetary stimulus right

130
00:07:11,800 --> 00:07:16,560
Speaker 1: behind it. Christine Legarde is absolutely right, albeit a decade late,

131
00:07:17,040 --> 00:07:20,560
Speaker 1: and it is remember the Austerians in the UK and Europe.

132
00:07:20,840 --> 00:07:23,760
Speaker 1: They took a bad situation and said, how could we

133
00:07:23,880 --> 00:07:27,840
Speaker 1: make this much much worse? I know, let's cut back

134
00:07:27,880 --> 00:07:31,680
Speaker 1: spending right into the teeth of a drop of demands,

135
00:07:31,720 --> 00:07:35,800
Speaker 1: and they very successfully made the circumstances in Europe much worse.

136
00:07:36,120 --> 00:07:40,440
Speaker 1: There is a reason why the US recovery preceded that

137
00:07:40,520 --> 00:07:44,280
Speaker 1: in Japan and then in Europe. We recognize this immediately

138
00:07:44,440 --> 00:07:47,720
Speaker 1: for what it was. We had Bernanke doing monetary stimulus,

139
00:07:47,880 --> 00:07:50,560
Speaker 1: and we still did a modest seven or eight hundred

140
00:07:50,560 --> 00:07:53,160
Speaker 1: billion dollar stimulus should have been three or four trillion.

141
00:07:53,240 --> 00:07:55,600
Speaker 1: But let's hold that aside. Barry rid Holts, founder of

142
00:07:55,640 --> 00:07:59,800
Speaker 1: red Holts Wealth Management, Bloomberg opinion columnist, founder of rit Holts,

143
00:07:59,800 --> 00:08:04,200
Speaker 1: while the management and incredible orator on the woes and

144
00:08:04,280 --> 00:08:07,320
Speaker 1: the lack of fiscal stimulus, I will say, I love

145
00:08:07,360 --> 00:08:10,280
Speaker 1: them sitting around thinking how can we make this much

146
00:08:10,400 --> 00:08:24,480
Speaker 1: much worse? Here we go, we're gonna be hearing from

147
00:08:24,480 --> 00:08:28,800
Speaker 1: President Trump after he was acquitted of the impeachment charges

148
00:08:28,840 --> 00:08:32,200
Speaker 1: brought to him by the House of Representatives. Senators, particularly

149
00:08:32,240 --> 00:08:36,280
Speaker 1: the Republicans, really joined forces and voted to acquit him.

150
00:08:36,360 --> 00:08:39,280
Speaker 1: Joining us now to discuss Preneur, a senior editor for

151
00:08:39,320 --> 00:08:42,360
Speaker 1: the National Review, also a Bloomberg opinion columnist, coming to

152
00:08:42,480 --> 00:08:45,280
Speaker 1: us from Washington, d C. I just want to start

153
00:08:45,280 --> 00:08:49,800
Speaker 1: a mesh uh your opinion of the stance that Republicans took.

154
00:08:49,840 --> 00:08:52,160
Speaker 1: Do you think that they did the right thing in

155
00:08:52,240 --> 00:08:57,880
Speaker 1: acquitting President Trump. I think that Senator Romney had the

156
00:08:57,920 --> 00:09:02,520
Speaker 1: better of the argument among Republicans. I think that President

157
00:09:02,640 --> 00:09:05,599
Speaker 1: Trump abused his power, and even some of the Republicans

158
00:09:05,840 --> 00:09:10,600
Speaker 1: who voted to acquit him agreed with that. Uh and UH.

159
00:09:10,640 --> 00:09:13,719
Speaker 1: The impeachment power was put into the Constitution by the

160
00:09:13,760 --> 00:09:18,320
Speaker 1: founders precisely to deal with presidential abuses of power of

161
00:09:18,360 --> 00:09:22,720
Speaker 1: this nature. So I think he should have been convicted. Remesh.

162
00:09:22,800 --> 00:09:25,800
Speaker 1: The National Review is thought of as a right leaning,

163
00:09:25,800 --> 00:09:30,560
Speaker 1: a conservative leaning, typically Republican publication. How much pushback do

164
00:09:30,679 --> 00:09:32,920
Speaker 1: you get when you say things like this given the

165
00:09:32,920 --> 00:09:36,240
Speaker 1: fact that President Trump has a near record amount of

166
00:09:36,280 --> 00:09:40,560
Speaker 1: support among Republicans, Well, the official editorial position of the

167
00:09:40,600 --> 00:09:42,960
Speaker 1: magazine is on the other side. For me, most of

168
00:09:42,960 --> 00:09:45,080
Speaker 1: my colleagues are on the other side, So I do

169
00:09:45,240 --> 00:09:51,360
Speaker 1: get a lot of uh, pushback, disagreement, um, sometimes very

170
00:09:51,360 --> 00:09:56,560
Speaker 1: politefully politely and thoughtfully expressed uh from our readers, sometimes

171
00:09:56,640 --> 00:09:59,800
Speaker 1: less so so. Remesh. Let's look forward a little bit.

172
00:10:00,000 --> 00:10:04,280
Speaker 1: Do you think the acquittal or the in the Senate

173
00:10:04,520 --> 00:10:06,880
Speaker 1: means for President Trump and the Democrats? How do you

174
00:10:06,880 --> 00:10:08,880
Speaker 1: think that's going to kind of play out for the election?

175
00:10:10,320 --> 00:10:13,760
Speaker 1: I suspect that it will not be a top of

176
00:10:13,840 --> 00:10:17,960
Speaker 1: mind issue by the time of the election. UM. I

177
00:10:18,040 --> 00:10:20,200
Speaker 1: just think that we have a lot of time between

178
00:10:20,200 --> 00:10:24,840
Speaker 1: now and November, and media cycles and news cycles are

179
00:10:24,880 --> 00:10:27,559
Speaker 1: just a lot faster than they used to be, so

180
00:10:27,600 --> 00:10:30,559
Speaker 1: I think we'll all probably be obsessing about something else

181
00:10:30,840 --> 00:10:33,520
Speaker 1: in the last weeks of October in the beginning of November.

182
00:10:33,840 --> 00:10:37,200
Speaker 1: Do you think that going forward that this will actually

183
00:10:37,240 --> 00:10:40,200
Speaker 1: solidify President trump space behind him or do you think

184
00:10:40,240 --> 00:10:42,720
Speaker 1: that this will just sort of be a side note

185
00:10:42,840 --> 00:10:49,880
Speaker 1: as we proceed towards November. President Trump has been extremely

186
00:10:50,000 --> 00:10:54,520
Speaker 1: careful to keep his base together. He has done a

187
00:10:54,559 --> 00:10:58,360
Speaker 1: lot of things that previous Republican presidents would not have done,

188
00:10:58,679 --> 00:11:02,360
Speaker 1: but on the core issues that mattered Republican voters, like

189
00:11:03,240 --> 00:11:06,360
Speaker 1: guns and taxes and abortion, he has been a completely

190
00:11:06,559 --> 00:11:11,080
Speaker 1: orthodox Republican and so he had a unified base even

191
00:11:11,160 --> 00:11:16,720
Speaker 1: before impeachment. Impeachment may have slightly solidified that base, but

192
00:11:16,920 --> 00:11:21,520
Speaker 1: the partisan dynamic of a presidential election was likely to

193
00:11:21,800 --> 00:11:25,440
Speaker 1: generate that result anyway. What do you make of Senator

194
00:11:25,480 --> 00:11:30,680
Speaker 1: Mitt Romney's decision to vote to convict Well, I think

195
00:11:30,800 --> 00:11:33,840
Speaker 1: that it surprised a lot of people who had just

196
00:11:34,120 --> 00:11:39,920
Speaker 1: resigned themselves to this being uh an almost completely perfectly

197
00:11:40,679 --> 00:11:45,120
Speaker 1: uh party line vote. Um. I think um. Senator Romney

198
00:11:45,160 --> 00:11:50,560
Speaker 1: made a good case for his decision. Uh, it's not uh,

199
00:11:50,600 --> 00:11:53,800
Speaker 1: you know, obviously doesn't have change the outcome. UM, but

200
00:11:53,880 --> 00:11:57,480
Speaker 1: it just sort of puts him on record about, UM,

201
00:11:57,720 --> 00:12:02,000
Speaker 1: what the appropriate norms for presidential conduct ought to be.

202
00:12:03,720 --> 00:12:06,640
Speaker 1: Considering your stance that you thought that President Trump should

203
00:12:06,640 --> 00:12:10,600
Speaker 1: have been convicted, do you think that he should lose

204
00:12:10,720 --> 00:12:15,480
Speaker 1: or are you voting for someone else in November? Well,

205
00:12:15,520 --> 00:12:18,160
Speaker 1: I don't even know who the Democratic nominee is going

206
00:12:18,200 --> 00:12:23,800
Speaker 1: to be. UM. I certainly think it's unlikely, UM, that

207
00:12:23,920 --> 00:12:26,840
Speaker 1: I am going to vote for President Trump. I didn't

208
00:12:26,880 --> 00:12:30,640
Speaker 1: vote for him last time. Uh, and I continue to

209
00:12:30,760 --> 00:12:35,200
Speaker 1: have UM serious objections to the way he has conducted

210
00:12:35,280 --> 00:12:38,239
Speaker 1: himself in office. Do you think there are any Democrats

211
00:12:38,280 --> 00:12:41,280
Speaker 1: as we as currently currently constituted in the field that

212
00:12:41,320 --> 00:12:46,040
Speaker 1: can be President Trump? Oh? You know, UM, right now,

213
00:12:46,120 --> 00:12:50,760
Speaker 1: I'd say that President Trump is probably favored to win,

214
00:12:51,040 --> 00:12:55,120
Speaker 1: but I wouldn't say that he's an inevitably going to win.

215
00:12:55,520 --> 00:12:58,600
Speaker 1: And I think a number of the Democratic candidates could

216
00:12:58,679 --> 00:13:03,880
Speaker 1: potentially defeat him. Um. Some are I think riskier than others.

217
00:13:03,920 --> 00:13:08,079
Speaker 1: I think Senator Sanders UM would be a risky nominee

218
00:13:08,120 --> 00:13:12,120
Speaker 1: for the Democratic Party given the historic and continuing on

219
00:13:12,320 --> 00:13:16,720
Speaker 1: popularity of socialism in the United States. Thank you so

220
00:13:16,800 --> 00:13:19,959
Speaker 1: much for joining us. We appreciate your thoughts. Peuro was

221
00:13:20,000 --> 00:13:23,280
Speaker 1: a senior editor for the National Review, also Bloomberg opinion

222
00:13:23,679 --> 00:13:26,400
Speaker 1: columnist as well, and you could read the work from

223
00:13:26,400 --> 00:13:29,680
Speaker 1: Remesh and the other Bloomberg opinion columnists at Bloomberg dot com,

224
00:13:29,800 --> 00:13:33,439
Speaker 1: slash Opinion and on the terminal O p I n Go.

225
00:13:46,000 --> 00:13:50,480
Speaker 1: Tex shares absolutely surging after better than expected earnings from

226
00:13:50,480 --> 00:13:54,400
Speaker 1: a lot of the giants, plus looking at the trajectory

227
00:13:54,520 --> 00:13:57,720
Speaker 1: forward that they are the future. Big question, could the

228
00:13:57,760 --> 00:14:01,040
Speaker 1: coronavirus and the spread there disrupt supply chains enough to

229
00:14:01,040 --> 00:14:05,000
Speaker 1: make a material DNT for these companies? And just how

230
00:14:05,120 --> 00:14:08,200
Speaker 1: much good news has already been priced in without perhaps

231
00:14:08,400 --> 00:14:11,360
Speaker 1: that good news actually happening. Bradstone joining us here in

232
00:14:11,400 --> 00:14:13,839
Speaker 1: our interactive broker studios we're so glad to have. Do

233
00:14:13,880 --> 00:14:15,959
Speaker 1: you hear in New York normally San San Francisco, Senior

234
00:14:16,000 --> 00:14:19,240
Speaker 1: Executive editor of Global Tech for bloom Bloomberg News. Brad,

235
00:14:19,360 --> 00:14:22,720
Speaker 1: Let's just start with what we've seen in terms of

236
00:14:22,880 --> 00:14:27,040
Speaker 1: the supply chain challenges UH stemming from the coronavirus for

237
00:14:27,120 --> 00:14:29,640
Speaker 1: big tech. We've heard from Apple. What else are we

238
00:14:29,680 --> 00:14:32,640
Speaker 1: hearing with with chips? With other areas? Thankfully so well.

239
00:14:32,680 --> 00:14:34,600
Speaker 1: I mean, I think there's a lot of ambiguity, there's

240
00:14:34,600 --> 00:14:37,960
Speaker 1: a lot of concern, uh and and and doubt. I

241
00:14:38,000 --> 00:14:40,520
Speaker 1: mean just like the World Health Organization you know, is

242
00:14:40,520 --> 00:14:44,440
Speaker 1: saying it doesn't quite know, you know, how this virus operates, Um,

243
00:14:44,720 --> 00:14:47,680
Speaker 1: how it started, whether we're at peak infection. You know,

244
00:14:47,760 --> 00:14:49,720
Speaker 1: the tech companies don't know what's coming. And so we've

245
00:14:49,760 --> 00:14:52,680
Speaker 1: seen a lot of of the of the big suppliers

246
00:14:52,760 --> 00:14:56,080
Speaker 1: kind of warren. Uh, not much concrete evidence yet. So

247
00:14:56,080 --> 00:14:58,840
Speaker 1: so Fox con Right, the maker of the iPhone, saying

248
00:14:58,840 --> 00:15:00,840
Speaker 1: it expects one to three or sent growth and set

249
00:15:00,920 --> 00:15:03,800
Speaker 1: us three to five. You know, qual Calm warning that

250
00:15:03,840 --> 00:15:08,480
Speaker 1: it could be material materially impacted. We've seen LG Electronics

251
00:15:08,520 --> 00:15:13,400
Speaker 1: withdraw from the big Mobile World Congress trade show in Barcelona. Um.

252
00:15:13,440 --> 00:15:15,840
Speaker 1: You know, so if you're a tech company with the exposure,

253
00:15:16,120 --> 00:15:18,680
Speaker 1: if you're supply chains in China, you know you're watching

254
00:15:18,720 --> 00:15:20,440
Speaker 1: it and it's sort of up in the air what

255
00:15:20,440 --> 00:15:22,280
Speaker 1: what the impact is going to be and whether it

256
00:15:22,280 --> 00:15:25,360
Speaker 1: will impact global demand. So Brad, you and your the

257
00:15:25,400 --> 00:15:27,280
Speaker 1: technology team out on the West coast to cover this

258
00:15:27,360 --> 00:15:30,400
Speaker 1: so so well, uh, thinking about all the supply chain

259
00:15:30,440 --> 00:15:34,280
Speaker 1: of global technology. First, we had the trade uncertainty, which

260
00:15:34,280 --> 00:15:36,640
Speaker 1: I guess still is there between the US and China

261
00:15:36,720 --> 00:15:39,040
Speaker 1: despite the Phase one deal. Now we've got this virus.

262
00:15:39,440 --> 00:15:41,560
Speaker 1: A lot of times company has been talking about trying

263
00:15:41,600 --> 00:15:44,440
Speaker 1: to de emphasize or take some of the supply chain

264
00:15:44,480 --> 00:15:46,440
Speaker 1: out of China, maybe move with the Vietnam or other

265
00:15:46,480 --> 00:15:48,640
Speaker 1: areas in Asia. Is there any evidence that that they're

266
00:15:48,640 --> 00:15:50,080
Speaker 1: going to follow through with that or that they can

267
00:15:50,120 --> 00:15:52,200
Speaker 1: actually do that to move the needle. I mean, I

268
00:15:52,200 --> 00:15:54,240
Speaker 1: think they will follow through, but that's such a long

269
00:15:54,360 --> 00:15:56,840
Speaker 1: term process, right, and you've got you know, you've got

270
00:15:56,960 --> 00:16:00,160
Speaker 1: thirty years of the supply chain consolidating in China, in

271
00:16:00,200 --> 00:16:03,280
Speaker 1: particular in areas of China like shen Zen, and and

272
00:16:03,320 --> 00:16:05,640
Speaker 1: you're it's not gonna it's not gonna happen anytime soon.

273
00:16:05,680 --> 00:16:08,600
Speaker 1: And some of the you know, the politically motivated promises

274
00:16:08,720 --> 00:16:11,640
Speaker 1: like Fox Con saying it's going to build a facility

275
00:16:11,720 --> 00:16:14,760
Speaker 1: in Wisconsin. Uh, you know, that's been a little more

276
00:16:14,840 --> 00:16:17,680
Speaker 1: hyped than reality. So none of these companies can adjust

277
00:16:17,720 --> 00:16:20,000
Speaker 1: fast enough to contend with what's happening now in China.

278
00:16:20,080 --> 00:16:22,400
Speaker 1: So you talked about some of the supply chain challenges,

279
00:16:22,440 --> 00:16:24,520
Speaker 1: and yet we're looking at the NASDAC up six point

280
00:16:24,600 --> 00:16:29,800
Speaker 1: six percent. We're looking at a Fang plus index having

281
00:16:29,960 --> 00:16:32,880
Speaker 1: its biggest run in the most valuation relative to the

282
00:16:33,480 --> 00:16:35,920
Speaker 1: S and P I think in history. I mean, we're

283
00:16:35,960 --> 00:16:39,640
Speaker 1: looking at some pretty extreme valuations. When you talk to people,

284
00:16:39,720 --> 00:16:41,480
Speaker 1: is there a sense that there's too much good news

285
00:16:41,800 --> 00:16:45,760
Speaker 1: baked in? No? I think. I think it's really driven

286
00:16:45,840 --> 00:16:51,200
Speaker 1: by the kind of consolidation of of tech into you know,

287
00:16:51,280 --> 00:16:53,720
Speaker 1: into a few companies, and like you have the virus,

288
00:16:53,760 --> 00:16:57,880
Speaker 1: and you have the regulatory overhang, and yet right Apple

289
00:16:57,960 --> 00:17:00,760
Speaker 1: Blockbuster iPhone sales, you know, the dock near an all

290
00:17:00,800 --> 00:17:03,600
Speaker 1: time high, you know, Amazon, the re acceleration of the

291
00:17:03,600 --> 00:17:07,920
Speaker 1: cloud business despite all the fear and uncertainty around like Microsoft,

292
00:17:08,000 --> 00:17:10,639
Speaker 1: you know, winning the Jedi contract and whether Amazon's cloud

293
00:17:10,640 --> 00:17:14,000
Speaker 1: growth was slowing down, and are re acceleration in retail right,

294
00:17:14,320 --> 00:17:17,120
Speaker 1: more people becoming prime members and so yeah, you're right,

295
00:17:17,119 --> 00:17:19,399
Speaker 1: it seems oversold, I mean, and of course you have

296
00:17:19,480 --> 00:17:23,359
Speaker 1: examples where that is true, like Tesla right over overbought um.

297
00:17:23,400 --> 00:17:25,520
Speaker 1: And yet you know, when you look at the performance

298
00:17:25,560 --> 00:17:28,399
Speaker 1: of these companies, despite the sort of bad news and

299
00:17:28,440 --> 00:17:31,040
Speaker 1: the regulatory concerns, they're still doing really well. All right,

300
00:17:31,160 --> 00:17:34,960
Speaker 1: So can that enthusiasm translate and spill back over to

301
00:17:35,119 --> 00:17:38,520
Speaker 1: the unicorn world, which had some of its shine taken

302
00:17:38,520 --> 00:17:40,639
Speaker 1: off at the end of last year after a couple

303
00:17:40,680 --> 00:17:43,919
Speaker 1: of less than happy IPO situations. That's right now and

304
00:17:43,920 --> 00:17:46,119
Speaker 1: then and then we're sort of into a different discussion,

305
00:17:46,200 --> 00:17:48,280
Speaker 1: right because you know, when you when you look at

306
00:17:48,320 --> 00:17:51,200
Speaker 1: the companies I'm on public last year, Uber and Peloton

307
00:17:51,320 --> 00:17:53,040
Speaker 1: and then of course we Work, which didn't even make

308
00:17:53,080 --> 00:17:55,560
Speaker 1: it out, you had a situation where the hype did

309
00:17:55,600 --> 00:17:57,639
Speaker 1: collide with reality and a lot of the value was

310
00:17:57,680 --> 00:18:01,600
Speaker 1: taken out already by private equity, by soft bank, by

311
00:18:01,600 --> 00:18:04,199
Speaker 1: the venture capital firms. So you know, there you have

312
00:18:04,280 --> 00:18:08,760
Speaker 1: a situation where you've got companies like Airbnb or or

313
00:18:08,880 --> 00:18:11,440
Speaker 1: or the fintech company robin Hood, which are probably looking

314
00:18:11,440 --> 00:18:14,359
Speaker 1: at this market with a lot of anxiety, wondering and

315
00:18:14,520 --> 00:18:16,760
Speaker 1: cast for the Mattress company of course, today, you know,

316
00:18:16,840 --> 00:18:19,639
Speaker 1: how are the public markets going to react, particularly if

317
00:18:19,680 --> 00:18:22,720
Speaker 1: they if they remain unprofitable. So one of the issues

318
00:18:22,920 --> 00:18:26,199
Speaker 1: that has kind of crept into the technology discussion over

319
00:18:26,240 --> 00:18:30,720
Speaker 1: the last year or two has been regulatory overhang. Now,

320
00:18:30,760 --> 00:18:32,960
Speaker 1: historically the U. S Government has taken I think pretty

321
00:18:33,040 --> 00:18:36,200
Speaker 1: light touch to the U S. Tech industry that might

322
00:18:36,280 --> 00:18:38,320
Speaker 1: be changing. How what's the feeling in the valley. There

323
00:18:38,400 --> 00:18:40,280
Speaker 1: is this a paradigm shift, and they've got to really

324
00:18:40,280 --> 00:18:42,119
Speaker 1: start thinking about this. I think that's right, Paul. I

325
00:18:42,160 --> 00:18:45,560
Speaker 1: mean storm clouds. Right, it's coming at them from all angles.

326
00:18:45,600 --> 00:18:48,240
Speaker 1: You've you've got the EU, which is obviously the most

327
00:18:48,280 --> 00:18:51,359
Speaker 1: active over the last few years. UM. But then in

328
00:18:51,400 --> 00:18:55,200
Speaker 1: the US, the Justice Department seeming to increase the pace

329
00:18:55,280 --> 00:18:58,879
Speaker 1: of its investigation, particularly of Google. UM. But then and

330
00:18:59,000 --> 00:19:01,880
Speaker 1: particularly with the guards. So it's third party ad network.

331
00:19:02,200 --> 00:19:04,000
Speaker 1: You know, we've reported on the Wall Street Journal has

332
00:19:04,040 --> 00:19:08,040
Speaker 1: reported that they're interviewing publishers looking at Google's ad dominance.

333
00:19:08,280 --> 00:19:11,920
Speaker 1: Then you've got the FDC, You've got Attorneys General. Um,

334
00:19:11,960 --> 00:19:16,600
Speaker 1: you've got the David Cellini, uh, the the the House

335
00:19:16,640 --> 00:19:20,520
Speaker 1: member from Rhode Island, you know, leading these discussion panel

336
00:19:20,560 --> 00:19:24,040
Speaker 1: discussions looking at big tech. And so yeah, I think

337
00:19:24,040 --> 00:19:26,880
Speaker 1: we're sort of at peak or we're close to peak. Um,

338
00:19:27,280 --> 00:19:29,520
Speaker 1: you know, scrutiny of the big tech companies, and that's

339
00:19:29,520 --> 00:19:31,560
Speaker 1: not that's what we're just getting started there. And it

340
00:19:31,560 --> 00:19:33,320
Speaker 1: does seem to be the one thing that all the

341
00:19:33,320 --> 00:19:36,400
Speaker 1: presidential candidates kind of agree on right now markets basically

342
00:19:36,400 --> 00:19:38,520
Speaker 1: saying it doesn't look like those politicians are going to

343
00:19:38,600 --> 00:19:41,440
Speaker 1: move soon on anything. And it seems like tech companies

344
00:19:41,480 --> 00:19:44,040
Speaker 1: believe that as well. Is there a sign, any sign

345
00:19:44,080 --> 00:19:46,879
Speaker 1: whatsoever that they're wrong, that there is some kind of

346
00:19:46,880 --> 00:19:49,120
Speaker 1: push to get some regulation passed in the near term.

347
00:19:49,640 --> 00:19:52,239
Speaker 1: I think you're I don't think they're wrong. I think

348
00:19:52,320 --> 00:19:54,639
Speaker 1: this is a long term process, you know. And and

349
00:19:54,720 --> 00:19:56,840
Speaker 1: we saw it with the Microsoft case in the nineties.

350
00:19:56,920 --> 00:19:59,800
Speaker 1: It takes years, it's appealed, the Supreme Court often has

351
00:19:59,840 --> 00:20:02,000
Speaker 1: to get into these things. But you know, when we

352
00:20:02,040 --> 00:20:05,159
Speaker 1: saw Makon del Rahim, the head of the d o

353
00:20:05,280 --> 00:20:09,640
Speaker 1: j Antitrust Division, recused himself from the Google investigation, there

354
00:20:09,640 --> 00:20:12,199
Speaker 1: are signs that things are accelerating, you know. And he

355
00:20:12,240 --> 00:20:14,359
Speaker 1: was involved in the sale of double click to Google.

356
00:20:14,400 --> 00:20:16,280
Speaker 1: So it's one reason why you'd want to step back.

357
00:20:16,560 --> 00:20:19,240
Speaker 1: But things like that, you know, suggests that we're we're

358
00:20:19,280 --> 00:20:21,360
Speaker 1: no longer in the realm of the hypothetical. It might

359
00:20:21,359 --> 00:20:24,359
Speaker 1: take a long time, but these companies are girding for battle.

360
00:20:24,880 --> 00:20:26,520
Speaker 1: Brad Stone, thanks so much for joining us. To really

361
00:20:26,560 --> 00:20:30,159
Speaker 1: appreciate you coming into our Bloomberg studios, usually based in

362
00:20:30,200 --> 00:20:33,040
Speaker 1: San Francisco. Brad Senior Executive editor of Global Technology for

363
00:20:33,080 --> 00:20:35,280
Speaker 1: Bloomberg News. He in a team do a great job

364
00:20:35,359 --> 00:20:37,840
Speaker 1: covering everything on the tech space. They've been very busy

365
00:20:37,840 --> 00:20:39,880
Speaker 1: with all these I p o s and all these

366
00:20:39,880 --> 00:20:53,960
Speaker 1: big issues affecting big tech. The Treasury Department gave details

367
00:20:54,000 --> 00:20:57,480
Speaker 1: about their issuance of twenty year treasuries for the first time,

368
00:20:57,880 --> 00:21:00,639
Speaker 1: as they laid out a plan to find as a

369
00:21:00,760 --> 00:21:04,280
Speaker 1: deficit for the federal government that should reach one trillion

370
00:21:04,320 --> 00:21:07,639
Speaker 1: dollars annually over the next ten years. Is according to

371
00:21:07,840 --> 00:21:11,760
Speaker 1: independent analyzes. The question is doesn't matter and this has

372
00:21:11,760 --> 00:21:14,240
Speaker 1: been a subject of huge debate. Joining us now the

373
00:21:14,280 --> 00:21:17,199
Speaker 1: way in Chris Edwards, director of tax policy Studies at

374
00:21:17,200 --> 00:21:21,879
Speaker 1: the Cato Institute an editor of Downsizing Government dot org. Chris,

375
00:21:22,000 --> 00:21:25,040
Speaker 1: you have come out with some pretty stark warnings about

376
00:21:25,119 --> 00:21:28,240
Speaker 1: the federal deficit. Can we just start about why a

377
00:21:28,280 --> 00:21:31,520
Speaker 1: federal deficit is so problematic? A lot of people challenging

378
00:21:31,520 --> 00:21:34,320
Speaker 1: that concept in an era where there is an encouragement

379
00:21:34,320 --> 00:21:38,080
Speaker 1: for more fiscal stimulus. Well, what the federal government is

380
00:21:38,160 --> 00:21:40,920
Speaker 1: doing right now is completely unique in in our two

381
00:21:41,119 --> 00:21:44,280
Speaker 1: stories of history in the past We've had spikes in

382
00:21:44,280 --> 00:21:47,440
Speaker 1: federal government that usually during wars, you know, the Civil

383
00:21:47,520 --> 00:21:49,639
Speaker 1: War and World War One and World War Two, but

384
00:21:49,720 --> 00:21:53,040
Speaker 1: the government has always paid the debt back down again.

385
00:21:53,520 --> 00:21:55,760
Speaker 1: Now we are not at war. We're in the eleventh

386
00:21:55,840 --> 00:21:59,880
Speaker 1: year of economic expansion. Now we should be down our debt.

387
00:22:00,240 --> 00:22:02,919
Speaker 1: But our debt is the highest in our peacetime history,

388
00:22:03,240 --> 00:22:06,080
Speaker 1: and it is going up. The latest Congressional Budget Office

389
00:22:06,200 --> 00:22:10,600
Speaker 1: data shows that the annual deficit is going from a

390
00:22:10,640 --> 00:22:13,600
Speaker 1: trillion this year to one point seven trillion ten years

391
00:22:13,680 --> 00:22:16,640
Speaker 1: from now. And I think that's optimistic. For one thing,

392
00:22:16,680 --> 00:22:21,080
Speaker 1: the CBO doesn't put any recessions in its projections, and

393
00:22:21,160 --> 00:22:24,520
Speaker 1: yet we probably will have a recession in coming years sometime,

394
00:22:24,600 --> 00:22:27,359
Speaker 1: and that will blow an even bigger hole. So I

395
00:22:27,400 --> 00:22:30,440
Speaker 1: think the outlook is very scary. Chris. Are you surprised

396
00:22:30,480 --> 00:22:33,560
Speaker 1: that the Republican Party hasn't made this bigger of an

397
00:22:33,560 --> 00:22:37,080
Speaker 1: issue and and really tried to work harder to uh

398
00:22:37,359 --> 00:22:39,760
Speaker 1: shrink the size the government to deal with this deficit.

399
00:22:40,840 --> 00:22:44,159
Speaker 1: It is remarkable. There's been huge responsibility on both sides.

400
00:22:44,480 --> 00:22:46,800
Speaker 1: You know, the Republicans they just want to cut taxes,

401
00:22:46,840 --> 00:22:50,639
Speaker 1: which increases deficits that the Democrats and Republicans want to

402
00:22:50,640 --> 00:22:54,640
Speaker 1: increase spending. So we've got the situation where there's irresponsibility

403
00:22:54,640 --> 00:22:57,440
Speaker 1: on all sides. What's remarkable is if you go back

404
00:22:57,480 --> 00:23:00,199
Speaker 1: and you look at the federal budget document and so

405
00:23:00,320 --> 00:23:03,840
Speaker 1: say President Reagan or President Clinton, they were there's a

406
00:23:03,880 --> 00:23:06,800
Speaker 1: lot of concern about deficits. There was a focus on,

407
00:23:07,040 --> 00:23:10,359
Speaker 1: you know, creating new mechanisms to try to reduce debt

408
00:23:10,400 --> 00:23:13,119
Speaker 1: and deficits. That has all gone out the window. And

409
00:23:13,160 --> 00:23:16,000
Speaker 1: I think what has happened is pretty clear that we

410
00:23:16,080 --> 00:23:19,560
Speaker 1: have global capital markets these days, and you are gonna

411
00:23:19,560 --> 00:23:22,439
Speaker 1: be able to borrow at very low interest rates, and

412
00:23:22,560 --> 00:23:26,680
Speaker 1: politicians don't have any fears about the death. It used

413
00:23:26,720 --> 00:23:29,560
Speaker 1: to be the politicians thought if they ran big deficits,

414
00:23:29,840 --> 00:23:32,680
Speaker 1: it would push up mortgage interest rates, it would cause inflation,

415
00:23:32,800 --> 00:23:35,280
Speaker 1: and it would create political pain for them. But I

416
00:23:35,280 --> 00:23:37,960
Speaker 1: think all the political pain has gone and so they're

417
00:23:38,000 --> 00:23:43,080
Speaker 1: just their natural spending instincts have come out and they're irresponsible, Chris.

418
00:23:43,200 --> 00:23:47,560
Speaker 1: But to that exact point, they have blown up the

419
00:23:47,600 --> 00:23:49,920
Speaker 1: deficit and it hasn't mattered. In fact, we just got

420
00:23:49,920 --> 00:23:52,840
Speaker 1: to read today, uh that mortgage rates in the United

421
00:23:52,880 --> 00:23:56,560
Speaker 1: States have fall into their lowest in sixteen. So why

422
00:23:56,680 --> 00:23:59,919
Speaker 1: is it a problem to have a big deficit. Uh,

423
00:24:00,560 --> 00:24:04,920
Speaker 1: The first problem is that all this all this borrowing

424
00:24:05,200 --> 00:24:09,240
Speaker 1: is cost pushed to the future. The pain doesn't come now.

425
00:24:09,320 --> 00:24:11,920
Speaker 1: The government borrows another one billion or ten billion, or

426
00:24:12,000 --> 00:24:14,600
Speaker 1: hundred billion, that is all a cost on the next

427
00:24:14,600 --> 00:24:19,040
Speaker 1: generation of young taxpayers. Taxes will to be higher twenty

428
00:24:19,080 --> 00:24:22,399
Speaker 1: trillion in the future because we've got this giant twenty

429
00:24:22,440 --> 00:24:24,920
Speaker 1: trillion dollar debt now. So it means that and as

430
00:24:24,960 --> 00:24:27,639
Speaker 1: you know, just somewhat a bit less than half of

431
00:24:27,680 --> 00:24:30,520
Speaker 1: all our debt is borrowed from abroad. So that means

432
00:24:30,560 --> 00:24:34,800
Speaker 1: that young American workers in incoming decades will be working,

433
00:24:35,119 --> 00:24:38,800
Speaker 1: their taxes will be going to Washington siphoned off from

434
00:24:38,880 --> 00:24:41,840
Speaker 1: them and paid the foreign creditors. So they're gonna be working,

435
00:24:41,920 --> 00:24:43,639
Speaker 1: and we're not even going to get the benefit of

436
00:24:43,640 --> 00:24:46,200
Speaker 1: that work here in the US economy. So that's where

437
00:24:46,240 --> 00:24:49,320
Speaker 1: the rubber hits the road, the costs on the future.

438
00:24:50,240 --> 00:24:52,479
Speaker 1: So Chris in hindsight, A little bit of hindsight here

439
00:24:52,480 --> 00:24:57,240
Speaker 1: with tax cuts a mistake from an economic perspective, I

440
00:24:57,280 --> 00:25:00,080
Speaker 1: think that the corporate tax cut was absolutely needed. You

441
00:25:00,119 --> 00:25:02,840
Speaker 1: have to be globally competitive on our corporate tax rape

442
00:25:03,160 --> 00:25:05,439
Speaker 1: the individual tax cuts, I think we're much more of

443
00:25:05,480 --> 00:25:08,160
Speaker 1: a mixed bag. As you know, the individual tax cuts

444
00:25:08,200 --> 00:25:11,160
Speaker 1: expire at the end of and I think there's gonna

445
00:25:11,200 --> 00:25:13,000
Speaker 1: be and there should be a good debate at that

446
00:25:13,080 --> 00:25:16,560
Speaker 1: time whether they're worth extending, because if Congress keeps spending

447
00:25:16,600 --> 00:25:20,399
Speaker 1: like uh, the money like this, those individual tax cuts,

448
00:25:20,400 --> 00:25:22,720
Speaker 1: in a way, they're not really tax cuts. All they're

449
00:25:22,720 --> 00:25:25,600
Speaker 1: doing is deferring a giant tax burton that's going to

450
00:25:25,680 --> 00:25:28,400
Speaker 1: come in the future anyway. Chris. There's also though an

451
00:25:28,480 --> 00:25:31,520
Speaker 1: argument here that if there is some sort of fiscal

452
00:25:31,560 --> 00:25:36,000
Speaker 1: stimulus ongoing, that it will continue to grow the economy

453
00:25:36,119 --> 00:25:38,880
Speaker 1: enough to finance some of the tax bills that will

454
00:25:38,920 --> 00:25:42,919
Speaker 1: come do later on, that the consequences of not taking

455
00:25:42,920 --> 00:25:45,919
Speaker 1: action now could potentially be more detrimental to the U.

456
00:25:46,000 --> 00:25:49,200
Speaker 1: S economy than ballooning the deficit. What do you say

457
00:25:49,240 --> 00:25:52,840
Speaker 1: to those arguments, It doesn't make any sense. Look in

458
00:25:52,880 --> 00:25:56,560
Speaker 1: the in the under President Clinton, we had some of

459
00:25:56,560 --> 00:25:59,240
Speaker 1: the strongest growth we've had over the last half century,

460
00:25:59,600 --> 00:26:02,160
Speaker 1: and we've balance the budget. Clinton balanced the budget four

461
00:26:02,240 --> 00:26:05,119
Speaker 1: years in a row, and we had strong economic growth.

462
00:26:05,280 --> 00:26:08,160
Speaker 1: The idea that we're getting stimulus from the massive deficits

463
00:26:08,200 --> 00:26:10,240
Speaker 1: now doesn't make any sense. I think what it does

464
00:26:10,280 --> 00:26:14,280
Speaker 1: is it scares investors and scares businesses about the future

465
00:26:14,320 --> 00:26:17,240
Speaker 1: credit worthiness of the U. S. Economy. So I don't

466
00:26:17,280 --> 00:26:20,520
Speaker 1: And and look, we've only got modest economic growth right

467
00:26:20,520 --> 00:26:23,920
Speaker 1: now despite this giant so called stimulus, So I don't

468
00:26:23,960 --> 00:26:27,119
Speaker 1: buy the stimulus argument. Chris Edwards, thanks so much for

469
00:26:27,160 --> 00:26:30,560
Speaker 1: joining us. We appreciate your thoughts here. Chris Edwards, director

470
00:26:30,560 --> 00:26:33,679
Speaker 1: of Tax Policy Studies at the Cato Institute, also an

471
00:26:33,840 --> 00:26:37,560
Speaker 1: editor of Downsizing Government dot org based in Washington, d C.

472
00:26:37,760 --> 00:26:41,760
Speaker 1: Raising the specter of how this, potentially the federal deficit

473
00:26:41,800 --> 00:26:45,200
Speaker 1: could end badly UH for the U. S. Government, and

474
00:26:45,359 --> 00:26:49,159
Speaker 1: it's populous. Look, whichever way you you believe, it's a

475
00:26:49,200 --> 00:26:52,000
Speaker 1: really interesting debate to be having, because for a long time,

476
00:26:52,000 --> 00:26:55,280
Speaker 1: to Chris's point, people did believe if you balloon the deficit,

477
00:26:55,560 --> 00:26:58,040
Speaker 1: you'd end up with much higher rates, which would lead

478
00:26:58,080 --> 00:27:00,719
Speaker 1: to uh some sort of economic slow down in their

479
00:27:00,760 --> 00:27:03,960
Speaker 1: own right. But the problem is we've seen exactly the opposite,

480
00:27:03,960 --> 00:27:07,400
Speaker 1: that major developed nations have gone out there and they

481
00:27:07,440 --> 00:27:10,760
Speaker 1: have ballooned their deficits and their rates have dropped, so

482
00:27:10,880 --> 00:27:14,160
Speaker 1: kind of calling into questions some of the old theory here,

483
00:27:14,240 --> 00:27:17,159
Speaker 1: I'd raising questions about helicopter money, etcetera. It's an interesting

484
00:27:17,160 --> 00:27:21,960
Speaker 1: debate one that will be definitely had increasingly fervently. Yes, exactly.

485
00:27:22,280 --> 00:27:24,520
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

486
00:27:24,680 --> 00:27:27,280
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

487
00:27:27,359 --> 00:27:30,439
Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on

488
00:27:30,480 --> 00:27:33,119
Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woyds. I'm on

489
00:27:33,160 --> 00:27:36,040
Speaker 1: Twitter at Lisa bramwo wits one Before the podcast, you

490
00:27:36,040 --> 00:27:38,600
Speaker 1: can always catch us worldwide on Bloomberg Radio