1 00:00:00,080 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple Cockley and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:24,120 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,239 --> 00:00:28,160 Speaker 2: The Treasury Secretary Scott Besson, who's currently still in London 7 00:00:28,200 --> 00:00:31,240 Speaker 2: at these talks, is technically scheduled to testify before the 8 00:00:31,240 --> 00:00:34,400 Speaker 2: House Ways and Means Committee tomorrow morning on the budget 9 00:00:34,440 --> 00:00:35,400 Speaker 2: from the play school year. 10 00:00:35,440 --> 00:00:37,600 Speaker 3: Yeah. I'm not sure how we're going to do that. Yeah, 11 00:00:37,680 --> 00:00:40,040 Speaker 3: it does bring us to matters of course on Capitol 12 00:00:40,120 --> 00:00:43,400 Speaker 3: Hill though, Kaylee, and some big questions about what happens 13 00:00:43,440 --> 00:00:45,320 Speaker 3: to the big beautiful bill, if we are going to 14 00:00:45,320 --> 00:00:47,040 Speaker 3: be in store for some changes as soon. 15 00:00:46,920 --> 00:00:49,080 Speaker 2: As today indeed, and it's on that note we turn 16 00:00:49,159 --> 00:00:51,159 Speaker 2: to Capitol Hill now, where we're joined live by the 17 00:00:51,240 --> 00:00:53,479 Speaker 2: chair of the House Ways and Means Committee, the Republican 18 00:00:53,520 --> 00:00:56,840 Speaker 2: Congressman from Missouri, Jason Smith. Back with us on Bloomberg 19 00:00:56,920 --> 00:01:00,360 Speaker 2: TV and Radio. Mister Chairman, we appreciate you being here 20 00:01:00,400 --> 00:01:03,120 Speaker 2: on Balance of Power as we consider the changes that 21 00:01:03,160 --> 00:01:05,399 Speaker 2: are underway in the Senate. Have you been read in 22 00:01:05,880 --> 00:01:09,080 Speaker 2: to what the Senate Parliamentarian is saying needs to be 23 00:01:09,200 --> 00:01:11,800 Speaker 2: stripped from this package. 24 00:01:12,440 --> 00:01:17,360 Speaker 4: Yeah, the Senate Parliamentarian has been ruling on various different items. 25 00:01:17,400 --> 00:01:20,720 Speaker 4: It's really have not been that many, especially when it 26 00:01:20,760 --> 00:01:23,479 Speaker 4: comes to the tax policy. These are things that we 27 00:01:23,520 --> 00:01:25,840 Speaker 4: have been very careful that when we were trying to 28 00:01:25,920 --> 00:01:29,679 Speaker 4: draft the legislation over on the House side, that it 29 00:01:29,720 --> 00:01:32,040 Speaker 4: would be bird compliant and be able to follow the 30 00:01:32,120 --> 00:01:35,560 Speaker 4: rules of reconciliation and that would that would fly for 31 00:01:35,640 --> 00:01:39,000 Speaker 4: the parliamentarian. However, a few things that might have to 32 00:01:39,080 --> 00:01:44,200 Speaker 4: be changed will be done before we send the final 33 00:01:44,240 --> 00:01:45,240 Speaker 4: bill over. 34 00:01:45,080 --> 00:01:48,760 Speaker 2: To well and what few things, mister Chairman, what are 35 00:01:48,800 --> 00:01:49,440 Speaker 2: we still waiting? 36 00:01:49,800 --> 00:01:52,440 Speaker 4: We're still waiting for the final analysis. But when it 37 00:01:52,440 --> 00:01:56,560 Speaker 4: comes to some tax policies that were discussed, for example, 38 00:01:58,720 --> 00:02:01,919 Speaker 4: provisions that was in the bill that affect. 39 00:02:02,960 --> 00:02:04,520 Speaker 5: Non for profits that. 40 00:02:04,480 --> 00:02:10,280 Speaker 4: Are funding terrorism that was not a budgetary impact and 41 00:02:10,320 --> 00:02:11,560 Speaker 4: so it had to be taken out. 42 00:02:11,800 --> 00:02:12,839 Speaker 5: It's things like that. 43 00:02:13,080 --> 00:02:19,000 Speaker 4: Nothing of major significance that will alter the bill. The 44 00:02:19,400 --> 00:02:21,760 Speaker 4: biggest things that I think is still left to be 45 00:02:21,840 --> 00:02:25,000 Speaker 4: decided by the Senate Parliamentarian when it comes to tax 46 00:02:25,000 --> 00:02:31,120 Speaker 4: policy is eliminating the employment tax credit and also something 47 00:02:31,160 --> 00:02:33,960 Speaker 4: in regards to purple Heart designation. 48 00:02:35,320 --> 00:02:38,360 Speaker 3: Interesting, mister Chairman. I know there's an important rules committee 49 00:02:38,960 --> 00:02:41,960 Speaker 3: meeting on the House side about an hour from now. 50 00:02:42,000 --> 00:02:45,120 Speaker 3: Will those changes be made in that session so you 51 00:02:45,160 --> 00:02:47,120 Speaker 3: can do this before it's technically in the hands of 52 00:02:47,160 --> 00:02:47,600 Speaker 3: the Senate. 53 00:02:48,720 --> 00:02:51,040 Speaker 4: I don't serve on the Rules committee, but it's very 54 00:02:51,080 --> 00:02:55,960 Speaker 4: possibly those changes will be made before it is released 55 00:02:55,960 --> 00:02:59,880 Speaker 4: to the Senate. And the Senate is working around the 56 00:03:00,160 --> 00:03:04,440 Speaker 4: clock on this bill. They've been working with the fellow 57 00:03:04,600 --> 00:03:06,880 Speaker 4: their fellow colleagues over in the Senate and trying to 58 00:03:06,919 --> 00:03:10,280 Speaker 4: thread the needle that we thread over in the House Representatives. 59 00:03:10,320 --> 00:03:13,000 Speaker 5: It's very, very tough to. 60 00:03:13,000 --> 00:03:14,720 Speaker 4: Thread that needle when you look at the debt and 61 00:03:14,760 --> 00:03:18,160 Speaker 4: deficit hawks that some want to cut more money, others 62 00:03:18,400 --> 00:03:20,560 Speaker 4: think you're cutting too much. It's the same way with 63 00:03:20,600 --> 00:03:23,160 Speaker 4: all the green credits. Some folks want the green credits 64 00:03:23,200 --> 00:03:26,960 Speaker 4: eliminated immediately, others want to use a scalpel and look 65 00:03:27,040 --> 00:03:28,440 Speaker 4: at it approach. And it's the same way with the 66 00:03:28,480 --> 00:03:32,480 Speaker 4: state and local tax deduction. There's some senators over there 67 00:03:32,520 --> 00:03:35,320 Speaker 4: that they don't like it, but they know that they 68 00:03:35,360 --> 00:03:37,200 Speaker 4: have to balance it in order to make sure we 69 00:03:37,200 --> 00:03:39,240 Speaker 4: get two eighteen in the House and fifty one in 70 00:03:39,280 --> 00:03:39,680 Speaker 4: the Senate. 71 00:03:41,280 --> 00:03:43,720 Speaker 2: Well, and it doesn't look like they're stopping it changes 72 00:03:43,800 --> 00:03:46,320 Speaker 2: to salt. We've heard talk as well of senators of 73 00:03:46,320 --> 00:03:48,920 Speaker 2: the Senate looking to make changes to the no tax 74 00:03:48,960 --> 00:03:52,200 Speaker 2: on tips and overtime measures that were included in the 75 00:03:52,240 --> 00:03:54,840 Speaker 2: House package. In fact, the Senate Budget Chair Lindsey Graham 76 00:03:54,880 --> 00:03:57,360 Speaker 2: told Semaphore in an interview earlier today that he thinks 77 00:03:57,400 --> 00:04:00,400 Speaker 2: those things may not fit in this megabill for there 78 00:04:00,480 --> 00:04:04,160 Speaker 2: might need to be another budget reconciliation package later down 79 00:04:04,160 --> 00:04:06,040 Speaker 2: the line. And mister Chairman, I wonder what your response 80 00:04:06,080 --> 00:04:06,560 Speaker 2: to that is. 81 00:04:07,520 --> 00:04:09,680 Speaker 4: That's a no go. It would be dead on arrival. 82 00:04:10,560 --> 00:04:14,560 Speaker 4: The Senators need to know that we have followed through. 83 00:04:14,640 --> 00:04:16,360 Speaker 4: We pass this one big, beautiful bill. 84 00:04:16,640 --> 00:04:18,880 Speaker 5: It's what the President is asked. They need to do 85 00:04:18,920 --> 00:04:19,560 Speaker 5: the same thing. 86 00:04:19,880 --> 00:04:23,039 Speaker 4: There's no reason for those senators to kick the can 87 00:04:23,120 --> 00:04:26,960 Speaker 4: down the road on priorities that the President campaigned on. 88 00:04:27,279 --> 00:04:29,920 Speaker 5: No tax on tips, no tax on overtime. 89 00:04:30,360 --> 00:04:33,400 Speaker 4: These are items that the President spoke at every one 90 00:04:33,440 --> 00:04:37,080 Speaker 4: of his rallies and seventy seven million people voted for him. 91 00:04:37,320 --> 00:04:40,400 Speaker 4: The House delivered on it. The Senate will deliver on 92 00:04:40,440 --> 00:04:41,880 Speaker 4: it as well. 93 00:04:42,040 --> 00:04:45,040 Speaker 3: Well, mister Chairman, we just arrived at one deal breaker 94 00:04:45,440 --> 00:04:47,200 Speaker 3: in your words here, and I wonder what some of 95 00:04:47,200 --> 00:04:49,000 Speaker 3: the others are. You hear all the same talk that 96 00:04:49,040 --> 00:04:50,760 Speaker 3: everybody here is. In fact, i'm sure you know a 97 00:04:50,760 --> 00:04:52,280 Speaker 3: lot more about it than we do, which is why 98 00:04:52,320 --> 00:04:53,880 Speaker 3: we're glad to have you with us today. When you 99 00:04:53,920 --> 00:04:57,320 Speaker 3: talk about changes to salts, you talk about pulling out 100 00:04:57,320 --> 00:05:00,479 Speaker 3: the so called revenge tax, maybe some of the green 101 00:05:00,520 --> 00:05:04,520 Speaker 3: incentives that are in there. What's the deal breaker on 102 00:05:04,560 --> 00:05:07,359 Speaker 3: the House side, Because the conventional wisdom we keep hearing 103 00:05:07,480 --> 00:05:10,520 Speaker 3: is the Freedom Caucus will deal with it if the 104 00:05:10,520 --> 00:05:13,440 Speaker 3: salt number stays where it is, for instance, that some 105 00:05:13,480 --> 00:05:15,800 Speaker 3: of the issues from the more conservative members of the 106 00:05:15,800 --> 00:05:17,760 Speaker 3: House will have to be dealt with because you need 107 00:05:17,800 --> 00:05:20,800 Speaker 3: to keep the moderates the New York, New Jersey, California 108 00:05:20,839 --> 00:05:24,080 Speaker 3: delegations happy, am I am I anywhere close to true 109 00:05:24,120 --> 00:05:24,480 Speaker 3: on this. 110 00:05:25,640 --> 00:05:28,800 Speaker 4: The deal breaker is whenever you get out of balance. 111 00:05:29,200 --> 00:05:32,760 Speaker 4: We struck a very good balance of passing a bill 112 00:05:32,800 --> 00:05:36,080 Speaker 4: two hundred and fifteen to two point fourteen in the 113 00:05:36,120 --> 00:05:40,120 Speaker 4: House of Representatives, you have to thread a very narrow needle, 114 00:05:40,560 --> 00:05:44,039 Speaker 4: and that's what the deal breaker could be, is if. 115 00:05:43,839 --> 00:05:46,760 Speaker 5: The Senate adjusts it too much one. 116 00:05:46,520 --> 00:05:50,880 Speaker 4: Way or the other, you could either lose members of 117 00:05:50,560 --> 00:05:54,159 Speaker 4: the right flank or you could lose members on the 118 00:05:54,279 --> 00:05:57,080 Speaker 4: left flank. And so those are things that were balancing, 119 00:05:57,480 --> 00:06:00,520 Speaker 4: and that is what could be fatal. But failure's not 120 00:06:00,560 --> 00:06:03,240 Speaker 4: an option. We're going to get this done. Leader Thun, 121 00:06:03,480 --> 00:06:07,479 Speaker 4: Chairman Crapo. They are navigating it over on their side 122 00:06:07,560 --> 00:06:10,320 Speaker 4: the building, and they understand the huge dynamics that we 123 00:06:10,360 --> 00:06:13,080 Speaker 4: have within the House of Representatives, and they're going to 124 00:06:13,120 --> 00:06:15,560 Speaker 4: make some changes over there. But I don't see those 125 00:06:15,600 --> 00:06:19,320 Speaker 4: to be mega changes that are going to be catastrophic. 126 00:06:19,400 --> 00:06:22,440 Speaker 4: It's going to be changes that probably will make the 127 00:06:22,440 --> 00:06:22,960 Speaker 4: bill better. 128 00:06:24,800 --> 00:06:27,120 Speaker 2: Well, what about the change specifically or the decision to 129 00:06:27,240 --> 00:06:31,080 Speaker 2: drop the AI regulation moratorium. Have you heard from colleagues 130 00:06:31,120 --> 00:06:32,440 Speaker 2: in the House as to whether or not that's a 131 00:06:32,480 --> 00:06:34,160 Speaker 2: deal breaker for any of them. 132 00:06:34,960 --> 00:06:37,880 Speaker 4: We've had colleagues in the House that has raised a 133 00:06:37,880 --> 00:06:40,240 Speaker 4: lot of concerns about it. Of course, that was not 134 00:06:40,320 --> 00:06:44,240 Speaker 4: in the ways and means jurisdiction whenever it was it 135 00:06:44,320 --> 00:06:46,359 Speaker 4: was put in. But it's something I think that the 136 00:06:46,400 --> 00:06:49,640 Speaker 4: Senate or I know that the Senate is definitely addressing. 137 00:06:51,480 --> 00:06:55,040 Speaker 3: I'm curious as well about some of the green incentives, 138 00:06:55,080 --> 00:06:57,760 Speaker 3: Mister Chairman. There's reporting that more than thirty owners of 139 00:06:57,839 --> 00:07:01,040 Speaker 3: rural energy companies are swarming the Hill to knocking on doors. 140 00:07:01,040 --> 00:07:04,440 Speaker 3: Maybe they've been knocking on yours to urge Republican lawmakers 141 00:07:04,480 --> 00:07:08,240 Speaker 3: to preserve clean energy tax credits. Let's put evs aside 142 00:07:08,560 --> 00:07:11,000 Speaker 3: and the whole Elon Musk conversation when it comes to 143 00:07:11,080 --> 00:07:14,200 Speaker 3: wind in solar, if those are restored in the Senate, 144 00:07:14,560 --> 00:07:16,000 Speaker 3: is that a deal breaker in the House. 145 00:07:17,600 --> 00:07:23,280 Speaker 4: So we cut over half a trillion dollars of the 146 00:07:23,320 --> 00:07:28,040 Speaker 4: green energy credits. This is something that the President called for, 147 00:07:28,360 --> 00:07:31,880 Speaker 4: This is something that the majority of the House Republicans 148 00:07:31,880 --> 00:07:34,920 Speaker 4: called for. You have to understand, not one Republican in 149 00:07:35,000 --> 00:07:37,720 Speaker 4: the House or the Senate voted for these green credits 150 00:07:37,720 --> 00:07:40,400 Speaker 4: and the Inflation Reduction Act. And so we tried to 151 00:07:40,520 --> 00:07:44,200 Speaker 4: use a very balanced approach so that it didn't rip 152 00:07:44,280 --> 00:07:48,520 Speaker 4: the rug from underneath industries that have invested already within 153 00:07:48,640 --> 00:07:51,640 Speaker 4: the current tax policies, and we figured out a way 154 00:07:51,680 --> 00:07:54,840 Speaker 4: to phase it out over a period of time. You 155 00:07:55,000 --> 00:07:58,520 Speaker 4: just have to be balanced. We cannot be extreme and 156 00:07:58,680 --> 00:08:03,040 Speaker 4: just ripping them away. We cannot be extreme and not 157 00:08:03,640 --> 00:08:06,320 Speaker 4: taking them away. So it's right in the middle. You 158 00:08:06,400 --> 00:08:08,360 Speaker 4: have to be right in the middle, and that's what 159 00:08:08,400 --> 00:08:10,680 Speaker 4: we're doing well. 160 00:08:10,720 --> 00:08:12,360 Speaker 2: And as you talk about needing to be right in 161 00:08:12,400 --> 00:08:14,360 Speaker 2: the middle, how this is a very difficult line to 162 00:08:14,440 --> 00:08:18,000 Speaker 2: walk for both chambers, mister Chairman, when we consider the 163 00:08:18,000 --> 00:08:21,640 Speaker 2: Congressional Budget Office yesterday released another estimate of when the 164 00:08:21,760 --> 00:08:23,400 Speaker 2: US will reach the X date when it can no 165 00:08:23,440 --> 00:08:25,960 Speaker 2: longer fulfill its debt obligations, guessing that could be as 166 00:08:26,000 --> 00:08:28,560 Speaker 2: soon as mid August, when you and your colleagues are 167 00:08:28,560 --> 00:08:31,600 Speaker 2: on recess. Can you rule out entirely that the debt 168 00:08:31,640 --> 00:08:35,360 Speaker 2: ceiling is not going to have to be addressed separately? 169 00:08:35,480 --> 00:08:37,520 Speaker 2: If by the end of July this bill has not 170 00:08:37,640 --> 00:08:40,840 Speaker 2: worked its way through both chambers, what odds would you put. 171 00:08:40,679 --> 00:08:44,280 Speaker 4: Around that the House has increased the debt selling. We've 172 00:08:44,280 --> 00:08:47,280 Speaker 4: addressed that in the one big, beautiful bill the Senate 173 00:08:47,440 --> 00:08:50,480 Speaker 4: needs to act. We have said all along, let's put 174 00:08:50,480 --> 00:08:53,360 Speaker 4: this bill on the President's desk by July fourth, and 175 00:08:53,400 --> 00:08:56,240 Speaker 4: then you have nothing to worry about. The Senate trying 176 00:08:56,320 --> 00:09:00,640 Speaker 4: to break different items in fifteen different bills is a 177 00:09:00,679 --> 00:09:03,520 Speaker 4: no go. We have delivered in the House, they need 178 00:09:03,559 --> 00:09:04,520 Speaker 4: to deliver in the Senate. 179 00:09:06,720 --> 00:09:09,200 Speaker 3: Mister Chairman, I wonder if you've had a chance to 180 00:09:09,240 --> 00:09:12,080 Speaker 3: speak with Elon Musk or any of his allies since 181 00:09:12,120 --> 00:09:15,920 Speaker 3: he took a position of opposition on this bill, and 182 00:09:16,280 --> 00:09:18,520 Speaker 3: whether he's giving members of the Freedom Coccus or anyone 183 00:09:18,520 --> 00:09:21,440 Speaker 3: in the Republican Conference in the House, or for that matter, 184 00:09:21,520 --> 00:09:25,320 Speaker 3: Republicans in the Senate cover to vote no. 185 00:09:26,480 --> 00:09:29,560 Speaker 4: Let me just say this, the bill that we passed, 186 00:09:29,640 --> 00:09:33,080 Speaker 4: the One Big Beautiful Bill, is the largest cut to 187 00:09:33,240 --> 00:09:38,280 Speaker 4: spending in the history of our country, almost one point 188 00:09:38,400 --> 00:09:42,160 Speaker 4: seven trillion dollars. With all the great work that Elon 189 00:09:42,360 --> 00:09:46,160 Speaker 4: and Doge has done in cutting, they cut one hundred 190 00:09:46,200 --> 00:09:50,360 Speaker 4: and seventy five billion dollars in five months. The bill 191 00:09:50,400 --> 00:09:52,560 Speaker 4: that we passed out of the House cut. 192 00:09:52,320 --> 00:09:57,520 Speaker 5: One point six y nine trillion. Could we cut more? 193 00:09:57,679 --> 00:10:00,200 Speaker 4: I would love to cut more, but it's still the 194 00:10:00,400 --> 00:10:01,600 Speaker 4: largest cut. 195 00:10:01,559 --> 00:10:02,680 Speaker 5: In the history of America. 196 00:10:02,679 --> 00:10:05,720 Speaker 4: And that's what I like to point out whenever people 197 00:10:05,800 --> 00:10:10,200 Speaker 4: try to use the accounting measure sam that it's going 198 00:10:10,240 --> 00:10:13,880 Speaker 4: to add two plus trillion dollars to the deficit. I 199 00:10:13,960 --> 00:10:17,319 Speaker 4: believe that that is funny funny math, because what they 200 00:10:17,320 --> 00:10:21,240 Speaker 4: are referring to is existing tax policy is going to 201 00:10:21,280 --> 00:10:24,920 Speaker 4: cost roughly four trillion dollars, and that's not the case. 202 00:10:25,320 --> 00:10:28,920 Speaker 4: Our revenues into this country right now is seventeen point 203 00:10:29,040 --> 00:10:31,480 Speaker 4: two percent of GDP, and if you look at the 204 00:10:31,559 --> 00:10:34,800 Speaker 4: historic level over the last fifty years, revenues to GDP 205 00:10:35,000 --> 00:10:38,120 Speaker 4: has been right at seventeen percent. We don't have a 206 00:10:38,160 --> 00:10:40,880 Speaker 4: revenue problem, we have a spending problem. 207 00:10:42,120 --> 00:10:44,880 Speaker 2: Well, finally, mister Chairman, on the revenue side, tariffs of 208 00:10:44,920 --> 00:10:47,520 Speaker 2: course factor into that equation, and just quickly, we have 209 00:10:47,559 --> 00:10:50,640 Speaker 2: a minute left here on tariffs. The Treasury Secretary Scott 210 00:10:50,679 --> 00:10:53,880 Speaker 2: Besson is currently still in London working on trade negotiations 211 00:10:53,880 --> 00:10:55,760 Speaker 2: with China that are expected to go late into the 212 00:10:55,840 --> 00:10:58,320 Speaker 2: light night local time. Are you still expecting him before 213 00:10:58,320 --> 00:10:59,920 Speaker 2: the committee for his testimony tomorrow more? 214 00:11:01,080 --> 00:11:03,839 Speaker 4: I am still expecting him before the committee. It looks 215 00:11:03,840 --> 00:11:07,480 Speaker 4: like he may have a long night, But I'm grateful 216 00:11:07,640 --> 00:11:10,679 Speaker 4: for the work that he's doing. Howard Lutnik and Ambassador 217 00:11:10,720 --> 00:11:15,640 Speaker 4: Greer is doing because they are working and representing the 218 00:11:15,720 --> 00:11:18,640 Speaker 4: United States when it comes to China and all the 219 00:11:18,679 --> 00:11:21,560 Speaker 4: other countries coming to the table to make sure that 220 00:11:21,600 --> 00:11:25,400 Speaker 4: the American worker, American manufacturing, American farmer is treated fairly 221 00:11:25,520 --> 00:11:27,040 Speaker 4: on a world stage. 222 00:11:27,559 --> 00:11:31,480 Speaker 3: You may need stronger coffee tomorrow morning, mister chairman. This 223 00:11:31,480 --> 00:11:32,920 Speaker 3: thought it'd be interesting. 224 00:11:33,920 --> 00:11:35,000 Speaker 5: The energy drinks for them. 225 00:11:35,240 --> 00:11:40,440 Speaker 3: Kiss all right, I guess we love. Congressman Jason Smith, 226 00:11:41,160 --> 00:11:45,120 Speaker 3: Republican chair of the House Ways and Means Committee, wanted 227 00:11:45,160 --> 00:11:48,480 Speaker 3: that last word. We'll assemble our panel next Yeah, Okay, 228 00:11:49,040 --> 00:11:51,280 Speaker 3: Rit Davis and Jeanie Shanzino are on the way in 229 00:11:51,320 --> 00:11:54,280 Speaker 3: here on the fastest show in politics. This is Bloomberg. 230 00:11:56,480 --> 00:11:59,880 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 231 00:12:00,240 --> 00:12:03,120 Speaker 1: live weekdays at noon and five pm. He's durn on 232 00:12:03,200 --> 00:12:06,440 Speaker 1: Apple Cockley and Android Auto with the Flooburg business app. 233 00:12:06,480 --> 00:12:09,520 Speaker 1: You can also listen live on Amazon Alexa from our 234 00:12:09,559 --> 00:12:13,880 Speaker 1: flagship New York station, Just Say Alexa played Bloomberg eleven. 235 00:12:13,760 --> 00:12:19,040 Speaker 2: Thirty, continuing drama over protests in Los Angeles, where, of 236 00:12:19,080 --> 00:12:22,120 Speaker 2: course we've seen the deployment of another two thousand National 237 00:12:22,120 --> 00:12:25,360 Speaker 2: Guard members after the initial two thousand members deployed over 238 00:12:25,400 --> 00:12:28,400 Speaker 2: the weekend, and of course seven hundred marines active duty 239 00:12:28,440 --> 00:12:31,400 Speaker 2: Marines have now arrived in Los Angeles as well as 240 00:12:31,640 --> 00:12:34,480 Speaker 2: President Trump describes that as an effort necessary to keep 241 00:12:34,520 --> 00:12:37,960 Speaker 2: Los Angeles from burning into control the activity we're seeing. 242 00:12:38,000 --> 00:12:40,240 Speaker 2: But he also said in the Oval Office while speaking 243 00:12:40,240 --> 00:12:43,080 Speaker 2: to reporters in the last hour, that he spoke with 244 00:12:43,160 --> 00:12:46,040 Speaker 2: California's Governor Gavin Newsom a day ago, to quote, the 245 00:12:46,080 --> 00:12:48,000 Speaker 2: President called him up to tell him got to do 246 00:12:48,040 --> 00:12:50,920 Speaker 2: a better job. He's doing a bad job, to which 247 00:12:51,080 --> 00:12:54,640 Speaker 2: the governor is now responding, there was no call, Joe, 248 00:12:54,640 --> 00:12:56,480 Speaker 2: he says, not even a voicemail. 249 00:12:57,240 --> 00:12:59,959 Speaker 3: Yeah, Gavin Newsome going on to write that American should 250 00:13:00,160 --> 00:13:02,720 Speaker 3: alarmed that a president deploying marines onto our streets doesn't 251 00:13:02,720 --> 00:13:05,800 Speaker 3: even know who he is talking to, kind of taking 252 00:13:05,840 --> 00:13:09,120 Speaker 3: a page from Trump the way he talks about Joe Biden. 253 00:13:09,720 --> 00:13:12,959 Speaker 3: Let's assemble our political tannel. Bloomberg Politics contributors Rick Davis 254 00:13:12,960 --> 00:13:15,600 Speaker 3: and Genie Shanzano are on board with us today, back 255 00:13:15,600 --> 00:13:17,360 Speaker 3: together for the first time in over a week. Rick 256 00:13:17,480 --> 00:13:20,480 Speaker 3: is our Republican strategist and partner at Stone Core Capital. 257 00:13:20,559 --> 00:13:23,160 Speaker 3: Genie senior democracy fellow with the Center for the Study 258 00:13:23,160 --> 00:13:28,319 Speaker 3: of the Presidency and Congress and Bloomberg Politics contributor Genie. 259 00:13:28,520 --> 00:13:32,400 Speaker 3: We keep hearing that this is good politics for Donald Trump. 260 00:13:33,520 --> 00:13:36,080 Speaker 3: This seems like it's pretty good politics for Gavin Newsom too, 261 00:13:36,559 --> 00:13:39,040 Speaker 3: What do you think it is? 262 00:13:39,120 --> 00:13:42,120 Speaker 6: And you know, I share Gavin Newsom's use of the 263 00:13:42,160 --> 00:13:45,440 Speaker 6: word alarm, but probably not for the same reason he's 264 00:13:45,559 --> 00:13:48,760 Speaker 6: using it. I am alarmed that a president would say 265 00:13:48,880 --> 00:13:51,760 Speaker 6: just minutes ago in the Oval Office that if you're 266 00:13:51,760 --> 00:13:54,680 Speaker 6: going to protest on the two hundred and fiftieth anniversary, 267 00:13:54,679 --> 00:13:58,120 Speaker 6: you will be met with heavy force, without differentiating that 268 00:13:58,240 --> 00:14:01,600 Speaker 6: peaceful protest is one one of the lynchpins of being 269 00:14:01,640 --> 00:14:05,120 Speaker 6: an American, our right to speak and assemble. I'm alarmed 270 00:14:05,120 --> 00:14:08,400 Speaker 6: that he would send troops in without being asked by 271 00:14:08,400 --> 00:14:11,520 Speaker 6: the governor. But I'm also alarmed on the democratic side 272 00:14:11,559 --> 00:14:16,120 Speaker 6: that they are playing into this theatricality. The reality is 273 00:14:16,120 --> 00:14:20,240 Speaker 6: is that we do need a solution to immigration, and 274 00:14:20,360 --> 00:14:24,040 Speaker 6: the kind of solution we need is not this performative 275 00:14:24,080 --> 00:14:27,400 Speaker 6: back and forth of our leaders on social media yelling 276 00:14:27,440 --> 00:14:32,160 Speaker 6: at each other. It is a legislation out of Congress, 277 00:14:32,440 --> 00:14:36,360 Speaker 6: like Rick's former boss Don McCain put together. That's what 278 00:14:36,440 --> 00:14:39,560 Speaker 6: we need. And what's alarming is we are nowhere close 279 00:14:39,640 --> 00:14:41,240 Speaker 6: to their And oh, by the way, we have a 280 00:14:41,280 --> 00:14:44,880 Speaker 6: director of Homeland Security who went on TV last night 281 00:14:44,960 --> 00:14:48,400 Speaker 6: and said everybody in LA is a criminal. That kind 282 00:14:48,440 --> 00:14:52,680 Speaker 6: of performative nonsense is not what we need. We need solutions. 283 00:14:54,440 --> 00:14:58,240 Speaker 2: Well, when we consider the performance, if you will, Rick, 284 00:14:58,280 --> 00:15:00,680 Speaker 2: in the continued escalation we see p and Trump was 285 00:15:00,720 --> 00:15:02,640 Speaker 2: asked in the Oval office by a reporter if he 286 00:15:02,640 --> 00:15:06,000 Speaker 2: would consider invoking the Insurrection Act, and he said, if 287 00:15:06,000 --> 00:15:08,720 Speaker 2: there's an insurrection, I will invoke the Insurrection Act. That 288 00:15:08,840 --> 00:15:13,080 Speaker 2: of course would carve out what is not allowed thanks 289 00:15:13,120 --> 00:15:16,560 Speaker 2: to the Possecommitatus Act, which is the US military acting 290 00:15:16,880 --> 00:15:19,840 Speaker 2: in a law enforcement capacity. Do you really believe the 291 00:15:19,840 --> 00:15:21,080 Speaker 2: President would go there? 292 00:15:22,640 --> 00:15:24,600 Speaker 7: You know, it's hard to tell in these circumstances. 293 00:15:24,640 --> 00:15:26,800 Speaker 8: You know, he gets a question, he feels like he's 294 00:15:26,840 --> 00:15:28,440 Speaker 8: got to answer the question. 295 00:15:28,800 --> 00:15:31,360 Speaker 7: And I thought it was actually pretty noncommittal. 296 00:15:32,080 --> 00:15:34,960 Speaker 8: But look, I mean, the difference between the Marines going 297 00:15:34,960 --> 00:15:38,040 Speaker 8: to California and protecting the assets of the federal government, 298 00:15:38,080 --> 00:15:41,880 Speaker 8: you know, courthouses and federal government centers where some of 299 00:15:41,920 --> 00:15:45,240 Speaker 8: the deportees are being held, that's one thing. But then 300 00:15:45,640 --> 00:15:48,640 Speaker 8: you know, basically them acting as a police squad in 301 00:15:48,720 --> 00:15:53,040 Speaker 8: any jurisdiction of America is going to have a different reaction. 302 00:15:53,160 --> 00:15:53,800 Speaker 7: Right now, we're. 303 00:15:53,680 --> 00:15:55,640 Speaker 8: Debating whether or not a phone call was made or 304 00:15:55,640 --> 00:15:59,560 Speaker 8: who asked for what? In that case, when you take 305 00:15:59,560 --> 00:16:04,400 Speaker 8: that kind of constitutional action where you suspend passe comatatis, 306 00:16:05,120 --> 00:16:08,360 Speaker 8: I think you would see a national dialogue erupt of 307 00:16:08,480 --> 00:16:13,760 Speaker 8: epic proportions, because you really wonder at what point does 308 00:16:13,880 --> 00:16:16,840 Speaker 8: the violence have to occur to have that triggered in 309 00:16:16,880 --> 00:16:20,000 Speaker 8: a Donald Trump administration. And I don't think we know 310 00:16:20,120 --> 00:16:22,320 Speaker 8: the answer to that question, and pretty much I don't 311 00:16:22,360 --> 00:16:24,520 Speaker 8: think he did either when he answered the question today, 312 00:16:24,600 --> 00:16:28,280 Speaker 8: So stay tuned on this. Luckily, it looks like some 313 00:16:28,360 --> 00:16:31,680 Speaker 8: of the riots have dispelled in LA and it's starting 314 00:16:31,680 --> 00:16:34,880 Speaker 8: to quiet down, so hopefully it won't matter in this instance. 315 00:16:35,400 --> 00:16:38,400 Speaker 8: But I think it's definitely a page to watch. 316 00:16:39,920 --> 00:16:42,760 Speaker 3: Interesting as we learn more about some of the folks 317 00:16:42,760 --> 00:16:45,400 Speaker 3: who are arrested. Genie, isn't that interesting? We're not hearing 318 00:16:45,480 --> 00:16:47,920 Speaker 3: very much about what went behind these arrests. In some 319 00:16:48,000 --> 00:16:51,880 Speaker 3: cases there were violent criminals. We heard about a handful 320 00:16:52,080 --> 00:16:55,800 Speaker 3: of them, but we're learning more now as well about 321 00:16:55,800 --> 00:16:59,600 Speaker 3: for instance, Juan Fernando, detained by ice at his job 322 00:16:59,640 --> 00:17:03,240 Speaker 3: at a CLI clothing factory, transported back to the country 323 00:17:03,440 --> 00:17:07,920 Speaker 3: he had left behind without much time past to be 324 00:17:08,040 --> 00:17:10,879 Speaker 3: the same day he was pulled out of his job 325 00:17:10,960 --> 00:17:15,760 Speaker 3: and immediately deported. His family is asking for due process. 326 00:17:15,800 --> 00:17:17,600 Speaker 3: So we're going to go through this all over again 327 00:17:18,080 --> 00:17:20,280 Speaker 3: with this group, like we did with those deported to 328 00:17:20,320 --> 00:17:21,040 Speaker 3: El Salvador. 329 00:17:22,680 --> 00:17:26,760 Speaker 6: I think we probably will. The reality is Donald Trump 330 00:17:26,840 --> 00:17:31,320 Speaker 6: deserves credit for shutting the border. We need common sense 331 00:17:31,520 --> 00:17:36,720 Speaker 6: immigration reform and it is neither cost effective nor enforceable 332 00:17:37,000 --> 00:17:40,520 Speaker 6: for the United States to deport people who have been here, 333 00:17:40,640 --> 00:17:44,200 Speaker 6: many of them brought as young people for their entire lives, 334 00:17:44,240 --> 00:17:47,000 Speaker 6: who are working in paying taxes, to pick them up 335 00:17:47,040 --> 00:17:51,280 Speaker 6: at home, depot or like you're talking about these people criminals. Absolutely, 336 00:17:51,359 --> 00:17:54,720 Speaker 6: but that was part of the DAKA and Donald Trump 337 00:17:54,760 --> 00:17:58,000 Speaker 6: had embraced some of that in the past. Now he 338 00:17:58,160 --> 00:18:00,960 Speaker 6: is being pushed by the likes of Stephen as is 339 00:18:01,000 --> 00:18:04,160 Speaker 6: Ice to deport two to three thousand people per day. 340 00:18:04,680 --> 00:18:08,320 Speaker 6: That means you go to peaceful, tax paying people who, 341 00:18:08,320 --> 00:18:11,480 Speaker 6: by the way, are paying taxes and helping our economy. 342 00:18:11,720 --> 00:18:15,080 Speaker 6: It is not a common sense solution to a real 343 00:18:15,200 --> 00:18:18,480 Speaker 6: crisis and problem we've long had, and the President should 344 00:18:18,520 --> 00:18:21,360 Speaker 6: be called out for not working with Congress to get 345 00:18:21,400 --> 00:18:24,359 Speaker 6: a deal done. This is the same person for electoral 346 00:18:24,400 --> 00:18:29,040 Speaker 6: reasons in January blew up, much to the dismay of Republicans, 347 00:18:29,240 --> 00:18:33,400 Speaker 6: a very strong immigration bill that could have moved us forward. 348 00:18:33,680 --> 00:18:35,679 Speaker 6: That's what Americans should be alarmed about. 349 00:18:37,320 --> 00:18:40,600 Speaker 2: Well when we consider immigration related legislation, though Rick the 350 00:18:40,640 --> 00:18:42,679 Speaker 2: White House in recent days has been very quick to 351 00:18:42,760 --> 00:18:44,960 Speaker 2: point every one to you the fact that the one 352 00:18:45,000 --> 00:18:47,200 Speaker 2: big beautiful bill working its way through the Hill right 353 00:18:47,240 --> 00:18:51,320 Speaker 2: now does include funding for more ice agents, more customs agents, 354 00:18:51,359 --> 00:18:54,760 Speaker 2: more border patrol agents. How does that factor into the 355 00:18:54,800 --> 00:18:57,720 Speaker 2: overall likelihood of the bill sailing through or at least 356 00:18:57,760 --> 00:18:59,960 Speaker 2: getting through easier? 357 00:19:00,320 --> 00:19:01,000 Speaker 5: Shall we say? 358 00:19:01,840 --> 00:19:04,639 Speaker 8: Yeah? I would say the one item that has not 359 00:19:04,880 --> 00:19:08,399 Speaker 8: generated much controversy at this point in time, and the 360 00:19:08,520 --> 00:19:12,119 Speaker 8: big beautiful bill, the Reconciliation Bill, has been money for 361 00:19:12,320 --> 00:19:15,800 Speaker 8: the Homeland Security and for Department of Defense and their 362 00:19:15,840 --> 00:19:19,720 Speaker 8: portion on things like building the wall. So the reality 363 00:19:19,840 --> 00:19:23,199 Speaker 8: is this is one there. Most Republicans have been jumping 364 00:19:23,200 --> 00:19:26,440 Speaker 8: on board. It's gotten some criticism for being a big 365 00:19:26,520 --> 00:19:27,439 Speaker 8: spending item. 366 00:19:27,600 --> 00:19:29,800 Speaker 7: And we just talked to the chairman of the Ways 367 00:19:29,800 --> 00:19:30,760 Speaker 7: and Means Committee. 368 00:19:31,760 --> 00:19:33,800 Speaker 8: Basically from what I could tell, what he was saying 369 00:19:33,840 --> 00:19:37,359 Speaker 8: is we've cut enough, don't need to cut anymore, and 370 00:19:38,359 --> 00:19:40,760 Speaker 8: so probably no appetite in the House side. 371 00:19:40,760 --> 00:19:42,199 Speaker 7: I guess to go after those funds. 372 00:19:42,480 --> 00:19:45,560 Speaker 8: But the reality is it's a significant, over three hundred 373 00:19:45,600 --> 00:19:49,280 Speaker 8: billion dollars commitment at a time when border security seems 374 00:19:49,320 --> 00:19:50,720 Speaker 8: to be handled pretty well. 375 00:19:50,760 --> 00:19:52,960 Speaker 7: And so it's really deportations. 376 00:19:52,960 --> 00:19:56,640 Speaker 8: And I could just add there have been more deportations 377 00:19:56,640 --> 00:19:59,040 Speaker 8: in the first year at this point in time in 378 00:19:59,080 --> 00:20:03,720 Speaker 8: the bidendministration than it is today. Donald Trump's deporting fewer people. 379 00:20:03,760 --> 00:20:06,240 Speaker 8: So it's not the issue of deportation as it exists, 380 00:20:06,280 --> 00:20:09,960 Speaker 8: that's happened throughout all the administrations. It's the tactics under 381 00:20:10,000 --> 00:20:13,560 Speaker 8: which they're using the deportation rules to their advantage. 382 00:20:14,440 --> 00:20:17,640 Speaker 3: Well, that's a really important point to make, Rick, It's 383 00:20:17,720 --> 00:20:20,280 Speaker 3: kind of ironic, Genie. Remember the big argument was do 384 00:20:20,359 --> 00:20:22,360 Speaker 3: we do this in one big beautiful bill. That's why 385 00:20:22,400 --> 00:20:24,240 Speaker 3: we call it that, because the other option was to 386 00:20:24,240 --> 00:20:27,000 Speaker 3: break it in two. That was the John Thune option. 387 00:20:27,240 --> 00:20:29,879 Speaker 3: Get the border money out the door, and we'll spend 388 00:20:29,920 --> 00:20:32,000 Speaker 3: time on taxes and the rest, which will be more 389 00:20:32,000 --> 00:20:35,280 Speaker 3: difficult to debate. Well, here we are, one big beautiful 390 00:20:35,280 --> 00:20:37,919 Speaker 3: bill was the answer. And it kind of ironic that, 391 00:20:38,000 --> 00:20:40,040 Speaker 3: based on current events, it is in fact the border 392 00:20:40,080 --> 00:20:42,400 Speaker 3: component that could help push this over the finish line, 393 00:20:42,400 --> 00:20:42,720 Speaker 3: isn't it. 394 00:20:43,960 --> 00:20:49,159 Speaker 6: Yeah, it's ironic, or it is something that the administration 395 00:20:49,440 --> 00:20:53,919 Speaker 6: helped to sort of push forward. But the reality a part. 396 00:20:53,800 --> 00:20:55,240 Speaker 3: Of the plan is what you're saying. 397 00:20:55,760 --> 00:20:59,040 Speaker 6: I don't know, but you know, I'm not sure it's ironic. 398 00:20:59,400 --> 00:21:03,439 Speaker 6: But the reality is is that this bill funds the border. 399 00:21:03,640 --> 00:21:07,679 Speaker 6: That is fine, But what we need is immigration reform. 400 00:21:08,200 --> 00:21:11,640 Speaker 6: We have six to seven million people in this country 401 00:21:11,760 --> 00:21:14,240 Speaker 6: the government doesn't even know, They can't tell you who 402 00:21:14,240 --> 00:21:17,119 Speaker 6: are brought here as babies and children. Are we really 403 00:21:17,160 --> 00:21:20,000 Speaker 6: going to pick these people up, take them to a 404 00:21:20,040 --> 00:21:22,120 Speaker 6: place or push them out to a place they've never 405 00:21:22,160 --> 00:21:25,240 Speaker 6: been and know nothing about while they have done nothing wrong. 406 00:21:26,040 --> 00:21:30,240 Speaker 6: Very few Americans support that tactic. We have to find 407 00:21:30,359 --> 00:21:35,520 Speaker 6: a common sense pathway to citizenship. Yes, close the border, Yes, 408 00:21:35,640 --> 00:21:39,480 Speaker 6: fund border security. Yes, deal with people who are committing crimes. 409 00:21:39,840 --> 00:21:43,600 Speaker 6: But yes, also find a common sense way to keep 410 00:21:43,680 --> 00:21:47,760 Speaker 6: people who are working and contributing in this country, especially 411 00:21:48,240 --> 00:21:51,200 Speaker 6: people who are brought here who work with many of us, 412 00:21:51,200 --> 00:21:53,840 Speaker 6: and we know many personally. They are friends, neighbors, and 413 00:21:53,920 --> 00:21:58,359 Speaker 6: family members. They are here and they should be supported 414 00:21:58,680 --> 00:22:01,680 Speaker 6: in an effort to stay here and to continue contributing 415 00:22:01,720 --> 00:22:04,920 Speaker 6: to this great country. That's where the President's planned here 416 00:22:04,960 --> 00:22:07,720 Speaker 6: and Stephen Miller's quite frankly falls very short. 417 00:22:09,240 --> 00:22:11,560 Speaker 2: Rick, in our final minute, your degree of confidence that 418 00:22:11,560 --> 00:22:15,640 Speaker 2: that common sense solution can be found in the near term, Well. 419 00:22:15,440 --> 00:22:17,560 Speaker 8: I certainly worked hard enough with John McCain to try 420 00:22:17,600 --> 00:22:21,720 Speaker 8: and have a comprehensive immigration bill passed and didn't work 421 00:22:21,760 --> 00:22:24,200 Speaker 8: out so well. But it is the way to actually 422 00:22:24,200 --> 00:22:26,840 Speaker 8: have all these jobs that people are getting deported from 423 00:22:27,200 --> 00:22:30,920 Speaker 8: to be filled with people who actually come in legally. 424 00:22:31,040 --> 00:22:34,359 Speaker 8: And of course I think there's a broad bipartisan support 425 00:22:34,800 --> 00:22:39,760 Speaker 8: for legal immigration reform, and it's just not the administration 426 00:22:39,880 --> 00:22:42,679 Speaker 8: it's likely to pass it, but it would be a 427 00:22:42,960 --> 00:22:45,879 Speaker 8: very good thing in the heels of this current debate 428 00:22:46,240 --> 00:22:47,240 Speaker 8: to be contemplating. 429 00:22:47,280 --> 00:22:49,280 Speaker 7: If you're the Trump administration. 430 00:22:49,840 --> 00:22:53,480 Speaker 3: Talking about motivations here on both sides of the Aisle Genie, 431 00:22:53,480 --> 00:22:56,040 Speaker 3: Would it help Democrats if this did not fizzle out 432 00:22:56,080 --> 00:22:58,959 Speaker 3: and in fact spread to other cities as we consider 433 00:22:59,000 --> 00:23:00,320 Speaker 3: messaging ahead of the mids. 434 00:23:01,680 --> 00:23:05,480 Speaker 6: You know, maybe politically, but you know, I think many 435 00:23:05,520 --> 00:23:08,800 Speaker 6: Americans are tired of thinking about this from a political lens. 436 00:23:08,880 --> 00:23:12,720 Speaker 6: I mean, we need solutions, and so yeah, that helps democrats. 437 00:23:12,920 --> 00:23:16,760 Speaker 6: That's fine for democrats, but it doesn't help the United 438 00:23:16,760 --> 00:23:19,440 Speaker 6: States as a whole, not to treat people the way 439 00:23:19,480 --> 00:23:22,400 Speaker 6: they should be treated and to keep people brought here 440 00:23:22,440 --> 00:23:25,600 Speaker 6: as children here contributing to society and making us the 441 00:23:25,640 --> 00:23:29,000 Speaker 6: best we can. So I think that's also important in 442 00:23:29,000 --> 00:23:30,280 Speaker 6: addition to the political end. 443 00:23:31,560 --> 00:23:35,280 Speaker 2: All right, Jeanie Shanzano and Rick Davis, Bloomberg Politics contributors 444 00:23:35,280 --> 00:23:37,560 Speaker 2: in our political panel on this Tuesday, thanks for joining 445 00:23:37,640 --> 00:23:39,360 Speaker 2: us on Balance of Power, and we'll have more head 446 00:23:39,400 --> 00:23:41,600 Speaker 2: here on Bloomberg TV than treat. 447 00:23:41,440 --> 00:23:47,760 Speaker 1: You than you're listening to the Bloomberg Balance of Power podcast. 448 00:23:47,960 --> 00:23:51,120 Speaker 1: Catch us live weekdays at noon and five pm Eastern 449 00:23:51,240 --> 00:23:54,680 Speaker 1: on Apple Cocklay and Android Auto with the Bloomberg Business App. 450 00:23:54,840 --> 00:23:58,119 Speaker 1: Listen on demand wherever you get your podcasts, or watch 451 00:23:58,160 --> 00:24:02,439 Speaker 1: us live on YouTube. 452 00:24:00,920 --> 00:24:04,600 Speaker 3: Bloomberg Radio Satellite radio channel one twenty one. Maybe you're 453 00:24:04,600 --> 00:24:06,720 Speaker 3: watching us on YouTube right now. If not, this is 454 00:24:06,720 --> 00:24:10,000 Speaker 3: the coolest thing we have going search Bloomberg Business News Live. 455 00:24:10,040 --> 00:24:11,920 Speaker 3: It's not just this show, it's all the way, surveillance 456 00:24:11,960 --> 00:24:15,040 Speaker 3: through the day, Bloomberg Business Week Daily, and we were 457 00:24:15,080 --> 00:24:17,040 Speaker 3: always live for you in the studio with our great 458 00:24:17,040 --> 00:24:19,000 Speaker 3: guests here in Washington as we try to get our 459 00:24:19,119 --> 00:24:22,760 Speaker 3: arms around reconciliation, kind of like the Senate's trying to 460 00:24:22,800 --> 00:24:25,080 Speaker 3: do as we speak. Some important things are going to 461 00:24:25,080 --> 00:24:28,040 Speaker 3: take place today. All procedural, but if you want to 462 00:24:28,119 --> 00:24:30,360 Speaker 3: sound smart at the cocktail party, we're about to get 463 00:24:30,400 --> 00:24:35,600 Speaker 3: you ready on this Tuesday edition. Right, it's Tuesday, which 464 00:24:35,640 --> 00:24:38,440 Speaker 3: means we have about three and a half weeks until 465 00:24:38,480 --> 00:24:42,359 Speaker 3: the fake deadline of the fourth of July that even 466 00:24:42,520 --> 00:24:44,919 Speaker 3: the President doesn't seem to care about. Yesterday, at this 467 00:24:44,960 --> 00:24:48,280 Speaker 3: invest event, he's sitting next to speaker Johnson, fourth of July. 468 00:24:48,359 --> 00:24:49,960 Speaker 3: He said, yeah, or it might take a little longer. 469 00:24:51,640 --> 00:24:56,600 Speaker 3: Is something going on over there, James. They're gathering the pool. 470 00:24:56,920 --> 00:25:00,360 Speaker 3: This is It's noontime. This happens every day. We can 471 00:25:00,440 --> 00:25:02,520 Speaker 3: just talk amongst ourselves. I get up in the morning, 472 00:25:02,560 --> 00:25:06,199 Speaker 3: I do my reading, I talk to the people I trust, 473 00:25:06,520 --> 00:25:08,120 Speaker 3: try to figure out what's going on in the world. 474 00:25:08,160 --> 00:25:10,000 Speaker 3: We start mapping out the show that I connect with 475 00:25:10,520 --> 00:25:17,159 Speaker 3: producer James Booker, Matt co anchor Kayley. We come up 476 00:25:17,200 --> 00:25:19,879 Speaker 3: with a plan. Different people to call you book some things. 477 00:25:19,920 --> 00:25:21,919 Speaker 3: You map out a show. This is what we're going 478 00:25:21,960 --> 00:25:24,240 Speaker 3: to have for our viewers and listeners. And then at 479 00:25:24,280 --> 00:25:27,520 Speaker 3: high noon they assemble the press pool, Donald Trump starts 480 00:25:27,560 --> 00:25:29,840 Speaker 3: talking and it all goes off the rails. Maybe we'll 481 00:25:29,880 --> 00:25:32,240 Speaker 3: do this again together. At least we enjoy each other. Right, 482 00:25:33,200 --> 00:25:36,280 Speaker 3: this is the new world we're in, and a big 483 00:25:36,320 --> 00:25:39,000 Speaker 3: part of this new world is the effort that's unfolding 484 00:25:39,080 --> 00:25:43,919 Speaker 3: right now on Capitol Hill. Yeah, CC is part of 485 00:25:43,920 --> 00:25:45,960 Speaker 3: this mix too. It's a big family behind this show. 486 00:25:48,240 --> 00:25:50,280 Speaker 3: The Rules Committee is going to get down to brass 487 00:25:50,320 --> 00:25:52,560 Speaker 3: tacks today in the House at two o'clock. That's right 488 00:25:52,800 --> 00:25:54,920 Speaker 3: around the time we got off there, two hours from now. 489 00:25:55,520 --> 00:25:58,160 Speaker 3: In the meantime, they're expecting a report from the Parliamentarian 490 00:25:58,200 --> 00:26:00,800 Speaker 3: and the Senate. Right, this is the ref who says 491 00:26:00,840 --> 00:26:03,560 Speaker 3: you can do this in reconciliation. You're not allowed to 492 00:26:03,600 --> 00:26:07,119 Speaker 3: do that. Budget matters, yes, everything else. No, this is 493 00:26:07,119 --> 00:26:09,560 Speaker 3: the bird bath, the bird rule we talk about. And 494 00:26:09,640 --> 00:26:11,880 Speaker 3: so by the end of this day, I suspect we're 495 00:26:11,880 --> 00:26:13,560 Speaker 3: going to have a much better idea of what's going 496 00:26:13,600 --> 00:26:15,680 Speaker 3: to end up in the Senate version of this bill. 497 00:26:15,840 --> 00:26:18,719 Speaker 3: And that's why we have Nathan Dean with US senior 498 00:26:18,800 --> 00:26:22,520 Speaker 3: US policy analyst at Bloomberg Intelligence. His phone is ringing 499 00:26:22,760 --> 00:26:25,080 Speaker 3: because we're actually getting into something here. Nathan is great 500 00:26:25,080 --> 00:26:27,960 Speaker 3: to see you. What's the parliamentary going to tell us today? 501 00:26:28,400 --> 00:26:30,879 Speaker 9: So I think the parliamentarian is going to allow most 502 00:26:31,000 --> 00:26:33,879 Speaker 9: of what the investable angle or the investment. 503 00:26:33,520 --> 00:26:34,440 Speaker 10: Community cares about. 504 00:26:34,440 --> 00:26:38,399 Speaker 9: Obviously, these tax cuts, the extensions, the Custom Medicaid Inflation 505 00:26:38,440 --> 00:26:40,760 Speaker 9: Reduction Act, extent benefits. You know, we think it's going 506 00:26:40,800 --> 00:26:42,680 Speaker 9: to be more structural things, things like where they're trying 507 00:26:42,720 --> 00:26:45,040 Speaker 9: to get rid of the Office of Financial Research, or 508 00:26:45,359 --> 00:26:48,639 Speaker 9: maybe changing the funding mechanism of the Consumer Financial Protection Bureau, 509 00:26:48,880 --> 00:26:50,520 Speaker 9: things that are very important for us to hear in 510 00:26:50,520 --> 00:26:52,800 Speaker 9: the Washington But for the New York community that's investing 511 00:26:52,840 --> 00:26:55,119 Speaker 9: in this, we'd say it's probably most likely going to 512 00:26:55,119 --> 00:26:56,720 Speaker 9: be out because the general rule of thumb is is 513 00:26:56,760 --> 00:26:59,119 Speaker 9: that if it impacts the budget, then it's allowed. But 514 00:26:59,320 --> 00:27:02,000 Speaker 9: you know, every single party, any single time they do 515 00:27:02,040 --> 00:27:04,879 Speaker 9: a reconciliation package, they throw in the kitchen sink and 516 00:27:04,920 --> 00:27:07,120 Speaker 9: they say, let's try and do this. So the Senate 517 00:27:07,160 --> 00:27:09,359 Speaker 9: Parliamentarian is going to come out later today, she's going 518 00:27:09,400 --> 00:27:11,120 Speaker 9: to say, no, you can't do that. I don't think 519 00:27:11,119 --> 00:27:13,000 Speaker 9: there's going to be a lot of fireworks here. And 520 00:27:13,080 --> 00:27:15,400 Speaker 9: obviously the Senate does have the ability to just fire 521 00:27:15,440 --> 00:27:18,280 Speaker 9: the parliamentarian or ignore the parliamentarian. Yeah right, But you know, 522 00:27:18,280 --> 00:27:19,800 Speaker 9: I don't think that's going to happen in this case 523 00:27:19,840 --> 00:27:22,840 Speaker 9: because I don't think they're going to get any major controversy. 524 00:27:22,920 --> 00:27:26,639 Speaker 3: I'm waiting to hear when Donald Trump tells John Thune, 525 00:27:26,680 --> 00:27:29,640 Speaker 3: what happens with you ignore the parliamentarian. But we'll deal 526 00:27:29,680 --> 00:27:32,359 Speaker 3: with that when it happens. That could be an interesting standoff. 527 00:27:32,680 --> 00:27:36,440 Speaker 3: No tax on tips, no tax on overtime. This gets 528 00:27:36,480 --> 00:27:39,399 Speaker 3: through the bird bath. It's more lawmakers who are concerned 529 00:27:39,400 --> 00:27:39,880 Speaker 3: about those. 530 00:27:39,960 --> 00:27:40,760 Speaker 10: Yeah, I think it does. 531 00:27:40,840 --> 00:27:42,680 Speaker 9: I mean, I think it's one of those things where 532 00:27:43,000 --> 00:27:44,399 Speaker 9: you know, it's not going to become so much of 533 00:27:44,440 --> 00:27:48,199 Speaker 9: a parliamentarian decision. It's going to be a deficit condition question. 534 00:27:48,480 --> 00:27:50,040 Speaker 10: And that's where we're going at with all this. 535 00:27:50,119 --> 00:27:51,520 Speaker 9: And in fact, we put a note out just this 536 00:27:51,600 --> 00:27:54,119 Speaker 9: morning to our clients and it always is going to 537 00:27:54,160 --> 00:27:56,520 Speaker 9: come down to the deficit because you know, and I 538 00:27:56,520 --> 00:27:59,639 Speaker 9: should have said earlier, the biggest question we're waiting for 539 00:27:59,720 --> 00:28:01,800 Speaker 9: is what then not the parliamentarian is going to allow 540 00:28:01,840 --> 00:28:05,399 Speaker 9: the Senate to use current baseline policy as zero, meaning 541 00:28:05,400 --> 00:28:07,600 Speaker 9: to extend the trumpe of tax cuts, the cost is 542 00:28:07,640 --> 00:28:10,840 Speaker 9: effectively zero. If the parliamentarian improves that, which I think 543 00:28:10,880 --> 00:28:13,840 Speaker 9: she will. If the Parliamentarian improves it, then you know, 544 00:28:13,880 --> 00:28:15,760 Speaker 9: you don't really have to cut all that much to 545 00:28:15,960 --> 00:28:18,720 Speaker 9: actually keep this package going forward. And that's why we 546 00:28:18,840 --> 00:28:22,280 Speaker 9: always think that the deficit is the most likely impacted 547 00:28:22,480 --> 00:28:26,480 Speaker 9: entity here from this package. Looking at Medicaid, the inflationial reduction, 548 00:28:26,560 --> 00:28:29,440 Speaker 9: extent benefits, it's much easier for the Senate to say, 549 00:28:29,440 --> 00:28:32,719 Speaker 9: you know what, let's not cut those to the extent 550 00:28:32,760 --> 00:28:33,680 Speaker 9: that the House proposed. 551 00:28:33,720 --> 00:28:35,240 Speaker 10: Yep, let's pull that back a little bit. 552 00:28:35,560 --> 00:28:38,400 Speaker 9: We'll borrow today and we'll vote for something that will 553 00:28:38,400 --> 00:28:41,040 Speaker 9: actually be tomorrow's pain as opposed to voting for. 554 00:28:41,000 --> 00:28:43,200 Speaker 10: Something that's going to hurt our constituents in the next year. 555 00:28:43,240 --> 00:28:47,600 Speaker 3: So understood. So let's lay out the concerns. You could 556 00:28:47,640 --> 00:28:51,000 Speaker 3: really count them on one hand, right, what actually is 557 00:28:51,040 --> 00:28:53,880 Speaker 3: going to be a concern for senators and then when 558 00:28:53,880 --> 00:28:56,000 Speaker 3: it comes back to the House could be deal breakers. 559 00:28:56,360 --> 00:28:59,960 Speaker 3: You change the cap on salt, yep, you could lose 560 00:29:00,040 --> 00:29:03,920 Speaker 3: a couple of lawmakers. The revenge tax is something we 561 00:29:04,040 --> 00:29:06,960 Speaker 3: keep hearing about banks are calling you about it, Nathan, 562 00:29:07,000 --> 00:29:07,360 Speaker 3: what is it? 563 00:29:07,480 --> 00:29:09,560 Speaker 9: Yeah, so this is section eight ninety nine. This is 564 00:29:09,720 --> 00:29:11,800 Speaker 9: something that hasn't gotten a ton of press. I mean, 565 00:29:11,880 --> 00:29:14,320 Speaker 9: Limberg News has done some extensive reporting on this. But 566 00:29:14,360 --> 00:29:16,959 Speaker 9: it's called the Revenge tax. It essentially allows the Treasury 567 00:29:17,000 --> 00:29:20,920 Speaker 9: Department to deem a foreign country a unfair foreign country 568 00:29:21,000 --> 00:29:24,680 Speaker 9: or a discriminatory tax environment, and then allows the Treasury 569 00:29:24,720 --> 00:29:27,840 Speaker 9: Department to put essentially a five percent tariff on sorry, 570 00:29:27,920 --> 00:29:32,400 Speaker 9: five percent tax levy on essentially all passive income, real estate, 571 00:29:32,800 --> 00:29:33,840 Speaker 9: you know, income. 572 00:29:33,480 --> 00:29:35,080 Speaker 10: From foreign countries and so forth. 573 00:29:35,160 --> 00:29:37,400 Speaker 9: So if you think if you're a US entity or 574 00:29:37,400 --> 00:29:39,840 Speaker 9: a foreign bank here in the United States and your 575 00:29:39,840 --> 00:29:42,160 Speaker 9: income's going back to HQ, well, now all of a sudden, 576 00:29:42,160 --> 00:29:44,160 Speaker 9: you have an additional tax on that. It's five percent, 577 00:29:44,200 --> 00:29:47,160 Speaker 9: It goes up annually, up till about twenty percent, unless 578 00:29:47,240 --> 00:29:50,520 Speaker 9: that's essentially deemed you know, that country gets off. It's 579 00:29:50,560 --> 00:29:53,160 Speaker 9: designed as a way to combat what they could consider 580 00:29:53,320 --> 00:29:58,480 Speaker 9: digital foreign sorry, discriminatory digital taxes, mostly in the tech space. 581 00:29:58,680 --> 00:30:01,040 Speaker 9: My colleague Andrew silver and I Silverman and I looked 582 00:30:01,040 --> 00:30:03,320 Speaker 9: at it. It's going to most likely impact banks in 583 00:30:03,360 --> 00:30:06,480 Speaker 9: the tech companies, the tech companies in particular, because if 584 00:30:06,600 --> 00:30:08,760 Speaker 9: or overseas firms decides that they're not going to play 585 00:30:08,760 --> 00:30:11,520 Speaker 9: in the United States anymore, then that's that's actually somewhat 586 00:30:11,520 --> 00:30:14,320 Speaker 9: somewhat bad. So the main question we've been getting is 587 00:30:14,320 --> 00:30:16,560 Speaker 9: is the Senate going to pull this out? Senator Thune 588 00:30:16,600 --> 00:30:18,360 Speaker 9: said that he's been looking at it. We think it's 589 00:30:18,400 --> 00:30:19,840 Speaker 9: either going to be pulled out or it's going to 590 00:30:19,840 --> 00:30:21,040 Speaker 9: be watered significantly. 591 00:30:21,880 --> 00:30:24,560 Speaker 3: So we'll see very important. Who does that offend if 592 00:30:24,560 --> 00:30:26,440 Speaker 3: they take it out. Is there a constituency behind this 593 00:30:26,520 --> 00:30:28,080 Speaker 3: in the House that thun needs to worry about. 594 00:30:28,120 --> 00:30:31,080 Speaker 9: Well, I don't think if there's a constituency as to 595 00:30:31,120 --> 00:30:33,000 Speaker 9: the point where you're going to see a coalition coming 596 00:30:33,000 --> 00:30:34,920 Speaker 9: together and trying to, you know, fight like a salt 597 00:30:35,000 --> 00:30:36,760 Speaker 9: caucus exactly. I don't think you're going to see a 598 00:30:36,760 --> 00:30:38,640 Speaker 9: salt caucus. I actually don't think it was all that 599 00:30:38,680 --> 00:30:41,640 Speaker 9: controversial when the House lawmakers put it in there, because 600 00:30:41,680 --> 00:30:44,280 Speaker 9: in their eyes, it just gives the Treasury Department flexibility. 601 00:30:44,320 --> 00:30:46,720 Speaker 10: Doesn't say that this has to happen. It just says 602 00:30:46,720 --> 00:30:48,840 Speaker 10: that this is another another tool. 603 00:30:48,880 --> 00:30:52,400 Speaker 9: I almost said weapon, you know, another tool that would 604 00:30:52,440 --> 00:30:54,760 Speaker 9: allow the Treasury Department in the White House to actually 605 00:30:54,920 --> 00:30:58,320 Speaker 9: use when conducting its negotiations. I don't think it was 606 00:30:58,320 --> 00:30:59,959 Speaker 9: all that controversial when it was put in. I think 607 00:31:00,080 --> 00:31:02,560 Speaker 9: it was one of those unattended consequences that was coming 608 00:31:02,680 --> 00:31:04,479 Speaker 9: especially from the non US foreign community. 609 00:31:04,480 --> 00:31:06,520 Speaker 3: Would be kind of cool if there was a revenge caucus. 610 00:31:06,560 --> 00:31:08,120 Speaker 3: Just I mean, if there was something called that, all right, 611 00:31:08,440 --> 00:31:13,120 Speaker 3: then we've got green incentives, tax credits. Tom Tillis is 612 00:31:13,160 --> 00:31:17,080 Speaker 3: calling if some of these are put back in, who 613 00:31:17,080 --> 00:31:18,240 Speaker 3: do you lose in the House. 614 00:31:18,880 --> 00:31:20,640 Speaker 9: So I think this is one of those where the 615 00:31:20,720 --> 00:31:22,360 Speaker 9: you know, if you look at the original bill that 616 00:31:22,400 --> 00:31:24,120 Speaker 9: came up from the House Ways and Means Committee, the 617 00:31:24,160 --> 00:31:25,720 Speaker 9: electric vehicle tax credit was gone. 618 00:31:25,800 --> 00:31:25,960 Speaker 3: Yep. 619 00:31:26,160 --> 00:31:28,760 Speaker 9: I think that's still gone, despite Elon Musk's you know, 620 00:31:29,280 --> 00:31:31,960 Speaker 9: discussions about it. I think if you're Tesla or any 621 00:31:32,000 --> 00:31:33,920 Speaker 9: other car companies relying on it, you know, and I 622 00:31:33,920 --> 00:31:36,560 Speaker 9: don't know, our view is is that Tesla isn't so 623 00:31:36,640 --> 00:31:39,000 Speaker 9: much relying on it, But I think that's gone. The 624 00:31:39,040 --> 00:31:41,040 Speaker 9: bigger question is when it comes to wind and solar 625 00:31:41,120 --> 00:31:43,000 Speaker 9: and a lot of these tax credits, there was a 626 00:31:43,080 --> 00:31:44,800 Speaker 9: phase out, and that phase out was pushed up. 627 00:31:44,920 --> 00:31:46,760 Speaker 10: Yes, we think the phase out will get pushed. 628 00:31:46,560 --> 00:31:48,680 Speaker 9: Back, maybe not to the original house in ways means 629 00:31:48,720 --> 00:31:51,600 Speaker 9: text where the Solar, for example, was twenty twenty eight 630 00:31:51,640 --> 00:31:54,400 Speaker 9: from twenty thirty one. But you know it will get 631 00:31:54,400 --> 00:31:57,160 Speaker 9: pushed back a little bit, just because the Inflation Reduction 632 00:31:57,200 --> 00:32:00,520 Speaker 9: Act is very important to states like North Carolina because 633 00:32:00,560 --> 00:32:03,000 Speaker 9: there's a lot of foreign CAPACX money coming into the 634 00:32:03,120 --> 00:32:05,479 Speaker 9: United States, and there's a lot of constituents out there 635 00:32:05,480 --> 00:32:07,880 Speaker 9: are lawmakers who saying, look, I got sevenard jobs being 636 00:32:07,880 --> 00:32:10,000 Speaker 9: built in this district. I got a plant being built 637 00:32:10,040 --> 00:32:12,160 Speaker 9: in this district. So we think it's going to get 638 00:32:12,160 --> 00:32:15,120 Speaker 9: pushed back. So keep in mind for like stocks like 639 00:32:15,160 --> 00:32:17,840 Speaker 9: First Solar and end Phase, these things have hot sauce. 640 00:32:17,840 --> 00:32:19,960 Speaker 10: They're almost like what we call the marijuana hot sauce stocks. 641 00:32:20,280 --> 00:32:21,080 Speaker 10: These things have been. 642 00:32:20,920 --> 00:32:23,440 Speaker 9: Bouncing up and down based off of what's in this language. 643 00:32:23,640 --> 00:32:26,280 Speaker 9: So definitely watch this later this week because those those 644 00:32:26,320 --> 00:32:26,800 Speaker 9: stocks have. 645 00:32:26,760 --> 00:32:30,200 Speaker 3: Hot sauce, not always based on fundies. As they say, 646 00:32:30,200 --> 00:32:33,480 Speaker 3: we've got a minute left here, Nathan, you're running odds 647 00:32:33,960 --> 00:32:35,480 Speaker 3: fourth of July August. 648 00:32:35,920 --> 00:32:38,040 Speaker 9: We think the Senate can get it done around the 649 00:32:38,080 --> 00:32:40,000 Speaker 9: fourth of July. I like the joke, it's gonna come 650 00:32:40,000 --> 00:32:41,960 Speaker 9: a little bit later because I'll be on vacation. But 651 00:32:42,200 --> 00:32:44,800 Speaker 9: I think we're saying eighty percent chance. By the August recession, 652 00:32:44,800 --> 00:32:47,000 Speaker 9: we're actually feeling fairly confident they get this done. 653 00:32:47,000 --> 00:32:47,480 Speaker 10: In late July. 654 00:32:47,560 --> 00:32:49,800 Speaker 3: You kick out a great note to clients every week 655 00:32:49,840 --> 00:32:52,440 Speaker 3: with little inside something about what's going on in Washington. 656 00:32:52,440 --> 00:32:54,440 Speaker 3: I always love these What are you telling people to do? 657 00:32:54,480 --> 00:32:56,440 Speaker 3: If they want to watch this parade? Is there any 658 00:32:56,440 --> 00:32:57,760 Speaker 3: way to get in and out of tests? They're like 659 00:32:57,800 --> 00:33:00,680 Speaker 3: a Nathan Dean angle on this mass of parade, the 660 00:33:00,760 --> 00:33:01,800 Speaker 3: army parade on just. 661 00:33:01,800 --> 00:33:03,680 Speaker 10: Like with the NFL. It's great for my couch. 662 00:33:03,920 --> 00:33:07,000 Speaker 3: That's a good answer. Buy a blimp. Right, We're not 663 00:33:07,040 --> 00:33:08,120 Speaker 3: even gonna be able to get to work in a 664 00:33:08,120 --> 00:33:08,560 Speaker 3: couple days. 665 00:33:08,600 --> 00:33:11,600 Speaker 10: You see this closures driving in this morning. It is difficult. 666 00:33:11,640 --> 00:33:14,320 Speaker 3: It has begun, YEA, sounds like it might be quite 667 00:33:14,320 --> 00:33:16,719 Speaker 3: a show, though, Nathan Great Nathan Dean Bloomberg Intelligence, our 668 00:33:16,760 --> 00:33:19,480 Speaker 3: senior US policy analyst. How's that for a deep dive? 669 00:33:19,760 --> 00:33:26,000 Speaker 3: What goes in what stays out? Thanks for listening to 670 00:33:26,040 --> 00:33:29,440 Speaker 3: the Balance of Power podcast. Make sure to subscribe if 671 00:33:29,440 --> 00:33:32,200 Speaker 3: you haven't already, at Apple, Spotify, or wherever you get 672 00:33:32,200 --> 00:33:35,240 Speaker 3: your podcasts. And you can find us live every weekday 673 00:33:35,240 --> 00:33:39,040 Speaker 3: from Washington, DC at noontime Eastern at Bloomberg dot com.