1 00:00:02,520 --> 00:00:10,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:14,160 Speaker 1: Bloomberg Balance of Power podcast Kettas live weekdays at noon 3 00:00:14,240 --> 00:00:17,119 Speaker 1: and five pm. E's den on Apple, Cocklay 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 --> 00:00:24,160 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,239 --> 00:00:28,440 Speaker 2: The market, specifically global energy and wider commodity markets are 7 00:00:28,480 --> 00:00:30,680 Speaker 2: laser focused on the straight of horror news, which means 8 00:00:30,680 --> 00:00:35,520 Speaker 2: effectively shut outright controlled at this time by aaran amid 9 00:00:35,520 --> 00:00:38,479 Speaker 2: the ongoing war with the US and Israel, which of 10 00:00:38,479 --> 00:00:40,880 Speaker 2: course shows no signs of abating, even as President Trump's 11 00:00:40,880 --> 00:00:42,920 Speaker 2: today suggests, at least right now he is not thinking 12 00:00:42,960 --> 00:00:46,080 Speaker 2: about sending ground troops in in order to secure the Strait. 13 00:00:46,120 --> 00:00:48,280 Speaker 2: But he also, of course is repeatedly called on allies 14 00:00:48,320 --> 00:00:51,519 Speaker 2: to come in and assist with this endeavor, to a 15 00:00:51,600 --> 00:00:54,760 Speaker 2: lukewarm reception. I think we could say, of course, one 16 00:00:54,760 --> 00:00:57,280 Speaker 2: of the allies who was on the receiving end of 17 00:00:57,320 --> 00:00:59,960 Speaker 2: that request and had been previously berated by President Trump 18 00:01:00,080 --> 00:01:02,840 Speaker 2: for not helping out more substantially, was Japan, as a 19 00:01:02,880 --> 00:01:06,080 Speaker 2: major importer of Middle Eastern energy products, and the Japanese 20 00:01:06,120 --> 00:01:09,399 Speaker 2: Prime Minister Takeichi was in the Oval Office and has 21 00:01:09,440 --> 00:01:14,240 Speaker 2: a full state visit today with President Trump. As we speak, 22 00:01:14,840 --> 00:01:18,160 Speaker 2: they are actually having discussions at the White House right now. 23 00:01:18,200 --> 00:01:19,959 Speaker 2: But the President did have a bit more of a 24 00:01:19,959 --> 00:01:23,640 Speaker 2: congenial tone when talking about Japan in their bilateral earlier. 25 00:01:24,560 --> 00:01:28,320 Speaker 3: We've had tremendous support and relationship with Japan on everything, 26 00:01:28,800 --> 00:01:32,600 Speaker 3: and I believe that based on statements who were given 27 00:01:32,640 --> 00:01:35,399 Speaker 3: to us yesterday the day before yesterday having to do 28 00:01:35,480 --> 00:01:39,400 Speaker 3: with Japan, they are really stepping up to the plate. 29 00:01:40,880 --> 00:01:42,039 Speaker 4: Stepping up to the plate. 30 00:01:42,680 --> 00:01:45,479 Speaker 5: As Bloomberg's Tyler Kendall steps up on the north lawn 31 00:01:45,520 --> 00:01:48,800 Speaker 5: of the White House in the throes of this visit, Tyler, 32 00:01:48,840 --> 00:01:50,880 Speaker 5: it's great to see you. It sounds like the Prime minister, 33 00:01:50,960 --> 00:01:54,000 Speaker 5: who was projecting concern, as Kaylee said ahead of this meeting, 34 00:01:54,040 --> 00:01:56,240 Speaker 5: said all the right things, right. 35 00:01:56,160 --> 00:02:00,320 Speaker 6: JOEA relatively warm welcome for Japanese Prime Minister Takachi at 36 00:02:00,400 --> 00:02:03,160 Speaker 6: the White House, as you heard President Trump comparing Japan 37 00:02:03,200 --> 00:02:06,080 Speaker 6: to NATO allies, saying that the country is quote stepping 38 00:02:06,200 --> 00:02:08,639 Speaker 6: up to the plate, though it was still evident that 39 00:02:08,680 --> 00:02:12,239 Speaker 6: some tensions still do remain. It's not totally clear exactly 40 00:02:12,280 --> 00:02:15,320 Speaker 6: what Japan is offering here when it does come to 41 00:02:15,600 --> 00:02:19,000 Speaker 6: the conflict in Iran or potential support in securing the 42 00:02:19,040 --> 00:02:21,600 Speaker 6: Strait of her moves, though President Trump did indicate that 43 00:02:21,639 --> 00:02:25,120 Speaker 6: the pair we'll talk about Japan's mind sweeping capabilities in 44 00:02:25,240 --> 00:02:29,000 Speaker 6: dialogue behind closed doors later today, the Japanese Prime Minister 45 00:02:29,080 --> 00:02:31,480 Speaker 6: herself saying that she has brought to the US quote, 46 00:02:31,480 --> 00:02:34,760 Speaker 6: concrete proposals to help calm the energy markets, and of 47 00:02:34,760 --> 00:02:37,720 Speaker 6: course condemned the closure of that critical waterway, as data 48 00:02:37,720 --> 00:02:40,120 Speaker 6: shows that Japan gets about ninety percent of its crude 49 00:02:40,160 --> 00:02:45,040 Speaker 6: oil imports through the Strait of Hermos. And this comes 50 00:02:45,040 --> 00:02:48,400 Speaker 6: as those disruptions really do continue and attacks on energy 51 00:02:48,440 --> 00:02:51,800 Speaker 6: infrastructure do too, as Israeli state media is reporting that 52 00:02:51,840 --> 00:02:54,240 Speaker 6: an oil refinery in the country was hit in a 53 00:02:54,280 --> 00:02:57,960 Speaker 6: barrage of strikes earlier today, as President Trump had taken 54 00:02:58,000 --> 00:03:01,320 Speaker 6: to truth social overnight to urge a stopping to attack 55 00:03:01,440 --> 00:03:05,360 Speaker 6: on energy infrastructure in the region from both Iran and Israel. 56 00:03:05,560 --> 00:03:08,240 Speaker 6: Joe and Keiley in a rare public review, President Trump 57 00:03:08,280 --> 00:03:11,120 Speaker 6: said that he told Israeli Prime Minister Benjamin and Yahoo 58 00:03:11,320 --> 00:03:14,679 Speaker 6: to not strike any more energy infrastructure after we saw 59 00:03:14,880 --> 00:03:19,320 Speaker 6: Israel strike Iran's largest natural gas field yesterday, which kicked 60 00:03:19,320 --> 00:03:23,440 Speaker 6: off this wave of retaliation by Iron to Gulf energy infrastructure. 61 00:03:24,880 --> 00:03:27,399 Speaker 2: Indeed, all right, Bloombergs Tyler Kendall on the north liwne 62 00:03:27,400 --> 00:03:28,960 Speaker 2: of the White House, thank you so much. And when 63 00:03:28,960 --> 00:03:32,200 Speaker 2: we consider that a retaliation against energy infrastructure. Of course, 64 00:03:32,240 --> 00:03:34,720 Speaker 2: the largest LNG facility in Cutter was hit in the 65 00:03:34,720 --> 00:03:38,560 Speaker 2: Cutter Energy CEO told Reuters that some seventeen percent of 66 00:03:38,600 --> 00:03:42,520 Speaker 2: that capacity could be offline now because of the damage, 67 00:03:42,520 --> 00:03:46,040 Speaker 2: and that it could take three to five years to repair. 68 00:03:46,160 --> 00:03:47,600 Speaker 2: So for more on this week, go to Mike mcglohon 69 00:03:47,600 --> 00:03:50,760 Speaker 2: Bloomerg Intelligence, Senior commodity strategist. And Mike, obviously we've talked 70 00:03:50,800 --> 00:03:52,480 Speaker 2: to you a lot about the near term versus longer 71 00:03:52,560 --> 00:03:56,080 Speaker 2: team case, longer term case for oil and natural gas. 72 00:03:56,080 --> 00:03:59,080 Speaker 2: But if we're talking infrastructure damage and capacity that may 73 00:03:59,120 --> 00:04:02,240 Speaker 2: not come back online line for that long, that far 74 00:04:02,280 --> 00:04:04,480 Speaker 2: into the future, how is that changing your thesis? 75 00:04:04,520 --> 00:04:09,960 Speaker 7: If at all, it's it's sticking with my thesis, Kaylene 76 00:04:10,040 --> 00:04:13,360 Speaker 7: Keith Thing Keith theming his hears. The longer this lasts 77 00:04:13,560 --> 00:04:16,560 Speaker 7: and the higher prices go, most notably crudeill you mentioned 78 00:04:16,640 --> 00:04:18,719 Speaker 7: natural gas it's more of a problem for the rest. 79 00:04:18,520 --> 00:04:19,120 Speaker 4: Of the world. 80 00:04:19,279 --> 00:04:21,800 Speaker 7: The more likely this energy crisis is going to tilt 81 00:04:21,800 --> 00:04:23,680 Speaker 7: over to a global recession and did what it did 82 00:04:23,680 --> 00:04:25,919 Speaker 7: in two thousand and eight. Just key thing to remember 83 00:04:26,080 --> 00:04:29,080 Speaker 7: Cordell peaked at one forty seven in July two thousand 84 00:04:29,120 --> 00:04:31,719 Speaker 7: and eight, with CPI five point six percent and the 85 00:04:31,800 --> 00:04:34,560 Speaker 7: end of the year down at thirty two and CPI 86 00:04:34,640 --> 00:04:37,279 Speaker 7: bottom the next year of minus two percent. That's what 87 00:04:37,360 --> 00:04:40,120 Speaker 7: I think is happening. That's what traders get. And you're 88 00:04:40,160 --> 00:04:41,560 Speaker 7: starting to see that little bit in. 89 00:04:41,520 --> 00:04:42,200 Speaker 1: The long bond. 90 00:04:42,200 --> 00:04:44,320 Speaker 7: The long bound yield's starting to tick down today because 91 00:04:44,360 --> 00:04:47,960 Speaker 7: it season endgame, and you're seeing that with metals collapsing, 92 00:04:48,200 --> 00:04:51,800 Speaker 7: this is starting to show the delayed deflation delation, deflationary 93 00:04:51,880 --> 00:04:54,760 Speaker 7: recessionary forces from this energy crisis. 94 00:04:55,400 --> 00:04:57,240 Speaker 5: Well, all right, I want to hear more about that, Mike, 95 00:04:57,320 --> 00:05:00,120 Speaker 5: because you're right, metals are falling out of bed and 96 00:05:00,120 --> 00:05:02,240 Speaker 5: so are mining stocks. So we're looking at gold right 97 00:05:02,279 --> 00:05:04,640 Speaker 5: now down over three hundred dollars an ounce, or six percent, 98 00:05:05,080 --> 00:05:07,640 Speaker 5: just below forty six hundred. The headline of the terminal 99 00:05:07,680 --> 00:05:11,159 Speaker 5: gold mining stocks set to erase twenty twenty six games 100 00:05:11,600 --> 00:05:13,320 Speaker 5: as rate cut bets fade. 101 00:05:13,320 --> 00:05:14,760 Speaker 4: There's more at work here than iran. 102 00:05:14,839 --> 00:05:18,960 Speaker 7: It sounds like, well, absolutely, copper did it, Silver did it. 103 00:05:19,000 --> 00:05:21,640 Speaker 7: Silvia is up sixty three percent in January. Now it's 104 00:05:21,680 --> 00:05:24,080 Speaker 7: down almost three percent in the year. This is just 105 00:05:24,120 --> 00:05:26,120 Speaker 7: getting started. And the reason I say that, Joe is 106 00:05:26,160 --> 00:05:28,920 Speaker 7: my key theme still hasn't happened. If you look at 107 00:05:29,000 --> 00:05:31,760 Speaker 7: sixty day volatility on the S and B five hundred, 108 00:05:31,800 --> 00:05:34,200 Speaker 7: it's still down on the year despite what's happening. So 109 00:05:34,279 --> 00:05:37,160 Speaker 7: to me, that trickle up from all that massive volatility 110 00:05:37,200 --> 00:05:39,719 Speaker 7: in crude and sawry in gold last year and crude 111 00:05:39,760 --> 00:05:41,680 Speaker 7: all this year, it's very rare not to go to 112 00:05:41,680 --> 00:05:43,960 Speaker 7: the stock market. Right now we're seeing wobbling, and I 113 00:05:43,960 --> 00:05:44,600 Speaker 7: think that's what. 114 00:05:44,480 --> 00:05:45,760 Speaker 4: The market starting to worry about. 115 00:05:46,080 --> 00:05:48,560 Speaker 7: Is this triggering what it did with nine to eleven. 116 00:05:48,760 --> 00:05:51,080 Speaker 7: It triggered the acceleration in the downward trend in the 117 00:05:51,080 --> 00:05:51,719 Speaker 7: stock market. 118 00:05:52,480 --> 00:05:55,400 Speaker 5: Well, it's interesting, Just quickly, Mike, we've got gold down 119 00:05:55,400 --> 00:05:57,440 Speaker 5: for a seventh session. What happened to buying gold in 120 00:05:57,480 --> 00:05:58,080 Speaker 5: times of war? 121 00:05:59,080 --> 00:06:01,640 Speaker 4: Well, it wasn't me. Gold told us gold. 122 00:06:01,320 --> 00:06:03,599 Speaker 7: The trying to buy last was gold was last year 123 00:06:04,120 --> 00:06:08,200 Speaker 7: gold pre empty, Gold warned us and gold was very 124 00:06:09,000 --> 00:06:11,039 Speaker 7: very much looked at the front rant it and now 125 00:06:11,080 --> 00:06:13,599 Speaker 7: that it went up, goal's looking forward to that more 126 00:06:13,640 --> 00:06:17,560 Speaker 7: secure future. When mister Trump by midterms was going to say, well, 127 00:06:17,720 --> 00:06:22,520 Speaker 7: Iran and Raashia have lost Venezuela, Syria, Iran and potentially Cuba. 128 00:06:22,600 --> 00:06:25,480 Speaker 7: It's looking forward to the opening of straight harm moves 129 00:06:25,560 --> 00:06:27,960 Speaker 7: and potentially maybe we've reached as bad as it can get. 130 00:06:28,839 --> 00:06:31,920 Speaker 5: Fascinating Mike, as always Mike mcloan with us from our 131 00:06:31,960 --> 00:06:37,200 Speaker 5: Miami Bureau, Bloomberg Intelligence Senior Commodities strategist, as we consider 132 00:06:37,240 --> 00:06:40,960 Speaker 5: the conversation on Capitol Hill, Yes, about oil and what 133 00:06:41,000 --> 00:06:43,560 Speaker 5: we're seeing in the markets, but also about and ask 134 00:06:43,680 --> 00:06:46,080 Speaker 5: for more money. It is coming at some point from 135 00:06:46,120 --> 00:06:48,119 Speaker 5: the White House. The President was asked about it today, 136 00:06:48,160 --> 00:06:50,960 Speaker 5: with reports now floated that the Pentagon is going to 137 00:06:51,000 --> 00:06:53,360 Speaker 5: ask the White House to approve a more than two 138 00:06:53,520 --> 00:06:58,240 Speaker 5: hundred billion dollar request, about four times the size of 139 00:06:58,279 --> 00:07:01,320 Speaker 5: what was already being floated here, at least privately or 140 00:07:01,400 --> 00:07:05,000 Speaker 5: quietly in Washington. In fact, we asked Senator Ron Johnson, 141 00:07:05,680 --> 00:07:08,479 Speaker 5: a budget hawk in the Republican led Senate, last evening 142 00:07:08,480 --> 00:07:11,320 Speaker 5: about this idea, maybe a fifty billion dollar request here's 143 00:07:11,320 --> 00:07:11,800 Speaker 5: what he said. 144 00:07:12,640 --> 00:07:14,760 Speaker 8: We haven't seen any numbers. That's the number of people 145 00:07:14,760 --> 00:07:15,720 Speaker 8: have been talking about. 146 00:07:15,880 --> 00:07:16,000 Speaker 5: Now. 147 00:07:16,040 --> 00:07:18,520 Speaker 8: From my standpoint, we went from four point four trillion 148 00:07:18,680 --> 00:07:23,160 Speaker 8: spending in twenty nineteen to seven point four I've laid 149 00:07:23,200 --> 00:07:24,840 Speaker 8: it out. I mean, we're spending how does the billity 150 00:07:24,840 --> 00:07:27,040 Speaker 8: of dollars way in access of what we spend in 151 00:07:27,080 --> 00:07:30,440 Speaker 8: twenty nineteen plus up for inflation and population. So if 152 00:07:30,440 --> 00:07:32,680 Speaker 8: we get that soup of mantle, I will certainly make 153 00:07:32,720 --> 00:07:36,480 Speaker 8: an attempt to offset it in areas of spending where 154 00:07:36,480 --> 00:07:37,000 Speaker 8: we shouldn't. 155 00:07:39,640 --> 00:07:42,400 Speaker 5: So he's a yes, potentially, but it's going to need 156 00:07:42,440 --> 00:07:45,600 Speaker 5: to be offset by cuts. And that just reminds us 157 00:07:45,800 --> 00:07:48,360 Speaker 5: of the very intense debate that will likely follow on 158 00:07:48,440 --> 00:07:52,160 Speaker 5: Capitol Hill, something I suspect Congressman Sam Lecardo is bracing for. 159 00:07:52,320 --> 00:07:56,280 Speaker 5: The Democrat from California's sixteenth district joins us right now 160 00:07:56,360 --> 00:07:59,240 Speaker 5: on Bloomberg TV and Radio, serving on the Financial Services 161 00:07:59,280 --> 00:08:01,960 Speaker 5: Committee Congress, and it's great to see you. What would 162 00:08:01,960 --> 00:08:04,320 Speaker 5: you do with a request for two hundred billion dollars? 163 00:08:05,760 --> 00:08:06,640 Speaker 4: I would reject it. 164 00:08:07,520 --> 00:08:11,760 Speaker 9: We know that in times when you're facing a budget deficit, 165 00:08:11,920 --> 00:08:16,560 Speaker 9: as so many American families do struggling every day to 166 00:08:16,680 --> 00:08:20,320 Speaker 9: make ends meet. They set their priorities and they fund 167 00:08:20,360 --> 00:08:23,120 Speaker 9: those priorities. They have to pay their rent. That's where 168 00:08:23,160 --> 00:08:23,800 Speaker 9: the money goes. 169 00:08:23,840 --> 00:08:24,200 Speaker 4: First. 170 00:08:24,920 --> 00:08:27,960 Speaker 9: We have massive challenges in this country, and there is 171 00:08:28,000 --> 00:08:30,920 Speaker 9: no voter a year and a half ago who thought 172 00:08:31,200 --> 00:08:35,079 Speaker 9: where we need to spend money is two hundred billion dollars. 173 00:08:34,880 --> 00:08:35,920 Speaker 4: On a war in Iran. 174 00:08:36,840 --> 00:08:40,800 Speaker 9: This is a war of choice by this president that 175 00:08:40,920 --> 00:08:47,000 Speaker 9: is really essentially bankrupting the American public, both as taxpayers 176 00:08:47,040 --> 00:08:49,440 Speaker 9: and as consumers, as we're seeing higher prices at the 177 00:08:49,480 --> 00:08:53,560 Speaker 9: pump and soon for our groceries as well well. 178 00:08:53,559 --> 00:08:55,839 Speaker 2: And when we consider those higher prices, Congressman, I'm not 179 00:08:55,840 --> 00:08:58,120 Speaker 2: sure if you just heard our colleague, our analysts there, 180 00:08:58,160 --> 00:09:00,600 Speaker 2: Mike McLoone suggesting that he sees kind of two thousand 181 00:09:00,600 --> 00:09:03,760 Speaker 2: and eight recessionary type forces at play here that ultimately 182 00:09:03,760 --> 00:09:06,240 Speaker 2: he is expecting the check on higher energy prices is 183 00:09:06,280 --> 00:09:10,000 Speaker 2: going to be demand destruction and a real growth slowdown. 184 00:09:10,120 --> 00:09:12,600 Speaker 2: Is that also your assessment here as a member of 185 00:09:12,640 --> 00:09:14,400 Speaker 2: the Financial Services Committee. 186 00:09:14,720 --> 00:09:16,920 Speaker 9: I mean, we should look at the last year. We 187 00:09:17,000 --> 00:09:19,920 Speaker 9: have just seen the largest tax cut in human history. 188 00:09:20,160 --> 00:09:22,800 Speaker 9: You would think we would be super charging job growth 189 00:09:22,880 --> 00:09:25,880 Speaker 9: throughout the country. We've seen zero job growth in the 190 00:09:25,920 --> 00:09:31,160 Speaker 9: last six months since Liberation Day when Trump started hiking 191 00:09:31,160 --> 00:09:34,040 Speaker 9: all these tariffs. When we're supposed to be building a 192 00:09:34,080 --> 00:09:37,920 Speaker 9: lot of manufacturing jobs. We've lost seventy two thousand manufacturing 193 00:09:37,960 --> 00:09:38,959 Speaker 9: jobs in the United States. 194 00:09:39,280 --> 00:09:40,200 Speaker 4: That should tell us something. 195 00:09:40,240 --> 00:09:42,920 Speaker 9: They're doing everything they can to prime the pump and 196 00:09:43,160 --> 00:09:47,600 Speaker 9: jobs are not responding. That really pretends a very dark 197 00:09:47,679 --> 00:09:51,040 Speaker 9: future for us, particularly as we're now looking at spending 198 00:09:51,080 --> 00:09:54,920 Speaker 9: on other priorities when we could be focused on critical 199 00:09:54,960 --> 00:09:55,720 Speaker 9: issues here at home. 200 00:09:57,160 --> 00:10:01,679 Speaker 5: We saw a statement a short time ago from Taxpayers 201 00:10:01,800 --> 00:10:07,319 Speaker 5: for Common Sense, Congressman, and pretty interesting here. The group's president, 202 00:10:07,360 --> 00:10:11,160 Speaker 5: Steve Ellis, says taxpayers haven't gotten any clarity from the 203 00:10:11,200 --> 00:10:13,760 Speaker 5: administration about the goals the costs of war, which she 204 00:10:14,280 --> 00:10:18,760 Speaker 5: outlines now the two hundred billion dollar supplemental request. He says, 205 00:10:18,840 --> 00:10:23,280 Speaker 5: to be clear, this funding is not about supporting the troops. 206 00:10:23,280 --> 00:10:26,120 Speaker 5: The Pentagon got an eighteen percent boost in spending this year. 207 00:10:26,280 --> 00:10:29,280 Speaker 5: If that's the case, Congressman, what is it about. Is 208 00:10:29,320 --> 00:10:32,320 Speaker 5: this a Pentagon that's bracing for a longer war. 209 00:10:34,440 --> 00:10:36,720 Speaker 9: Well, that's a good question. I think we're all deeply 210 00:10:36,800 --> 00:10:39,440 Speaker 9: concerned about that. I'm not sure this president has the 211 00:10:39,480 --> 00:10:43,360 Speaker 9: attention span for a longer war, and frankly, we have 212 00:10:43,400 --> 00:10:47,839 Speaker 9: an articulator. We haven't seen this president articulate any achievable 213 00:10:47,880 --> 00:10:52,240 Speaker 9: objective with a short or a long war. So I 214 00:10:52,240 --> 00:10:54,640 Speaker 9: think we need to first understand what is the objective 215 00:10:54,679 --> 00:10:57,160 Speaker 9: with this war, because so far all we've seen is 216 00:10:57,480 --> 00:11:01,520 Speaker 9: certainly a degradation of Iran's military capacity. We know our 217 00:11:01,559 --> 00:11:04,080 Speaker 9: troops are the best in the world, but we haven't 218 00:11:04,120 --> 00:11:07,320 Speaker 9: seen the actual accomplishment of any objective. We know we 219 00:11:07,360 --> 00:11:10,000 Speaker 9: have higher oil prices, we know we've got all of 220 00:11:10,040 --> 00:11:12,920 Speaker 9: our allies that are furious with us and won't help 221 00:11:13,000 --> 00:11:15,839 Speaker 9: us in the Straight of Hormuz precisely because of our 222 00:11:15,960 --> 00:11:19,560 Speaker 9: willingness to go it alone, and we've helped our adversaries. 223 00:11:19,679 --> 00:11:23,200 Speaker 9: Russia and China, of course, are benefiting from our willingness 224 00:11:23,360 --> 00:11:27,120 Speaker 9: to reduce sanctions on Russian oil. This is not a 225 00:11:27,160 --> 00:11:30,480 Speaker 9: war that has accomplished any meaningful objective for the American public. 226 00:11:31,840 --> 00:11:34,560 Speaker 2: Well, as we consider higher oil prices, which you mentioned, Congressman, 227 00:11:34,600 --> 00:11:36,680 Speaker 2: obviously that is translating to prices at the pump. I 228 00:11:36,720 --> 00:11:39,560 Speaker 2: believe on average in California, gas prices are well above 229 00:11:40,040 --> 00:11:42,760 Speaker 2: five dollars a gallon. If the White House were to 230 00:11:42,800 --> 00:11:46,760 Speaker 2: come to Congress and request a gas tax holiday, would 231 00:11:46,800 --> 00:11:49,240 Speaker 2: you be supportive of that in the name of relief 232 00:11:49,280 --> 00:11:50,600 Speaker 2: at the pump for your constituents. 233 00:11:51,800 --> 00:11:55,280 Speaker 9: Well, I'm certainly open to considering many options, but we 234 00:11:55,320 --> 00:11:58,400 Speaker 9: know what happens if that gas tax goes away, means 235 00:11:59,400 --> 00:12:02,160 Speaker 9: we don't and have the basic infrastructure we critically need 236 00:12:02,240 --> 00:12:05,160 Speaker 9: this country. I think a better approach is let's wrap 237 00:12:05,240 --> 00:12:09,960 Speaker 9: up this war and refocus US public resources on US infrastructure, 238 00:12:10,040 --> 00:12:12,760 Speaker 9: because that's what the gas tax funds, and what we 239 00:12:12,880 --> 00:12:15,120 Speaker 9: really need to be doing is investing in this country 240 00:12:15,280 --> 00:12:16,400 Speaker 9: and not spending abroad. 241 00:12:17,440 --> 00:12:19,120 Speaker 5: Well, you know a lot of economists would tell you 242 00:12:19,160 --> 00:12:22,040 Speaker 5: that the gas tax holidays simply would increase demand, which 243 00:12:22,080 --> 00:12:25,160 Speaker 5: sends prices even higher. Congressman, what are you paying last 244 00:12:25,160 --> 00:12:26,720 Speaker 5: time we filled the tank in California? 245 00:12:28,040 --> 00:12:30,839 Speaker 9: Yeah, we're paying a lot. I drive an electric car, 246 00:12:30,920 --> 00:12:33,080 Speaker 9: so I couldn't tell you what I pivot tell you. 247 00:12:33,760 --> 00:12:35,360 Speaker 4: My neighbors pay way. 248 00:12:35,200 --> 00:12:39,079 Speaker 9: Too much already. Look, I think those economists are right. Fundamentally, 249 00:12:39,240 --> 00:12:41,760 Speaker 9: simply priming the pump with more demand is not going 250 00:12:41,800 --> 00:12:44,959 Speaker 9: to help provide tax or price relief that so many 251 00:12:45,000 --> 00:12:46,920 Speaker 9: consumers are burdened by. And let's keep in mind all 252 00:12:46,920 --> 00:12:49,720 Speaker 9: the other ways this is affecting consumers. We know a 253 00:12:49,800 --> 00:12:53,120 Speaker 9: huge hit is being felt by an awful lot of 254 00:12:53,120 --> 00:12:56,720 Speaker 9: farmers as a result of a big spike in fertilizer costs. 255 00:12:56,760 --> 00:12:59,040 Speaker 9: A third of the world's fertilizer comes from this region. 256 00:12:59,600 --> 00:13:01,240 Speaker 9: That means we're all going to be paying for it 257 00:13:01,480 --> 00:13:03,880 Speaker 9: many months to come at the grocery aisle. 258 00:13:05,400 --> 00:13:08,320 Speaker 2: Well, and then there's also the borrowing costs consideration. We 259 00:13:08,320 --> 00:13:11,720 Speaker 2: saw red headline cross the terminal earlier. Today Congressman, mortgage 260 00:13:11,760 --> 00:13:13,640 Speaker 2: rates at a three month high, with the thirty year 261 00:13:13,679 --> 00:13:16,160 Speaker 2: average at six point two to two percent. Obviously, there 262 00:13:16,200 --> 00:13:18,400 Speaker 2: is now a live conversation of a federal reserve that 263 00:13:18,480 --> 00:13:20,960 Speaker 2: might not only not be cutting this year, but whether 264 00:13:21,040 --> 00:13:22,800 Speaker 2: rate hikes could be back on the table if we're 265 00:13:22,800 --> 00:13:26,480 Speaker 2: going to see an inflationary shock from energy on mortgage rates. Though, 266 00:13:26,520 --> 00:13:28,640 Speaker 2: given you sit in the Financial Services Committee, can you 267 00:13:28,640 --> 00:13:31,280 Speaker 2: tell us what's going to happen with the housing bill 268 00:13:31,280 --> 00:13:33,600 Speaker 2: that would address it more from the supply side? 269 00:13:33,600 --> 00:13:36,000 Speaker 10: Are you going to conference? Is that your anticipation? 270 00:13:37,520 --> 00:13:39,840 Speaker 9: Well, I certainly hope we can get to conference. I 271 00:13:39,880 --> 00:13:42,120 Speaker 9: know that right now the battle seems to be between 272 00:13:42,240 --> 00:13:45,040 Speaker 9: Republicans in the House and Republicans in the Senate about 273 00:13:45,040 --> 00:13:47,960 Speaker 9: what's going to happen. Obviously, they controlled both houses. I 274 00:13:48,000 --> 00:13:49,719 Speaker 9: was happy to see a few of my bills get 275 00:13:49,720 --> 00:13:52,800 Speaker 9: included in the version that I had approved by both houses. 276 00:13:53,120 --> 00:13:55,640 Speaker 9: But the bottom line is we need to get to Yes. 277 00:13:56,120 --> 00:13:58,760 Speaker 9: We critically need more housing supply. That is something that 278 00:13:58,800 --> 00:14:02,760 Speaker 9: Democrats and Republicans can agree upon. So let's get this 279 00:14:02,920 --> 00:14:05,320 Speaker 9: piece of legislation pass. There's much more we need to 280 00:14:05,360 --> 00:14:08,040 Speaker 9: do to be able to help get red tape out 281 00:14:08,040 --> 00:14:10,800 Speaker 9: of the way and accelerate housing production in this country. 282 00:14:11,880 --> 00:14:13,320 Speaker 4: We only have a minute left, Congressman. 283 00:14:13,360 --> 00:14:15,840 Speaker 5: The Department of Homeland Security has been closed out for 284 00:14:16,000 --> 00:14:19,000 Speaker 5: thirty three days, and we saw the President's pick to 285 00:14:19,040 --> 00:14:21,800 Speaker 5: run the department clear Committee on the Senate side this morning. 286 00:14:21,920 --> 00:14:25,400 Speaker 5: Mark Wayne Mullen, I'm wondering your thoughts on what happens 287 00:14:25,480 --> 00:14:28,000 Speaker 5: next to your TSA agents are driving uber instead of 288 00:14:28,000 --> 00:14:30,600 Speaker 5: going to work to make money. How long will this last? 289 00:14:30,640 --> 00:14:33,800 Speaker 5: We're at thirty three now, what number will we be 290 00:14:33,840 --> 00:14:35,120 Speaker 5: talking about when it ends? 291 00:14:36,040 --> 00:14:38,840 Speaker 9: That's an important question, I know, A very painful reality 292 00:14:38,880 --> 00:14:42,120 Speaker 9: for a lot of employees are Coastguard, TSA, many others 293 00:14:42,280 --> 00:14:46,479 Speaker 9: who critically deserve to get paid. I co sponsored legislation 294 00:14:46,920 --> 00:14:49,640 Speaker 9: that will enable us to pay all the other employees, 295 00:14:50,080 --> 00:14:54,320 Speaker 9: including TSA and Coastguard, so that we can hash out 296 00:14:54,360 --> 00:14:56,640 Speaker 9: what we need to resolve with regard to reforms to 297 00:14:56,680 --> 00:15:01,800 Speaker 9: ice get them paid separately. That currently that bill is 298 00:15:02,560 --> 00:15:04,920 Speaker 9: as a subject of a discharge petition because the House 299 00:15:05,400 --> 00:15:07,440 Speaker 9: leadership on the Republican side won't allow it to get 300 00:15:07,440 --> 00:15:09,200 Speaker 9: to the floor. So we're hoping we can get the 301 00:15:09,200 --> 00:15:11,680 Speaker 9: Republicans on board and get a vote. 302 00:15:12,600 --> 00:15:15,040 Speaker 2: All right, Congressman, thank you so much for joining us. 303 00:15:15,400 --> 00:15:19,440 Speaker 2: Democratic Congressman Sam Lecardo of California's sixteenth district live from 304 00:15:19,440 --> 00:15:21,400 Speaker 2: Capitol Hill here on Balance of Power, and we have 305 00:15:21,800 --> 00:15:24,240 Speaker 2: much more coming up. We'll turn to our political panel, 306 00:15:24,320 --> 00:15:27,040 Speaker 2: Rick Davis and Geanie Shanzano next right here on Bloomberg 307 00:15:27,080 --> 00:15:28,200 Speaker 2: TV and Tredia. 308 00:15:28,360 --> 00:15:30,520 Speaker 4: Stay with us on Balance of Power. We'll have much 309 00:15:30,520 --> 00:15:31,720 Speaker 4: more coming up after this. 310 00:15:36,000 --> 00:15:39,640 Speaker 1: You're listening to the Bloomberg Balance of Power podcast Ketchys 311 00:15:39,680 --> 00:15:43,000 Speaker 1: live weekdays at noon and five pm Eastern on Apple 312 00:15:43,040 --> 00:15:46,080 Speaker 1: Cockplay and Android Auto with the Bloomberg Business app. You 313 00:15:46,120 --> 00:15:49,600 Speaker 1: can also listen live on Amazon Alexa from our flagship 314 00:15:49,640 --> 00:15:53,440 Speaker 1: New York station, Just say Alexa play Bloomberg eleven. 315 00:15:53,280 --> 00:15:57,960 Speaker 5: Thirty President Trump meeting with the Prime Minister of Japan today. 316 00:15:58,000 --> 00:16:00,000 Speaker 5: She's still in the building and they will have dinner 317 00:16:00,280 --> 00:16:02,720 Speaker 5: in the State Dining Room later, having met in the 318 00:16:02,720 --> 00:16:05,120 Speaker 5: Oval Office to talk about a number of things, including 319 00:16:05,160 --> 00:16:07,840 Speaker 5: the war in Iran. Before we got to that point, though, 320 00:16:07,840 --> 00:16:11,720 Speaker 5: there was a Pentagon briefing Defense Secretary Pete Heggseth along 321 00:16:11,720 --> 00:16:12,920 Speaker 5: with the Chairman of the Joint Chiefs. 322 00:16:12,960 --> 00:16:15,000 Speaker 4: This tends to be how they do it lately. 323 00:16:15,200 --> 00:16:17,440 Speaker 5: Get the reporters out there of the Pentagon eight o'clock 324 00:16:17,440 --> 00:16:19,640 Speaker 5: in the morning to talk about what happened in the 325 00:16:19,680 --> 00:16:23,000 Speaker 5: big news today was the supplemental budget request that is looming. 326 00:16:23,040 --> 00:16:26,120 Speaker 5: You've probably seen this by now, reported by Bloomberg. Two 327 00:16:26,200 --> 00:16:29,560 Speaker 5: hundred billion dollars is the expectation, which is far beyond 328 00:16:29,600 --> 00:16:32,360 Speaker 5: any number that we have heard yet, remembering, of course, 329 00:16:32,400 --> 00:16:36,240 Speaker 5: the Pentagon is currently enjoying its first ever trillion dollar budget. 330 00:16:36,240 --> 00:16:38,680 Speaker 5: Pete hag Seth was asked about that number earlier in 331 00:16:38,720 --> 00:16:39,200 Speaker 5: that briefing. 332 00:16:39,240 --> 00:16:42,720 Speaker 11: Listen as far as two hundred billion dollars, I think 333 00:16:42,760 --> 00:16:43,880 Speaker 11: that number could move. 334 00:16:44,040 --> 00:16:48,960 Speaker 4: Obviously, it takes money to kill bad guys. 335 00:16:49,480 --> 00:16:52,240 Speaker 11: So we're going back to Congress and folks there to 336 00:16:52,560 --> 00:16:56,400 Speaker 11: ensure that we're properly funded for what's been done, for 337 00:16:56,440 --> 00:16:59,080 Speaker 11: what we may have to do in the future, ensure 338 00:16:59,120 --> 00:17:03,200 Speaker 11: that our ammunition is everything's refilled, and not just refilled, 339 00:17:03,200 --> 00:17:04,160 Speaker 11: but above and beyond. 340 00:17:05,480 --> 00:17:08,000 Speaker 5: It takes money to kill bad guys. The President was 341 00:17:08,040 --> 00:17:10,639 Speaker 5: asked about this earlier in the oval with the Prime Minister. 342 00:17:10,800 --> 00:17:13,480 Speaker 5: He too did not deny the idea of a two 343 00:17:13,560 --> 00:17:16,679 Speaker 5: hundred billion dollar request and said we're asking for a 344 00:17:16,720 --> 00:17:19,960 Speaker 5: lot of reasons beyond even what we're talking about in Iran, 345 00:17:20,119 --> 00:17:23,720 Speaker 5: pointing to vast amounts of ammunition, but it was taken 346 00:17:23,800 --> 00:17:26,960 Speaker 5: down by giving so much to Ukraine. Now lawmakers still 347 00:17:26,960 --> 00:17:30,040 Speaker 5: haven't received the request, as we just established with Congressman Lecardo, 348 00:17:30,080 --> 00:17:33,240 Speaker 5: who says he's already a no on this. Also standing 349 00:17:33,280 --> 00:17:36,320 Speaker 5: by to pour cold water on the idea is Maya 350 00:17:36,400 --> 00:17:40,320 Speaker 5: mcguinnis the president of the group Taxpayers. 351 00:17:40,840 --> 00:17:42,920 Speaker 4: I should say, what's the name of it. 352 00:17:42,920 --> 00:17:46,280 Speaker 5: Kaylee Committee Firbody for a Responsible Federal Budget. 353 00:17:46,320 --> 00:17:47,120 Speaker 4: Here's what she said. 354 00:17:47,800 --> 00:17:51,040 Speaker 12: We don't want to be deciding national security based on 355 00:17:51,080 --> 00:17:53,640 Speaker 12: our budget, and we have switched to that where that's 356 00:17:53,680 --> 00:17:54,359 Speaker 12: the situation. 357 00:17:54,720 --> 00:17:55,399 Speaker 10: If there are. 358 00:17:55,359 --> 00:17:58,360 Speaker 12: Needs for defense increases, we have to budget for them. 359 00:17:58,400 --> 00:18:00,480 Speaker 12: We have to be willing to figure out where we're 360 00:18:00,520 --> 00:18:03,000 Speaker 12: either going to pay more in taxes or reduce spending 361 00:18:03,040 --> 00:18:04,240 Speaker 12: in other parts of the budget. 362 00:18:04,480 --> 00:18:06,600 Speaker 10: But right now this offhanded sort of approach. 363 00:18:06,640 --> 00:18:09,159 Speaker 12: If we can just increase the defense budget by fifty percent, 364 00:18:09,480 --> 00:18:11,640 Speaker 12: there's no room in the budget for that. 365 00:18:12,040 --> 00:18:13,120 Speaker 4: And this is the moment that. 366 00:18:13,080 --> 00:18:15,880 Speaker 12: People have been warning about that the world is very 367 00:18:15,960 --> 00:18:18,280 Speaker 12: risky and we have a budget that now makes us 368 00:18:18,440 --> 00:18:19,200 Speaker 12: very vulnerable. 369 00:18:21,359 --> 00:18:23,359 Speaker 2: So let's get into this now with our political panel. 370 00:18:23,359 --> 00:18:26,640 Speaker 2: Bloomberg Politics contributors Rick Davis and Jeanie Shanzano are back 371 00:18:26,640 --> 00:18:28,560 Speaker 2: with us. Rick, of course, partner at Stone Court Capital, 372 00:18:28,680 --> 00:18:32,280 Speaker 2: and Republican strategists Genie, democratic analyst and democracy visiting fellow 373 00:18:32,280 --> 00:18:34,760 Speaker 2: at Harvard Kennedy School's Ash Center. 374 00:18:34,960 --> 00:18:37,240 Speaker 10: Welcome to you both, Genie. 375 00:18:37,280 --> 00:18:41,160 Speaker 2: When we consider this supplemental funding request and the size 376 00:18:41,160 --> 00:18:43,680 Speaker 2: of it potentially, though clearly this number is not yet firm, 377 00:18:43,760 --> 00:18:46,640 Speaker 2: this is not yet on paper and delivered to the hill, 378 00:18:46,680 --> 00:18:48,639 Speaker 2: but how difficult would you expect it to be for 379 00:18:48,720 --> 00:18:52,639 Speaker 2: even a Republican controlled Congress with the many budget fiscal 380 00:18:52,680 --> 00:18:54,080 Speaker 2: hawks that are within it. 381 00:18:54,119 --> 00:18:55,840 Speaker 10: To actually pass something like that. 382 00:18:57,000 --> 00:18:59,440 Speaker 13: It's going to be very tough, Pailey. We already heard 383 00:18:59,440 --> 00:19:02,439 Speaker 13: from people like Lauren Bobert who said she is a no. 384 00:19:03,400 --> 00:19:06,600 Speaker 13: Usually historically for these kinds of things, you're going to 385 00:19:06,720 --> 00:19:10,199 Speaker 13: need some crossover. It's got to be a bipartisan effort. 386 00:19:10,320 --> 00:19:13,960 Speaker 13: So the big question is will any Democrats go along? 387 00:19:14,440 --> 00:19:17,400 Speaker 13: And let's not forget you know, Joe mentioned one trillion 388 00:19:17,480 --> 00:19:21,320 Speaker 13: dollars the Pentagon has. This is a Pentagon that also, 389 00:19:21,560 --> 00:19:24,159 Speaker 13: for eight years in a row since they were mandatory, 390 00:19:24,320 --> 00:19:28,639 Speaker 13: has not yet passed an audit. Imagine working in a 391 00:19:28,720 --> 00:19:32,160 Speaker 13: place leading a place that can get one trillion and 392 00:19:32,200 --> 00:19:34,800 Speaker 13: not pass an audit for almost a decade, and you 393 00:19:34,920 --> 00:19:38,000 Speaker 13: go back and ask for two hundred billion more on 394 00:19:38,040 --> 00:19:42,280 Speaker 13: the day that the deficit hits thirty nine trillion dollars. 395 00:19:42,520 --> 00:19:45,679 Speaker 13: These are outstanding numbers when you think about them, and 396 00:19:45,720 --> 00:19:49,359 Speaker 13: not in a good way, Kayley, outstanding in a stunning way. 397 00:19:49,680 --> 00:19:51,680 Speaker 13: And they're going to go back a president who can 398 00:19:51,840 --> 00:19:54,960 Speaker 13: articulate what the that money would be for. That's a 399 00:19:54,960 --> 00:19:58,159 Speaker 13: big question, and it also seems to have taken leadership 400 00:19:58,200 --> 00:20:01,840 Speaker 13: on the Hill by surprise, because today John Thune, Mike Johnson, 401 00:20:02,160 --> 00:20:04,560 Speaker 13: they seem to say, you know, we'll consider it, we'll 402 00:20:04,560 --> 00:20:07,320 Speaker 13: think about it. But it was clear the groundwork for 403 00:20:07,440 --> 00:20:09,400 Speaker 13: this had not been laid by the White House. I'm 404 00:20:09,400 --> 00:20:12,720 Speaker 13: thinking of this as a trial balloon. As Pete Hags said, said, ah, 405 00:20:12,760 --> 00:20:14,040 Speaker 13: we can play with that number. 406 00:20:15,200 --> 00:20:18,119 Speaker 4: Well, maybe this is just the start of a negotiation. 407 00:20:18,320 --> 00:20:18,520 Speaker 14: Rick. 408 00:20:18,960 --> 00:20:20,800 Speaker 5: But as we heard from Maya at the Committee for 409 00:20:20,840 --> 00:20:23,520 Speaker 5: a Responsible Federal Budget, we also heard today from Steve 410 00:20:23,520 --> 00:20:26,919 Speaker 5: Ellis at Taxpayers for Common Sense, who says this is 411 00:20:27,000 --> 00:20:29,200 Speaker 5: much more than the direct cost of the war so far, 412 00:20:29,600 --> 00:20:32,639 Speaker 5: and likely more than will be needed anytime soon. His 413 00:20:32,760 --> 00:20:35,680 Speaker 5: statement begs the question, Rick, is the Pentagon just trying 414 00:20:35,680 --> 00:20:38,080 Speaker 5: to pat it's already a massive budget, or is the 415 00:20:38,119 --> 00:20:40,480 Speaker 5: administration planning for a protracted war? 416 00:20:40,600 --> 00:20:41,480 Speaker 4: How would you answer that? 417 00:20:42,720 --> 00:20:45,080 Speaker 15: Well, I don't think there's a clear answer to that. 418 00:20:45,280 --> 00:20:47,280 Speaker 15: I think he makes a good point. I mean, all 419 00:20:47,320 --> 00:20:51,480 Speaker 15: the reporting I've seen has this war currently costing us, 420 00:20:51,640 --> 00:20:55,080 Speaker 15: you know, around twelve billion dollars. When you add up 421 00:20:55,119 --> 00:20:58,560 Speaker 15: all the money we've spent on Atlantic Resolve, the war 422 00:20:58,600 --> 00:21:01,560 Speaker 15: in Ukraine, that's only a little over one hundred and 423 00:21:01,560 --> 00:21:05,679 Speaker 15: eighty billion dollars. So I mean, are we replenishing the 424 00:21:05,720 --> 00:21:09,000 Speaker 15: funding and the materials for the last you know, since 425 00:21:09,280 --> 00:21:12,359 Speaker 15: since February of twenty twenty two, which includes all the 426 00:21:12,400 --> 00:21:16,160 Speaker 15: expended ordinance in Ukraine. I mean, we haven't been given 427 00:21:16,240 --> 00:21:19,159 Speaker 15: any information about this, but the idea that we're going 428 00:21:19,200 --> 00:21:21,480 Speaker 15: to be able to pack a two hundred billion dollar 429 00:21:22,600 --> 00:21:27,720 Speaker 15: supplemental in under the guise of you know, Operation Epic 430 00:21:27,760 --> 00:21:30,560 Speaker 15: Fury is just going to be an incredibly hard sell, 431 00:21:30,720 --> 00:21:33,439 Speaker 15: especially because of what Genie said, which is with the 432 00:21:33,520 --> 00:21:37,120 Speaker 15: national debt hitting thirty nine billion, I mean, think about 433 00:21:37,160 --> 00:21:42,120 Speaker 15: the political ramifications of that ticking up to forty trillion 434 00:21:42,240 --> 00:21:46,520 Speaker 15: dollars when we get to election day in the midterms. 435 00:21:47,080 --> 00:21:50,720 Speaker 15: That could be a tipping point for making the national 436 00:21:50,800 --> 00:21:54,480 Speaker 15: debt a real salient political issue. We've kicked the can 437 00:21:54,600 --> 00:21:57,359 Speaker 15: for a long time, but those chickens may be coming 438 00:21:57,400 --> 00:21:58,600 Speaker 15: home to roost now. 439 00:22:00,760 --> 00:22:03,000 Speaker 2: Well, So then I have to wonder Rick if that 440 00:22:03,080 --> 00:22:05,920 Speaker 2: is actually going to lead to even more fissures within 441 00:22:05,960 --> 00:22:08,840 Speaker 2: the Republican Party itself for the kind of Ron Johnson, 442 00:22:08,920 --> 00:22:11,919 Speaker 2: or has the Genie mentioned Lauren Boberts of the world 443 00:22:12,000 --> 00:22:14,320 Speaker 2: versus others in leadership who may be more inclined to 444 00:22:14,359 --> 00:22:17,720 Speaker 2: try to get the Pentagon and the President exactly what 445 00:22:17,760 --> 00:22:18,400 Speaker 2: he wants here. 446 00:22:19,920 --> 00:22:20,120 Speaker 4: Yeah. 447 00:22:20,240 --> 00:22:24,040 Speaker 15: Ron Johnson made the point the other day that the 448 00:22:24,160 --> 00:22:26,720 Speaker 15: national debt is increased by three trillion dollars just in 449 00:22:26,760 --> 00:22:30,720 Speaker 15: the last year. That's an incredible acceleration, leading us to 450 00:22:30,760 --> 00:22:35,080 Speaker 15: the point where it could get forty trillion by the midterms. 451 00:22:35,160 --> 00:22:37,280 Speaker 15: And he's made a point, why don't we just return 452 00:22:37,320 --> 00:22:41,480 Speaker 15: to pre pandemic spending. I think Maam Againnis makes the case. 453 00:22:41,800 --> 00:22:44,399 Speaker 15: It's not that we don't want to spend money to 454 00:22:44,480 --> 00:22:47,960 Speaker 15: support our troops and have a strong national defense. We do, 455 00:22:48,760 --> 00:22:51,399 Speaker 15: and every member of Congress is sensitive to that. But 456 00:22:51,520 --> 00:22:53,800 Speaker 15: we can't do it in a vacuum. We can't keep 457 00:22:53,840 --> 00:22:58,040 Speaker 15: just piling these supplementals up against ever increasing defense budgets 458 00:22:58,080 --> 00:23:01,439 Speaker 15: and think that that's sustainable over the long run. So 459 00:23:02,320 --> 00:23:06,520 Speaker 15: I think this could spark a complete conversation, especially around 460 00:23:06,520 --> 00:23:10,120 Speaker 15: the twenty seven budget, that says where are we going 461 00:23:10,160 --> 00:23:15,520 Speaker 15: with expenditures and can we bring them down, especially to 462 00:23:15,560 --> 00:23:20,080 Speaker 15: a point which wasn't that long ago in before we 463 00:23:20,160 --> 00:23:25,520 Speaker 15: really started hitting these huge special spending increases pre pandemic levels. 464 00:23:26,840 --> 00:23:30,679 Speaker 5: So what extent would ground troops change this conversation, Genie, 465 00:23:30,680 --> 00:23:33,600 Speaker 5: You've probably seen this Reuter's report today. It's the latest, 466 00:23:33,600 --> 00:23:35,439 Speaker 5: and there have been several, but this one says the 467 00:23:35,480 --> 00:23:40,760 Speaker 5: administration is considering deploying thousands of US troops to reinforce 468 00:23:40,800 --> 00:23:44,320 Speaker 5: the operations, including a potential deployment on Iran's shoreline to 469 00:23:44,359 --> 00:23:46,639 Speaker 5: secure the Strait of hor Moves. Troops could also be 470 00:23:46,760 --> 00:23:50,639 Speaker 5: used on carg Island if that's something that we wanted 471 00:23:50,640 --> 00:23:55,560 Speaker 5: to do, as well, potentially to secure the enriched uranium 472 00:23:55,600 --> 00:23:57,960 Speaker 5: that has gone missing. The Pentagon has already shipped out 473 00:23:57,960 --> 00:24:00,800 Speaker 5: the thirty first Marine Expeditionary Unit that they took out 474 00:24:00,800 --> 00:24:04,399 Speaker 5: of Japan. That's about twenty two hundred marines, Genie, but 475 00:24:04,440 --> 00:24:06,240 Speaker 5: they won't get there till next week. So this would 476 00:24:06,240 --> 00:24:10,119 Speaker 5: clearly take additional troop movements. If this was going to happen, 477 00:24:10,200 --> 00:24:12,600 Speaker 5: what would Democrats say in that world? 478 00:24:13,800 --> 00:24:16,040 Speaker 13: Yeah, and I'm so glad you brought this in, because 479 00:24:16,040 --> 00:24:18,640 Speaker 13: of course the President was asked about it, and some 480 00:24:18,680 --> 00:24:21,160 Speaker 13: people are reporting that he said he would not send 481 00:24:21,160 --> 00:24:24,560 Speaker 13: in troops. I heard him say, you know, I'm not 482 00:24:24,680 --> 00:24:26,639 Speaker 13: going to tell you, which to me is one of 483 00:24:26,680 --> 00:24:30,159 Speaker 13: the typical non answer answers, so I'm not sure. He 484 00:24:30,400 --> 00:24:32,400 Speaker 13: ruled it out in the White House just a few 485 00:24:32,440 --> 00:24:37,080 Speaker 13: minutes ago. And of course this intimately involves Congress. So 486 00:24:37,400 --> 00:24:41,879 Speaker 13: this is the problem the administration has. They denied Congress 487 00:24:41,920 --> 00:24:46,400 Speaker 13: a role in a debate over voting to authorize this 488 00:24:46,720 --> 00:24:49,280 Speaker 13: war or excursion as the President likes to call it. 489 00:24:49,720 --> 00:24:52,960 Speaker 13: But this is what this debate over funding is going 490 00:24:53,000 --> 00:24:56,040 Speaker 13: to turn into. It's going to be a substitute for 491 00:24:56,160 --> 00:24:59,919 Speaker 13: everything congressmen and women senators could not talk about in 492 00:25:00,080 --> 00:25:02,600 Speaker 13: you know, they love to talk Joe. So everything they 493 00:25:02,600 --> 00:25:06,440 Speaker 13: could not talk about because they didn't have the authorization debate, 494 00:25:06,520 --> 00:25:09,120 Speaker 13: they're going to have it over this debate for funding, 495 00:25:09,440 --> 00:25:12,280 Speaker 13: and that is going to be a very very tough conversation. 496 00:25:12,720 --> 00:25:14,600 Speaker 4: If that involves. 497 00:25:14,040 --> 00:25:18,720 Speaker 13: Either really or potentially boots on the ground, that conversation 498 00:25:18,920 --> 00:25:22,600 Speaker 13: becomes even more for the White House. And so again 499 00:25:22,920 --> 00:25:26,960 Speaker 13: we have no clarity from the President, who, again in 500 00:25:26,960 --> 00:25:29,720 Speaker 13: the White just a few minutes ago, when asked, will 501 00:25:29,720 --> 00:25:32,480 Speaker 13: you put boots on the ground, said no, but I 502 00:25:32,520 --> 00:25:36,120 Speaker 13: wouldn't tell you if I was going to another non answer, 503 00:25:36,400 --> 00:25:40,240 Speaker 13: And this sort of encapsulates this entire war that we 504 00:25:40,280 --> 00:25:42,040 Speaker 13: are now involved in twenty days in. 505 00:25:43,480 --> 00:25:45,320 Speaker 2: Rick, we have less than a minute left. But do 506 00:25:45,400 --> 00:25:48,960 Speaker 2: you see the president as trying to essentially keep his 507 00:25:49,040 --> 00:25:54,080 Speaker 2: options open or trying to basically not trying to rule 508 00:25:54,119 --> 00:25:55,560 Speaker 2: out putting boots on the ground. 509 00:25:56,680 --> 00:25:59,320 Speaker 15: Yeah, Kaylee, I think there's enormous pressure on the president 510 00:25:59,320 --> 00:26:02,159 Speaker 15: to make this a short excursion, as he calls it. 511 00:26:02,280 --> 00:26:05,960 Speaker 15: And Pete Haiks said the same thing in the briefing 512 00:26:06,000 --> 00:26:07,919 Speaker 15: he did this morning, that this is going to be 513 00:26:08,119 --> 00:26:11,000 Speaker 15: a not a protracted. 514 00:26:11,920 --> 00:26:16,520 Speaker 4: War fighting effort. So you're hopeful that that is the strategy. 515 00:26:16,640 --> 00:26:20,520 Speaker 15: Look, they've really accounted for almost all their objectives, and 516 00:26:20,560 --> 00:26:22,640 Speaker 15: so the question is what are we really gaining by 517 00:26:22,680 --> 00:26:24,520 Speaker 15: continuing to pound Iran? 518 00:26:24,800 --> 00:26:27,680 Speaker 4: And we need that straight to Horr Moose Open. 519 00:26:28,280 --> 00:26:31,640 Speaker 5: Fascinating insights as always in great analysis from Bloomberg Politics 520 00:26:31,680 --> 00:26:34,800 Speaker 5: contributors Rick Davis and Jeanie Shanzano. Thank you both so much. 521 00:26:34,800 --> 00:26:38,080 Speaker 5: I'm Joe Matthew alongside Kaylee Lines. Kurt Volker joins us. 522 00:26:38,119 --> 00:26:40,680 Speaker 5: Coming up next, former Ambassador to NATO, stay with. 523 00:26:40,720 --> 00:26:42,920 Speaker 4: Us on Balance of Power. We'll have much more coming 524 00:26:43,000 --> 00:26:43,640 Speaker 4: up after this. 525 00:26:47,960 --> 00:26:51,440 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 526 00:26:51,520 --> 00:26:54,560 Speaker 1: us live weekdays at noon and five pm Eastern on 527 00:26:54,680 --> 00:26:57,920 Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business app. 528 00:26:57,960 --> 00:27:01,000 Speaker 1: You can also listen live on Amazon Alexa from our 529 00:27:01,040 --> 00:27:05,399 Speaker 1: flag Tip New York station Just Say Alexa played Bloomberg eleven. 530 00:27:05,240 --> 00:27:08,680 Speaker 2: Thirty checking on bred Crude at one oh nine. Of course, 531 00:27:08,720 --> 00:27:10,920 Speaker 2: it got a taste of more like one twenty earlier. Today, 532 00:27:10,960 --> 00:27:13,960 Speaker 2: as Iran continues its attacks on energy infrastructure of Gulf 533 00:27:13,960 --> 00:27:17,640 Speaker 2: States and of course effectively has the Strait of Hormuz closed, 534 00:27:17,680 --> 00:27:21,280 Speaker 2: which the US is calling to be reopened, and other 535 00:27:21,320 --> 00:27:24,040 Speaker 2: allies now are actually joining the United States in that 536 00:27:24,119 --> 00:27:27,280 Speaker 2: the UK, Japan, Germany, France, Italy and the Netherlands all 537 00:27:27,280 --> 00:27:29,800 Speaker 2: putting out a joint statement today that in part calls 538 00:27:29,800 --> 00:27:33,440 Speaker 2: on Iran to cease immediately its threats and attempts to 539 00:27:33,440 --> 00:27:36,199 Speaker 2: block the strait to commercial shipping. But it goes on 540 00:27:36,440 --> 00:27:39,760 Speaker 2: even further to say that the leaders are expressing readiness 541 00:27:39,800 --> 00:27:43,240 Speaker 2: to contribute to appropriate efforts to ensure safe passage through 542 00:27:43,280 --> 00:27:46,480 Speaker 2: the strait. This, of course, is after President Trump requested 543 00:27:46,520 --> 00:27:48,879 Speaker 2: that US allies, many of them of course more reliant 544 00:27:48,920 --> 00:27:51,000 Speaker 2: on the energy products leaving the Middle East than the 545 00:27:51,119 --> 00:27:54,400 Speaker 2: US itself, is to do just that to help get 546 00:27:54,440 --> 00:27:57,520 Speaker 2: the straight opened up. The question for President Trump, though, 547 00:27:57,560 --> 00:28:00,200 Speaker 2: is is this now too little, too late. He's seem 548 00:28:00,240 --> 00:28:03,040 Speaker 2: to suggest in the Oval Office earlier that indeed, the 549 00:28:03,119 --> 00:28:03,800 Speaker 2: time is passed. 550 00:28:04,800 --> 00:28:07,959 Speaker 14: We're defending the straight for everybody else. And then in 551 00:28:07,960 --> 00:28:11,600 Speaker 14: the case of NATO, they don't want to help us 552 00:28:11,640 --> 00:28:15,119 Speaker 14: defend us straight, and they're the ones that needed. But 553 00:28:15,200 --> 00:28:17,840 Speaker 14: now they're getting much nicer because they're seeing my attitude. 554 00:28:17,840 --> 00:28:18,919 Speaker 3: They're getting much nicer. 555 00:28:19,000 --> 00:28:21,720 Speaker 14: But it's as far as I'm concerned, it's too late. 556 00:28:24,160 --> 00:28:26,720 Speaker 5: This after he posted on truth Social I'm not surprised 557 00:28:26,720 --> 00:28:30,760 Speaker 5: by their action referring to NATO allies because I always 558 00:28:30,800 --> 00:28:33,520 Speaker 5: considered NATO, where we spend hundreds of billions of dollars 559 00:28:33,520 --> 00:28:35,680 Speaker 5: a year protecting these same countries, to be a one 560 00:28:35,720 --> 00:28:38,000 Speaker 5: way street. We will protect them, but they will do 561 00:28:38,080 --> 00:28:41,480 Speaker 5: nothing for us, in particular in a time of need. 562 00:28:41,680 --> 00:28:44,680 Speaker 5: Just yesterday, he also drew the contrast between what he 563 00:28:44,760 --> 00:28:49,640 Speaker 5: sees a lack of NATO's support following the United States 564 00:28:49,720 --> 00:28:52,280 Speaker 5: support in Ukraine. He said, we've helped them in Ukraine, 565 00:28:52,280 --> 00:28:56,040 Speaker 5: but they're not helping us now. We want to explore 566 00:28:56,440 --> 00:28:59,640 Speaker 5: this contrast with Kurt Folker, who knows more about this 567 00:28:59,680 --> 00:29:02,440 Speaker 5: than people you will hear from today as the former 568 00:29:02,520 --> 00:29:07,320 Speaker 5: US Special Representative for Ukraine negotiations and former ambassador to NATO. 569 00:29:07,400 --> 00:29:11,440 Speaker 5: Former US Ambassador Ambassadorvulper is great to see you, Welcome 570 00:29:11,480 --> 00:29:14,680 Speaker 5: back to Bloomberg TV and Radio. Is the President driving 571 00:29:14,720 --> 00:29:16,959 Speaker 5: down a road that will end with the United States 572 00:29:17,000 --> 00:29:18,080 Speaker 5: withdrawing from NATO. 573 00:29:19,640 --> 00:29:23,520 Speaker 16: I don't think so, because even though President Trump doesn't 574 00:29:23,520 --> 00:29:26,320 Speaker 16: say so, or maybe even doesn't believe it, NATO is 575 00:29:26,360 --> 00:29:30,360 Speaker 16: fundamentally in the US interest. It creates a vast secure 576 00:29:30,400 --> 00:29:33,400 Speaker 16: space in Europe that is beneficial to the US. It's 577 00:29:33,440 --> 00:29:37,120 Speaker 16: a great trading partner, investment partner, the largest investors in 578 00:29:37,160 --> 00:29:40,680 Speaker 16: the US, largest trading partner. It's where we have our 579 00:29:40,760 --> 00:29:43,320 Speaker 16: large military basis from which we can go to the 580 00:29:43,320 --> 00:29:47,000 Speaker 16: Middle East. So it is vastly in US interest. He's 581 00:29:47,000 --> 00:29:49,040 Speaker 16: wrong when he says NATO has never come to help 582 00:29:49,080 --> 00:29:51,560 Speaker 16: the US either. That's not true. After nine to eleven 583 00:29:51,800 --> 00:29:54,720 Speaker 16: it was the only time that Article one or Article 584 00:29:54,760 --> 00:29:58,160 Speaker 16: five was invoked by NATO. After the nine to eleven attacks, 585 00:29:58,480 --> 00:30:02,080 Speaker 16: NATO went with US to Sghanistan. They supported US in Iraq, 586 00:30:03,360 --> 00:30:06,960 Speaker 16: in Kosovo and Bosnia. Going back in time, the US 587 00:30:06,960 --> 00:30:09,800 Speaker 16: did about fifteen percent of the load. NATO did eighty 588 00:30:09,840 --> 00:30:14,120 Speaker 16: five percent, So he just doesn't appreciate NATO. But it's 589 00:30:14,240 --> 00:30:16,560 Speaker 16: very much in the US interest and I don't think 590 00:30:16,600 --> 00:30:19,280 Speaker 16: anyone in the country, public, Congress, others are going to 591 00:30:19,480 --> 00:30:20,920 Speaker 16: want to see him walk away from it. 592 00:30:22,960 --> 00:30:25,040 Speaker 2: Well, if that's what's in the United States interests, what 593 00:30:25,080 --> 00:30:27,640 Speaker 2: about the interests of other NATO countries who have indicated 594 00:30:27,680 --> 00:30:29,840 Speaker 2: they don't want to get miired in a conflict that 595 00:30:29,880 --> 00:30:32,000 Speaker 2: the US and Israel began with Iran. But at the 596 00:30:32,040 --> 00:30:34,800 Speaker 2: same time, they very much, ambassador, are going to feel 597 00:30:34,800 --> 00:30:38,120 Speaker 2: the economic ramifications. Is there not going to be an 598 00:30:38,120 --> 00:30:41,160 Speaker 2: economic incentive for these companies to actually have to get 599 00:30:41,200 --> 00:30:42,360 Speaker 2: more active in the Middle East? 600 00:30:42,760 --> 00:30:46,160 Speaker 16: Yeah, well, clearly there is. And the statement that we 601 00:30:46,200 --> 00:30:49,520 Speaker 16: saw indicates that they were taken by surprise. There were 602 00:30:49,520 --> 00:30:52,560 Speaker 16: no consultations, there was no joint operation, there was no 603 00:30:52,680 --> 00:30:55,240 Speaker 16: plan as to what was going to happen. They just 604 00:30:55,280 --> 00:30:57,760 Speaker 16: woke up one day and saw the US attacking Iran. 605 00:30:59,000 --> 00:31:03,520 Speaker 16: Then when the President suggested that they send naval vessels 606 00:31:03,560 --> 00:31:07,280 Speaker 16: to escort carriers through the straits of our moves, that's 607 00:31:07,320 --> 00:31:10,680 Speaker 16: clearly an operation that's not going to succeed when Iran 608 00:31:11,000 --> 00:31:14,760 Speaker 16: is able to take out the vessels, take out the 609 00:31:15,000 --> 00:31:18,280 Speaker 16: escorts as well. They've got missiles, they've got drones, So 610 00:31:18,400 --> 00:31:21,520 Speaker 16: it is not ripe for an escort operation unless there 611 00:31:21,560 --> 00:31:25,320 Speaker 16: is some other larger plan of taking out everything that 612 00:31:25,360 --> 00:31:28,720 Speaker 16: Iran's got, or negotiating with the government if it goes 613 00:31:28,760 --> 00:31:31,880 Speaker 16: that way. But I think what they did is they 614 00:31:31,920 --> 00:31:35,120 Speaker 16: finally got their messaging right. The message to the US 615 00:31:35,160 --> 00:31:38,560 Speaker 16: should not be no, we can't do that just simply 616 00:31:38,600 --> 00:31:42,280 Speaker 16: because it's not a workable plan. The answer should be 617 00:31:42,320 --> 00:31:46,360 Speaker 16: and now is yes, we want to help in appropriate ways. 618 00:31:46,480 --> 00:31:47,400 Speaker 16: Let's talk about it. 619 00:31:48,840 --> 00:31:51,960 Speaker 5: Two hundred billion dollars, Ambassador, is the number that's being 620 00:31:52,040 --> 00:31:55,880 Speaker 5: reported now. The administration is about to request in supplemental 621 00:31:55,920 --> 00:31:59,680 Speaker 5: funding to help pay for this operation. As someone who 622 00:31:59,720 --> 00:32:02,320 Speaker 5: has your experience, I'm just wondering how you read that 623 00:32:02,400 --> 00:32:05,200 Speaker 5: number if that really is about paying for a limited 624 00:32:05,200 --> 00:32:07,479 Speaker 5: operation in Iran. The President says, we have a lot 625 00:32:07,520 --> 00:32:10,800 Speaker 5: of munitions to replenish after providing much to Ukraine, but 626 00:32:10,840 --> 00:32:14,320 Speaker 5: this is beyond what we've ever given to Ukraine. What 627 00:32:14,360 --> 00:32:16,800 Speaker 5: does this tell you about timeline and resources that the 628 00:32:16,800 --> 00:32:18,560 Speaker 5: administration might be considering. 629 00:32:19,320 --> 00:32:21,440 Speaker 16: Well, I think it's several things. First off, it's a 630 00:32:21,480 --> 00:32:25,440 Speaker 16: psychological figure. It is designed to show that we have 631 00:32:25,720 --> 00:32:29,360 Speaker 16: enormously deep pockets and we can destroy anything that Iran 632 00:32:29,480 --> 00:32:31,440 Speaker 16: can put on the table. So it's meant for the 633 00:32:31,480 --> 00:32:34,959 Speaker 16: psychological purpose of being enormous. In addition to that, it 634 00:32:35,040 --> 00:32:38,760 Speaker 16: is exactly as you said, it is paying for the 635 00:32:38,800 --> 00:32:43,240 Speaker 16: expenses of this operation thus far, as well as replenishing 636 00:32:43,680 --> 00:32:48,440 Speaker 16: munitions that we have been using in this war defending 637 00:32:48,520 --> 00:32:51,040 Speaker 16: Israel prior to this, some of the things we have 638 00:32:51,520 --> 00:32:54,760 Speaker 16: transferred to Ukraine for sale that would now have to 639 00:32:54,800 --> 00:32:57,280 Speaker 16: be bought again by the US. So there's a lot 640 00:32:57,360 --> 00:32:59,920 Speaker 16: that's in this and it's partly a message to China. 641 00:33:00,080 --> 00:33:02,880 Speaker 16: We can't forget that either, that we have to signal 642 00:33:02,960 --> 00:33:05,560 Speaker 16: to China that we may be running low on a 643 00:33:05,560 --> 00:33:08,440 Speaker 16: few things like patriots compared to where we would like 644 00:33:08,520 --> 00:33:10,760 Speaker 16: to be, but we have plenty of money to throw 645 00:33:10,800 --> 00:33:13,440 Speaker 16: at this and we will have a robust military going forward. 646 00:33:14,560 --> 00:33:17,360 Speaker 5: Isn't that though, why the Pentagon has its first ever 647 00:33:17,480 --> 00:33:18,600 Speaker 5: trillion dollar budget. 648 00:33:18,640 --> 00:33:20,880 Speaker 4: What's all that money going to? Well? 649 00:33:21,120 --> 00:33:24,040 Speaker 16: Also the same thing, it is designed to build up 650 00:33:24,360 --> 00:33:28,000 Speaker 16: a very very strong and capable military to show our 651 00:33:28,080 --> 00:33:31,680 Speaker 16: adversaries that they will not be any match for us, 652 00:33:31,760 --> 00:33:34,400 Speaker 16: that we have very deep buckets, we have the best 653 00:33:34,440 --> 00:33:37,440 Speaker 16: weapons systems, we are prepared to spend the money, and 654 00:33:37,480 --> 00:33:39,280 Speaker 16: we're prepared to use for US if we have to. 655 00:33:41,320 --> 00:33:43,719 Speaker 2: Okay, So clearly there is a desire to continue funding 656 00:33:43,760 --> 00:33:46,360 Speaker 2: the US war machine. I'd also like to ask you, ambassador, 657 00:33:46,400 --> 00:33:48,360 Speaker 2: about the Russian war machine, which is getting a bit 658 00:33:48,400 --> 00:33:51,440 Speaker 2: of a lifeliner, at the very least, a cash injection 659 00:33:51,600 --> 00:33:54,240 Speaker 2: due to not just higher oil prices, but the actual 660 00:33:54,320 --> 00:33:58,760 Speaker 2: relief of sanctions as a result of this supply problem 661 00:33:58,800 --> 00:34:01,840 Speaker 2: in the Middle East. Yeah, p what impact ultimately is 662 00:34:01,880 --> 00:34:02,480 Speaker 2: this going to have. 663 00:34:03,480 --> 00:34:08,400 Speaker 16: It's really it's really remarkable. The oil price surge is 664 00:34:08,440 --> 00:34:11,760 Speaker 16: of course a windfall for Vladimir Buten because he sells 665 00:34:11,800 --> 00:34:13,640 Speaker 16: oil and now he gets a lot more money for it. 666 00:34:13,920 --> 00:34:16,760 Speaker 16: The estimates I've seen are about an extra five billion 667 00:34:16,840 --> 00:34:19,399 Speaker 16: dollars a month that he's going to be getting from 668 00:34:19,400 --> 00:34:23,320 Speaker 16: these higher prices. But on top of that, to allow 669 00:34:23,440 --> 00:34:26,640 Speaker 16: them to lift the sanctions, to allow them to sell 670 00:34:26,680 --> 00:34:29,399 Speaker 16: their oil, that just doesn't make any sense. Because they 671 00:34:29,400 --> 00:34:34,040 Speaker 16: are helping Iran and they're providing drones, their drone technology, 672 00:34:34,360 --> 00:34:37,319 Speaker 16: intelligence and targeting. Why on earth do we want to 673 00:34:37,320 --> 00:34:38,760 Speaker 16: help Russia at this time? 674 00:34:40,200 --> 00:34:44,719 Speaker 5: Interesting, As someone who is our ambassador Tonado, Kurt folk Or, 675 00:34:44,760 --> 00:34:47,279 Speaker 5: I'm wondering your thoughts about the repeated attempts to lob 676 00:34:47,360 --> 00:34:51,719 Speaker 5: missiles at Turkey. This of course could resolve in an 677 00:34:51,800 --> 00:34:56,040 Speaker 5: Article five violation if Turkey in fact pursued it. Why 678 00:34:56,040 --> 00:34:59,560 Speaker 5: do you think President Erduwan has chosen not to do that? 679 00:35:00,160 --> 00:35:04,280 Speaker 5: Did would we see a much wider war with Iran? 680 00:35:05,040 --> 00:35:07,960 Speaker 16: I don't think that a couple of missiles would be 681 00:35:08,080 --> 00:35:11,520 Speaker 16: viewed collectively within NATO as an Article five attack. It's 682 00:35:11,520 --> 00:35:14,120 Speaker 16: not threatening the territory of a NATO country in the 683 00:35:14,160 --> 00:35:16,560 Speaker 16: sense that Iran is going to be taking over part 684 00:35:16,560 --> 00:35:22,400 Speaker 16: of Turkey, and NATO and Turkey together have shot down 685 00:35:22,560 --> 00:35:26,040 Speaker 16: these missiles, so we've defended that territory. And I don't 686 00:35:26,040 --> 00:35:29,200 Speaker 16: think anyone in NATO wants to escalate into a wider war, 687 00:35:29,440 --> 00:35:33,239 Speaker 16: a whole regional war, and Turkey is going to have 688 00:35:33,239 --> 00:35:36,319 Speaker 16: to live in that neighborhood after this operation is over. 689 00:35:36,760 --> 00:35:39,440 Speaker 16: So I don't think it wants to have as hostile 690 00:35:39,480 --> 00:35:43,000 Speaker 16: a relationship with Iran as it could turn into. If 691 00:35:43,040 --> 00:35:45,759 Speaker 16: they can avoid that, they may even see themselves as 692 00:35:45,800 --> 00:35:48,480 Speaker 16: part of a solution at some point, so I think 693 00:35:48,520 --> 00:35:51,280 Speaker 16: they want to keep their powder dry as well. 694 00:35:51,480 --> 00:35:56,720 Speaker 2: So when we consider solutions, Ambassador, obviously you worked in diplomacy. 695 00:35:56,880 --> 00:35:59,719 Speaker 2: Do you see a path forward for diplomacy here when 696 00:35:59,719 --> 00:36:01,880 Speaker 2: the UN US is openly saying we don't even know 697 00:36:01,920 --> 00:36:03,880 Speaker 2: who we should be negotiating with. 698 00:36:04,440 --> 00:36:08,880 Speaker 16: Yeah, well, look, diplomacy works when the balance of forces 699 00:36:08,920 --> 00:36:12,160 Speaker 16: our right to achieve the goals. So this is why, 700 00:36:12,239 --> 00:36:16,000 Speaker 16: for example, nothing is working in negotiations with Russia's war 701 00:36:16,000 --> 00:36:18,920 Speaker 16: in Ukraine because Russia just wants to take over the country. 702 00:36:19,000 --> 00:36:21,400 Speaker 16: They don't feel any pushback, so they're not going to 703 00:36:21,400 --> 00:36:25,160 Speaker 16: negotiate seriously. In this case, it depends on how President 704 00:36:25,160 --> 00:36:28,040 Speaker 16: Trump frames our goals, and I have to say it 705 00:36:28,080 --> 00:36:32,240 Speaker 16: is still unclear what the goal actually is. He seems 706 00:36:32,280 --> 00:36:35,920 Speaker 16: reluctant to say regime change, but I think that is 707 00:36:36,000 --> 00:36:38,960 Speaker 16: the only thing that will assure future security. If we 708 00:36:39,000 --> 00:36:42,719 Speaker 16: have a different regime in Iran that we can then 709 00:36:42,960 --> 00:36:45,839 Speaker 16: deal with, it'll treat its own people well, respect its 710 00:36:45,880 --> 00:36:50,600 Speaker 16: neighbors have renounced nuclear weapons. If we have that, then 711 00:36:50,680 --> 00:36:52,920 Speaker 16: I think we can build security. If we leave the 712 00:36:52,960 --> 00:36:56,719 Speaker 16: current regime in place, weakened for now, it's going to 713 00:36:56,760 --> 00:36:58,719 Speaker 16: be a source of terrorism. It's going to be a 714 00:36:58,800 --> 00:37:02,000 Speaker 16: threat to shipping and oil and neighboring countries in the 715 00:37:02,000 --> 00:37:04,440 Speaker 16: Golf region for years and years to come. So I 716 00:37:04,440 --> 00:37:06,719 Speaker 16: think we have to clarify that that should be the 717 00:37:06,719 --> 00:37:10,120 Speaker 16: goal of regime change. But if it's not, if President 718 00:37:10,160 --> 00:37:12,799 Speaker 16: Trump doesn't want to do that, and he's prepared to 719 00:37:12,840 --> 00:37:15,600 Speaker 16: live with a weakened form of the current regime, then 720 00:37:15,640 --> 00:37:18,960 Speaker 16: we've got to say that, and then you negotiate something different. 721 00:37:19,280 --> 00:37:23,000 Speaker 16: You try to negotiate a security framework for shipping in 722 00:37:23,080 --> 00:37:25,279 Speaker 16: the Persian Gulf that a lot of countries are going 723 00:37:25,320 --> 00:37:26,399 Speaker 16: to have to participate into. 724 00:37:26,440 --> 00:37:31,120 Speaker 5: Police You talked about the psychological impacts of some of 725 00:37:31,120 --> 00:37:35,839 Speaker 5: the dollar figures that are being thrown around right now, Ambassador, 726 00:37:35,840 --> 00:37:39,240 Speaker 5: A trillion dollar defense budget, a two hundred billion dollars 727 00:37:39,280 --> 00:37:43,960 Speaker 5: supplemental to what extent are these reports about the president 728 00:37:44,040 --> 00:37:47,680 Speaker 5: considering thousands of US ground troops also part of the 729 00:37:47,719 --> 00:37:51,080 Speaker 5: psychological warfare that's at play, or are these leaks to 730 00:37:51,120 --> 00:37:52,800 Speaker 5: Reuters and other agencies correct? 731 00:37:53,840 --> 00:37:56,680 Speaker 16: Well, there are two things. It is part of the 732 00:37:56,680 --> 00:38:00,799 Speaker 16: psychological warfare to let the Iranians think that okay, we 733 00:38:00,840 --> 00:38:03,720 Speaker 16: may actually be coming with ground troops, and so maybe 734 00:38:03,719 --> 00:38:06,200 Speaker 16: they should call an end to this. But on the 735 00:38:06,239 --> 00:38:08,680 Speaker 16: other hand, it is to actually give the president the option, 736 00:38:09,440 --> 00:38:11,680 Speaker 16: and one of the options that has been kicked around 737 00:38:11,960 --> 00:38:15,800 Speaker 16: is not taking over the entire country, not going to Tehran, 738 00:38:16,360 --> 00:38:21,800 Speaker 16: but taking over the oil fields, controlling Iran's energy export 739 00:38:21,840 --> 00:38:26,160 Speaker 16: and production, this carg Island terminal, the oil fields in 740 00:38:26,200 --> 00:38:29,920 Speaker 16: the south, controlling these areas so that you're denying the 741 00:38:29,960 --> 00:38:33,040 Speaker 16: regime the financial benefit of having them, and you're also 742 00:38:34,320 --> 00:38:38,360 Speaker 16: more capable, not fully capable, but more capable of protecting 743 00:38:38,400 --> 00:38:39,320 Speaker 16: shipping in the Gulf. 744 00:38:41,600 --> 00:38:44,200 Speaker 2: Ambassador, we only have about a minute left here. But 745 00:38:44,239 --> 00:38:46,080 Speaker 2: as we talk about this conflict in the Middle East, 746 00:38:46,160 --> 00:38:48,279 Speaker 2: knowing President Trump and others in the administration and now 747 00:38:48,320 --> 00:38:51,520 Speaker 2: also openly talking about the Cuban regime, they've expressed, of 748 00:38:51,520 --> 00:38:55,000 Speaker 2: course desire when it comes to taking control of Greenland 749 00:38:55,160 --> 00:38:57,919 Speaker 2: as well. Would you be taking your eye off those 750 00:38:57,920 --> 00:38:59,320 Speaker 2: other balls at this point? 751 00:39:00,520 --> 00:39:04,040 Speaker 16: Well, no, I think with Greenland, if I were Denmark, 752 00:39:04,160 --> 00:39:07,839 Speaker 16: I would be actively proposing what could be done to 753 00:39:07,880 --> 00:39:13,040 Speaker 16: assure security in the Arctic. Everything is on the table 754 00:39:13,280 --> 00:39:16,960 Speaker 16: in terms of possibilities, doesn't need to be sovereign US territory. 755 00:39:17,000 --> 00:39:19,800 Speaker 16: We can do this together, so they should be proposing that, 756 00:39:19,960 --> 00:39:22,239 Speaker 16: And I wouldn't sit back and wait to see if 757 00:39:22,280 --> 00:39:25,480 Speaker 16: Trump wakes up and talks about Greenland again. On Cuba, 758 00:39:26,000 --> 00:39:29,080 Speaker 16: this is much more a result of our operation in 759 00:39:29,160 --> 00:39:33,160 Speaker 16: Venezuela and strangling the Cuban economy that is likely to 760 00:39:33,200 --> 00:39:35,319 Speaker 16: snap at some point, and we're going to have a 761 00:39:35,360 --> 00:39:38,160 Speaker 16: lot of responsibility in the Caribbean to make sure that 762 00:39:38,200 --> 00:39:41,320 Speaker 16: there's just not a humanitarian catastrophe that emerges. 763 00:39:42,719 --> 00:39:44,960 Speaker 2: All right, Ambassador, thank you so much for joining us. 764 00:39:44,960 --> 00:39:48,040 Speaker 2: We appreciate your time and insight. Ambassador k Volklar, of course, 765 00:39:48,080 --> 00:39:51,799 Speaker 2: former US Special Representative for Ukraine negotiations and former ambassador 766 00:39:51,840 --> 00:39:53,400 Speaker 2: to NATO. 767 00:39:54,880 --> 00:39:57,360 Speaker 4: Thanks for listening to the Balance of Power podcast. 768 00:39:57,960 --> 00:40:01,080 Speaker 5: Make sure to subscribe if you haven't already, Apple, Spotify, 769 00:40:01,200 --> 00:40:03,759 Speaker 5: or wherever you get your podcasts, and you can find 770 00:40:03,800 --> 00:40:07,520 Speaker 5: us live every weekday from Washington, DC at Noontimeeastern at 771 00:40:07,520 --> 00:40:09,240 Speaker 5: Bloomberg dot com.