WEBVTT - Bloomberg Wall Street Week: Rubenstein, Tett, Johnson 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.920 economy continues to send mixed signals, the financial stories that 0:00:10.039 --> 0:00:13.560 keep our world fed, action to con concerns over dollar liquidity, 0:00:13.600 --> 0:00:16.599 and encouraging China data. The five hundred wealthiest people in 0:00:16.640 --> 0:00:19.560 the world. Through the eyes of the most influential voices, 0:00:19.880 --> 0:00:22.880 Larry Summers, the former Treasury Secretary, star Ward CEO, Kevin 0:00:22.960 --> 0:00:26.640 Johnson sec Chairman J Clayton. Bloomberg Wall Street Week with 0:00:26.760 --> 0:00:30.520 David Weston from Bloomberg Radio. This week, for the first 0:00:30.680 --> 0:00:33.320 time in history, a U S president was impeached for 0:00:33.360 --> 0:00:37.640 a second time, a measure supported by ten House Republicans. 0:00:37.800 --> 0:00:42.600 Today in a five cards way, the House demonstrated that 0:00:42.760 --> 0:00:46.440 no one is above the law, not even the President 0:00:46.560 --> 0:00:49.440 of the United States. This is Bloomberg Wall Street Week. 0:00:49.680 --> 0:00:53.479 I'm David Weston. Let me say this. It's no secret 0:00:53.479 --> 0:00:57.560 to anybody that I hope that this relationship would never 0:00:57.600 --> 0:01:02.840 become public. When I was alone with miss Lewinsky on 0:01:02.880 --> 0:01:11.840 certain occasions in early nine and once in early I 0:01:12.000 --> 0:01:15.520 engaged in conduct that was wrong. That was President Bill 0:01:15.560 --> 0:01:18.400 Clinton testifying before a grand jury about the events leading 0:01:18.480 --> 0:01:22.360 up to his impeachment back but despite the history being 0:01:22.400 --> 0:01:26.000 made back then, the SMP rose almost twelve from then 0:01:26.360 --> 0:01:29.920 until he left office in early two thousand one. Markets 0:01:30.080 --> 0:01:33.800 similarly looked past President Trump's second impeachment this week, focusing 0:01:33.880 --> 0:01:37.320 instead on things like interest rates and proposed fiscal stimulus, 0:01:37.480 --> 0:01:40.640 things that Jillian Ted, chair of the Financial Times editor board, 0:01:40.720 --> 0:01:44.520 says investors should be considering that is the possibility of 0:01:44.560 --> 0:01:47.480 a return of inflation. It's important to realize that there 0:01:47.640 --> 0:01:51.160 is quite a big zeitgeide shift under way right now. 0:01:51.840 --> 0:01:54.920 You can see that, perhaps most clearly, not just in 0:01:55.080 --> 0:01:58.960 terms of the behavior of bond yields nominal bond deals, 0:01:59.200 --> 0:02:02.160 but if you look at inflation linked bonds in particular, 0:02:02.600 --> 0:02:05.960 they have been performing very well because investors having buying 0:02:06.000 --> 0:02:09.920 them to hedge their portfolio. Now on the phase of 0:02:09.919 --> 0:02:12.840 it that might seem absolutely peculiar, because we've just had 0:02:12.880 --> 0:02:16.560 the consumer price in data come out this week, which 0:02:16.560 --> 0:02:20.480 shows an inflation pression in December were incredibly muted, and 0:02:20.520 --> 0:02:23.960 there's very little wage growth. The level of economic growth 0:02:24.000 --> 0:02:27.360 is pretty weak two because of their pandemic. But there 0:02:27.360 --> 0:02:31.040 are really three key factors which are causing investors right 0:02:31.080 --> 0:02:35.000 now to think about inflation. The first is a chance 0:02:35.080 --> 0:02:37.919 that if you do have a big fiscal stimulus package 0:02:37.960 --> 0:02:42.639 from Joe Biden's incoming administration, and if that coincides with 0:02:43.040 --> 0:02:47.119 the pandemic vaccine gradually spreading across the country and reducing 0:02:47.120 --> 0:02:50.480 the pandemic fears, you could have those two factors coming 0:02:50.520 --> 0:02:54.560 together and create quite a big up searching growth later 0:02:54.600 --> 0:02:59.560 this year, which could coincide with supply chain bottlenecks because 0:02:59.600 --> 0:03:01.880 so much paracy to be knocked out by the pandemic. 0:03:02.320 --> 0:03:04.640 So what you could see is that prices, say to 0:03:04.639 --> 0:03:08.280 the hotels or travel or leisure, suddenly jump up in 0:03:08.320 --> 0:03:11.800 a way that will exkew the inflation data. Esther George, 0:03:11.800 --> 0:03:14.840 head of the Kansas Fed, spoke about this Justice Week. 0:03:15.440 --> 0:03:19.000 The second issue, which is equally important, is that many 0:03:19.120 --> 0:03:22.280 of the structural factors we should kept prices low in 0:03:22.320 --> 0:03:28.640 recent decades, most notably globalization and digitization, might just might be, 0:03:29.280 --> 0:03:33.440 if not reversed, but become less forceful in the decades ahead, 0:03:34.000 --> 0:03:37.880 because say the demographics and China are changing. That's a 0:03:37.960 --> 0:03:40.400 much bigger debate, but it's very important to take note 0:03:40.440 --> 0:03:44.080 of that. The third issue, though the really important issue 0:03:44.200 --> 0:03:48.120 is a FED and inverted as. Assumptions of ultra low 0:03:48.160 --> 0:03:52.760 inflation in recent years have been partly based around this 0:03:52.840 --> 0:03:56.720 idea that the Third's two percent price target meant that 0:03:56.760 --> 0:03:59.600 it would jump in and nip inflation and precious in 0:03:59.600 --> 0:04:03.440 the bar if they start to emerge. What's changed, though, 0:04:03.480 --> 0:04:07.680 are two things. Firstly, beneficials are saying that two percent 0:04:07.920 --> 0:04:10.960 is now an average target, not a ceiling, which means 0:04:10.960 --> 0:04:13.600 that they might be willing to let inflation rise above 0:04:13.680 --> 0:04:17.400 to perse for quite a long time. Secondly, there's an 0:04:17.400 --> 0:04:21.520 appreciation that the political economy pressures in the years ahead 0:04:21.880 --> 0:04:25.600 could make it incredibly hard for the EFFECT act preemptively. 0:04:26.000 --> 0:04:29.840 In particular, as the depth burden explodes, it's going to 0:04:29.920 --> 0:04:33.160 be so hard for the FED to do something which 0:04:33.200 --> 0:04:35.680 is going to raise the depth service in costs in 0:04:35.720 --> 0:04:39.480 the future, so that, in plain English, means the FED 0:04:39.600 --> 0:04:43.480 may sit on its hands, which also means inflation could 0:04:43.520 --> 0:04:46.760 well be more of a risk and investors realized, and 0:04:46.800 --> 0:04:48.880 in part it could have been that the FED wants 0:04:48.920 --> 0:04:51.040 to certain ends. In this sense, inflation, as you say, 0:04:51.080 --> 0:04:53.640 it's still is rollatory minus. At the same time, negative 0:04:53.680 --> 0:04:56.440 real yields that is to say, the difference between the 0:04:56.480 --> 0:04:59.880 inflation rate and the zero effectively zero industrates really have 0:05:00.200 --> 0:05:04.720 record negative real yield. Make that be actually a strategy 0:05:04.760 --> 0:05:07.200 to actually inflate our way in part out of that 0:05:07.320 --> 0:05:10.919 debt problem you just talked about. There's certainly a temptation 0:05:11.360 --> 0:05:14.720 um for the FED to sit on its hands in 0:05:14.839 --> 0:05:19.480 terms of running the economy hot and helping growth, Helping 0:05:19.520 --> 0:05:21.359 it should also be said, in the eyes of some 0:05:21.560 --> 0:05:26.000 FED officials lower income communities as well. You know, the 0:05:26.080 --> 0:05:28.880 ideas that you have a large amount of growth, then 0:05:28.920 --> 0:05:31.800 that will gently trickle down to poor people for what 0:05:31.839 --> 0:05:34.960 it's worth. I personally think that's a huge mistake, because 0:05:35.040 --> 0:05:37.640 I think what the FED is doing is raising inflating 0:05:37.680 --> 0:05:40.599 the value of the assets that the rich hold and 0:05:40.800 --> 0:05:44.760 increasing income inequality. But in terms of trying to inflict 0:05:44.800 --> 0:05:47.640 yourself way out of a debt burden, yes, absolutely, then 0:05:47.640 --> 0:05:50.080 the school of thinking in the investment community and the 0:05:50.160 --> 0:05:53.279 economics community that says that's probably the only way they're 0:05:53.279 --> 0:05:55.159 going to get out of that debt burden. If you 0:05:55.160 --> 0:05:57.800 look go back to the years after World War Two, 0:05:58.200 --> 0:06:00.320 you can see that some mild version of this was 0:06:00.320 --> 0:06:03.000 one of the reasons that the US and UK was 0:06:03.120 --> 0:06:06.880 able to exit from their massive debt burdens after World 0:06:06.920 --> 0:06:09.960 War Two. The danger though, is that if you do 0:06:10.120 --> 0:06:13.560 have inflation starting to come back as a significant threat 0:06:13.640 --> 0:06:16.320 and a perception, but the FED is not willing to act, 0:06:16.800 --> 0:06:20.720 you may then also see overseas investors start to become 0:06:20.800 --> 0:06:25.400 more nervous about holding US treasuries. And the problem with 0:06:25.600 --> 0:06:28.080 America is that at the end of the day, it 0:06:28.279 --> 0:06:31.800 is dependent on the kindness of strangers or the willingness 0:06:31.839 --> 0:06:36.720 of foreign investors to keep funding this exploding debt burden 0:06:37.120 --> 0:06:40.320 that the incoming administration is going to face. That was 0:06:40.320 --> 0:06:43.440 Wall Street Week contributor Jillian Tet of The Financial Times 0:06:44.000 --> 0:06:46.600 coming up the role of social media in the attack 0:06:46.640 --> 0:06:49.080 on the Capitol and what could be done about it 0:06:49.400 --> 0:06:52.960 from former head of Homeland Security j Johnson. That's next 0:06:52.960 --> 0:07:02.039 on Wall Street Week on Bloomberg. This is Bloomberg Wall 0:07:02.080 --> 0:07:06.440 Street Week with David Weston from Bloomberg Radio. The Capital 0:07:06.440 --> 0:07:09.040 may have been the target of the mob's attack last week, 0:07:09.240 --> 0:07:13.520 but Silicon Valley suffered its own collateral damage. Attention quickly 0:07:13.560 --> 0:07:16.320 focused on the role of social media in foemening and 0:07:16.400 --> 0:07:20.760 even helping organize the insurrection, leading Facebook and Instagram to 0:07:20.840 --> 0:07:25.400 suspend President Trump's account at least until Inauguration day. YouTube 0:07:25.480 --> 0:07:28.280 suspended his channel for at least one week. But the 0:07:28.320 --> 0:07:32.800 most severe action came from President Trump's platform of choice Twitter. 0:07:33.200 --> 0:07:36.800 It permanently suspended his account, severing an instant line of 0:07:36.840 --> 0:07:41.200 communication to his eighty nine million followers. The events raised 0:07:41.280 --> 0:07:44.560 pressure to regulate content on tech platforms and adds to 0:07:44.560 --> 0:07:49.040 the debate over shielding social media companies from liability. Senator 0:07:49.120 --> 0:07:52.400 Lindsey Graham said in a tweet, I'm more determined than 0:07:52.440 --> 0:07:55.480 ever to strip section to thirty protections from big tech 0:07:55.720 --> 0:08:00.000 Twitter that let them be immune from lawsuits. The issue 0:08:00.080 --> 0:08:04.600 of false and even incendiary social media posts poses serious 0:08:04.680 --> 0:08:08.000 issues for our politics and for our security. According to 0:08:08.080 --> 0:08:11.960 j Johnson, He's former head of Homeland Security, I don't 0:08:11.960 --> 0:08:15.880 want to take any particular company to task UM, but 0:08:16.840 --> 0:08:23.320 social media. The ability to UM to publish, push out 0:08:23.480 --> 0:08:28.160 fake news, extremist views is frankly a large reason for 0:08:28.240 --> 0:08:30.680 why we are where we are today in our politics, 0:08:31.200 --> 0:08:36.880 in our domestic security situation. Something like se of Republicans, 0:08:36.920 --> 0:08:40.000 according to polls, believed that the election was stolen and 0:08:40.040 --> 0:08:44.120 that there was fraud in the election. I'm waiting to 0:08:44.160 --> 0:08:48.040 see the poll that a certain percentage of Americans believe 0:08:48.200 --> 0:08:51.480 that last week's attack on the Capitol was the fault 0:08:51.520 --> 0:08:54.800 of Antifa, and there is absolutely no evidence of that. 0:08:55.360 --> 0:08:57.240 And so, you know, when you and I grew up, 0:08:57.880 --> 0:09:00.920 there were conventional news sources from which we got all 0:09:00.960 --> 0:09:03.679 the same set effects out of which we form our 0:09:03.679 --> 0:09:07.360 own opinions about the Vietnam War and the civil rights 0:09:07.400 --> 0:09:12.280 movement and the like. Now, because of social media, because 0:09:12.280 --> 0:09:16.160 of this, this this information highway, people can go to 0:09:16.480 --> 0:09:19.920 sources of so called news that do no more than 0:09:20.000 --> 0:09:24.440 reaffirm their own paranoias, their own biases, their own prejudices, 0:09:24.960 --> 0:09:29.240 and their own suspicions. And that has been a big 0:09:29.360 --> 0:09:33.319 driver of the divisiveness and the ugliness in our politics 0:09:33.360 --> 0:09:37.280 for the last several years. At the same time, is 0:09:37.320 --> 0:09:40.520 there a danger of overreacting? I mean, we've seen this 0:09:40.640 --> 0:09:43.480 sometimes in crises in this country, where we react to 0:09:43.559 --> 0:09:45.880 the last problem. We overreact. Let me give you a 0:09:45.920 --> 0:09:51.000 stark example. One person's extreme expression might be another person's 0:09:51.040 --> 0:09:53.640 Arab spring. I mean, social media is very important in 0:09:53.600 --> 0:09:56.760 the Arab spring. How do we protect our own homeland 0:09:57.520 --> 0:09:59.839 from the ills that could have come from social media 0:10:00.120 --> 0:10:05.280 without shutting down an Arab spring. Excellent question, David. Very 0:10:05.280 --> 0:10:09.360 often a crisis atmosphere is a poor atmosphere in which 0:10:09.400 --> 0:10:12.719 to make policy. I have been saying now for for 0:10:12.760 --> 0:10:18.120 several years that government agencies, national security agencies, need to 0:10:18.320 --> 0:10:23.480 resist the political push show the impulse to dive into 0:10:23.600 --> 0:10:27.520 trying to regulate social media, political debate on the on 0:10:27.559 --> 0:10:31.040 the internet. Think about what certain people in office today 0:10:31.040 --> 0:10:34.080 would do if they could deem something fake news and 0:10:34.120 --> 0:10:39.040 therefore impose government restrictions on the ability of the Internet 0:10:39.040 --> 0:10:42.800 to repeat it. And so I've got to be careful 0:10:42.840 --> 0:10:48.800 when it comes to government restrictions on political debate political speech, 0:10:49.240 --> 0:10:53.599 which is why the action on President Trump's accounts was 0:10:53.920 --> 0:10:57.960 extraordinary but probably overdue. Frankly, At the same time, I 0:10:57.960 --> 0:11:01.160 wonder if there's actually a positive good for law enforcement 0:11:01.400 --> 0:11:04.640 national security authorities of having an open web. That is 0:11:04.640 --> 0:11:07.000 to say, if really we do drive these people off 0:11:07.040 --> 0:11:10.280 of Twitter and Facebook and maybe even parlor, they may 0:11:10.320 --> 0:11:12.080 go to the dark web and it might be harder 0:11:12.240 --> 0:11:15.040 for our national security forces to really monitor what they're 0:11:15.120 --> 0:11:21.120 up to. There is that offsetting concern. Very definitely, um 0:11:21.280 --> 0:11:28.920 the ability to monitor extremist views, communications, plotting terrorists. Plotting 0:11:29.920 --> 0:11:33.880 is a valuable, valuable law enforcement tool and and you're correct. 0:11:34.000 --> 0:11:37.360 Very often when you prohibit something, you make it more difficult. 0:11:38.000 --> 0:11:40.600 You just drive it to another corner, and law enforcement 0:11:40.600 --> 0:11:43.400 struggles to keep up going beyond social media. We have 0:11:43.440 --> 0:11:46.640 an inauguration coming up next week. Now, how do we 0:11:46.679 --> 0:11:48.959 make sure we don't have some sort of problem the 0:11:49.000 --> 0:11:51.440 way we did last week? I mean, what went wrong 0:11:51.480 --> 0:11:53.960 and what steps should be taken to really make sure 0:11:54.000 --> 0:11:58.520 we're secure on the capitol, David. When I was Secretary 0:11:58.559 --> 0:12:01.720 of Homeland Security, I had the responsibility for the inauguration 0:12:02.000 --> 0:12:04.400 four years ago. For the security of the inauguration four 0:12:04.440 --> 0:12:07.360 years ago. UH. In my time as secretary, I also 0:12:07.400 --> 0:12:10.960 had the responsibility for the security of three State of 0:12:10.960 --> 0:12:14.840 the Union addresses in the US capital to presidential political 0:12:14.880 --> 0:12:20.480 conventions UH, three U N General Assembly sessions, one paper visit. UH. 0:12:20.600 --> 0:12:23.520 It can be done. There is something called an n 0:12:23.800 --> 0:12:28.760 s S E National Special security event. UH. The inauguration 0:12:28.880 --> 0:12:32.440 is an n s S. Political conventions are n s 0:12:32.440 --> 0:12:35.000 s S. And when you declare something an n s 0:12:35.000 --> 0:12:38.360 S UH, there's a certain level of security preparation that 0:12:38.520 --> 0:12:41.400 kicks in, and there's literally a checklist of things you 0:12:41.520 --> 0:12:45.360 go through to prevent any sort of penetration of the 0:12:45.400 --> 0:12:49.880 event from land, sea, air, and cyberspace. That failed to 0:12:49.920 --> 0:12:52.839 happen last week for reasons that we will learn at 0:12:52.840 --> 0:12:56.200 some point. Uh, those responsible for the security of last 0:12:56.240 --> 0:13:00.920 week's event in the Congress did not anticipate the security 0:13:01.360 --> 0:13:05.120 challenges that they ended up facing. This could have been prohibited. 0:13:05.160 --> 0:13:08.960 We know how to protect the perimeter of the U. S. Capital. 0:13:10.520 --> 0:13:12.880 Not to be flip about this at all, Mr Secretary, 0:13:12.920 --> 0:13:14.800 but do we know how to protect the security of 0:13:14.840 --> 0:13:17.000 the country from the President of States himself? And there's 0:13:17.000 --> 0:13:19.120 a raging debate right now, as you know, in Washington 0:13:19.400 --> 0:13:21.959 about whether this man should remain in office. How concerned 0:13:21.960 --> 0:13:25.600 are you about that possibility. I am very concerned. Our 0:13:25.679 --> 0:13:30.600 domestic security situation right now is very tense. It should 0:13:30.640 --> 0:13:35.439 be on high alert, David. The the very very sad 0:13:35.520 --> 0:13:40.880 fact is that there exists in this country a strand 0:13:41.040 --> 0:13:48.880 of racism, intolerance, bigotry, anti semitism that has for years 0:13:48.880 --> 0:13:53.280 existed under a rock. Uh. Frankly, our our political leaders, 0:13:53.320 --> 0:13:56.959 President Trump has enabled that group, has emboldened that group 0:13:57.000 --> 0:14:01.160 by saying your special people, you're good people, uh, and 0:14:01.240 --> 0:14:03.920 basically allowed them to come out from under their rock. 0:14:04.320 --> 0:14:07.080 One of the things that I think is important now 0:14:07.240 --> 0:14:09.560 and I'm glad to have this opportunity to talk to 0:14:09.559 --> 0:14:13.360 the business community, David, is that there are others involved 0:14:13.360 --> 0:14:15.960 in this who frankly aided and embedded this. There are 0:14:16.040 --> 0:14:20.600 people now who believe that by pandering to Trump's base, 0:14:21.360 --> 0:14:24.920 got pandering to this aspect of his base, it works 0:14:24.920 --> 0:14:28.400 to their own political benefit. And I think the rest 0:14:28.400 --> 0:14:30.720 of us in this country need to push back on 0:14:30.840 --> 0:14:33.600 that and say no, you don't, don't try that. In 0:14:33.640 --> 0:14:37.000 the business community in particular, I believe has a large 0:14:37.080 --> 0:14:40.280 voice in that. That was j Johnson of Paul Weiss 0:14:40.280 --> 0:14:43.120 coming up whether or not markets cared about the effisiment. 0:14:43.160 --> 0:14:46.400 A lot of big corporations did, distancing themselves from the 0:14:46.400 --> 0:14:50.120 Trump brand and reigning in their political contributions as fast 0:14:50.160 --> 0:14:53.600 as they could, something David Rubinstein and the Carloge Group says, 0:14:53.800 --> 0:14:57.080 maybe here to stay. That's next on Wall Street Week 0:14:57.240 --> 0:15:06.360 on Bloomberg. This is Bloomberg Wall Street Week with David 0:15:06.360 --> 0:15:10.120 weston Trump Bloomberg Radio. The Trump brand was at the 0:15:10.200 --> 0:15:12.960 heart of the president's business empire, long before he turned 0:15:12.960 --> 0:15:16.320 to politics, and that brand is in crisis after the 0:15:16.440 --> 0:15:19.080 riot at the US Capital. He is being shunned by 0:15:19.120 --> 0:15:22.600 political donors, by tech companies, banks handling his finances, and 0:15:22.640 --> 0:15:26.880 even by Shopify, the company behind his online stores. Deutsche 0:15:26.880 --> 0:15:30.040 Bank reportedly decided not to conduct more business with President 0:15:30.040 --> 0:15:33.760 Trump or his family company, and Signature Bank announced its 0:15:33.840 --> 0:15:37.840 closing two personal Trump accounts holding about five million dollars. 0:15:38.400 --> 0:15:41.440 Even the game of Golf so dear to President Trump, 0:15:41.720 --> 0:15:44.360 has turned its back on him, with the p g 0:15:44.520 --> 0:15:48.080 A canceling plans to have its championship at his Bedminster 0:15:48.160 --> 0:15:54.160 club and two, something Mr Trump had long coveted. The 0:15:54.240 --> 0:15:57.480 follow up goes beyond President Trump and his company. Other 0:15:57.520 --> 0:16:02.240 companies like Amazon, American Express, Disney, and Walmart are withholding 0:16:02.240 --> 0:16:06.040 political contributions to lawmakers who voted last week to oppose 0:16:06.160 --> 0:16:09.760 the electoral College results. In a recent Yale survey of 0:16:09.840 --> 0:16:13.920 forty c e ost of them said businesses should halt 0:16:14.000 --> 0:16:18.200 all political donations, and several corporations have said they'll suspend 0:16:18.280 --> 0:16:22.120 all political contributions at least for the time being. David 0:16:22.160 --> 0:16:24.960 Rubinstein has worked at the highest levels of corporate America 0:16:25.040 --> 0:16:28.560 for years now. As co founder and now co executive 0:16:28.600 --> 0:16:32.640 chairman of the Carlisle Group. He explains what motivates corporations 0:16:32.680 --> 0:16:36.840 when it comes to politics and why things might change. Well, 0:16:36.840 --> 0:16:39.120 business leaders by and large want to run their companies. 0:16:39.120 --> 0:16:42.080 They're not looking for controversy, so they don't don't tend 0:16:42.160 --> 0:16:44.400 to be profiles and courage and I would include myself 0:16:44.440 --> 0:16:46.960 in that category. We generally are not trying to make 0:16:47.000 --> 0:16:49.760 waves when we're running companies. That's for political people to 0:16:49.760 --> 0:16:51.760 do and not for business leaders. But I think the 0:16:51.800 --> 0:16:54.960 business community has been um scared a bit about where 0:16:54.960 --> 0:16:57.200 the country is going, and I think they're now trying 0:16:57.200 --> 0:16:59.280 to say, well, we want to be on the side 0:16:59.280 --> 0:17:01.000 of what's right of the country and we want to 0:17:01.040 --> 0:17:03.680 honor the Constitution and so forth. Whether that's going to 0:17:03.760 --> 0:17:05.680 make a big difference or not in terms of whether 0:17:05.760 --> 0:17:07.840 the country comes together or not, I'm not sure. But 0:17:07.880 --> 0:17:10.520 there's no doubt that people are running away from President Trump, 0:17:10.680 --> 0:17:13.040 who were people who work pretty close to them up 0:17:13.080 --> 0:17:16.280 until just recently. But interesting, is it running away from 0:17:16.320 --> 0:17:19.080 President Trump the person, which of course I'm sure is 0:17:19.080 --> 0:17:21.160 going on, or might there be a fund and more 0:17:21.200 --> 0:17:24.040 fundamental reform saying we need to think closely before we 0:17:24.080 --> 0:17:27.960 really get too close to any administration. Clearly they're running 0:17:27.960 --> 0:17:30.960 away from what President Trump UH did in the last 0:17:31.119 --> 0:17:33.480 week or two or three or so in a post election. 0:17:33.760 --> 0:17:36.040 But I do think that they're all weren't worried now 0:17:36.080 --> 0:17:38.800 that getting too close to politicians is a problem, And 0:17:38.800 --> 0:17:40.119 I think many of them are gonna re look at 0:17:40.119 --> 0:17:43.440 their political donations and they want to avoid being criticized 0:17:43.480 --> 0:17:45.800 for things that they can't control. They can't control what 0:17:45.840 --> 0:17:50.439 politicians do, so UH people make political contributions for various reasons. 0:17:50.520 --> 0:17:52.600 I think businesses are going to be more careful about 0:17:52.640 --> 0:17:54.560 what they do in the future, and they don't really 0:17:54.560 --> 0:17:57.680 want controversy. One of the things that's striking to me, 0:17:57.800 --> 0:17:59.439 maybe not to you, is the extent to which the 0:17:59.440 --> 0:18:01.119 markets that any much attention to any of this, At 0:18:01.160 --> 0:18:02.959 least far as I can tell, I can't discern it. 0:18:03.160 --> 0:18:05.359 We have a really history being made, first time in 0:18:05.400 --> 0:18:07.480 history of president will be impeached for the second time. 0:18:08.080 --> 0:18:10.160 What do you make of that as a practical letter? 0:18:10.240 --> 0:18:12.399 Is that right? Is that healthy? Is the way it 0:18:12.400 --> 0:18:17.280 should be? Well? Businesses like to see predictability, and markets 0:18:17.320 --> 0:18:19.480 want predictability, and I think the markets are pretty quick 0:18:19.520 --> 0:18:21.480 to figure out what's going to happen. They know that 0:18:21.560 --> 0:18:24.040 President Trump is gonna be leaving office, uh, they know 0:18:24.119 --> 0:18:26.640 that the companies are gonna do their business, and ultimately 0:18:26.640 --> 0:18:29.080 the key thing to the economy is getting COVID under control. 0:18:29.440 --> 0:18:31.200 And I think from the Business Committee's point of view, 0:18:31.440 --> 0:18:34.720 not having too many disruptive policies from the new administration. 0:18:34.960 --> 0:18:36.560 And I don't think they feel there's gonna be many 0:18:36.560 --> 0:18:40.760 disruptive economic policies, so the administration um it comes in 0:18:40.880 --> 0:18:42.320 is not gonna be one that's gonna be as favorable 0:18:42.280 --> 0:18:44.680 to business as the previous one. I think the business 0:18:44.720 --> 0:18:47.680 community recognizing the markets recognized that there's not gonna be 0:18:47.680 --> 0:18:50.439 a lot of disruptive changes as we saw through COVID 0:18:50.520 --> 0:18:52.840 and as we're seeing right now, the markets operate on 0:18:52.880 --> 0:18:55.919 their own, uh kind of wavelength, and they're not They 0:18:55.920 --> 0:18:58.600 didn't weren't as affected by by the by COVID as 0:18:58.640 --> 0:19:00.320 I thought they would have been, and then not gonna 0:19:00.320 --> 0:19:02.200 be as affected by what's going on today in Washington. 0:19:02.320 --> 0:19:04.080 I think they just shrug it off and look at 0:19:04.080 --> 0:19:05.760 what the your earnings for share is going to be. 0:19:05.760 --> 0:19:08.680 A Various companies that care about You're a veteran of Washington. 0:19:08.800 --> 0:19:10.879 You've been around Washington for quite a while, as if I, 0:19:11.000 --> 0:19:13.439 for that matter, give us your perspective overall on what 0:19:13.520 --> 0:19:16.600 you're seeing happen right now. Unimprecedented is an overused term, 0:19:16.800 --> 0:19:20.119 certainly applies here. What do you make of it? The 0:19:20.160 --> 0:19:24.560 country's greatest stress ever was the Civil War, and I 0:19:24.560 --> 0:19:27.720 think the Great Depression was the second greatest stress we've 0:19:27.760 --> 0:19:31.000 ever had. I think we have two great stresses going 0:19:31.040 --> 0:19:33.880 on right now, not quite the Civil War, not quite 0:19:33.880 --> 0:19:37.240 the Depression. One is the COVID situation, which now seems 0:19:37.240 --> 0:19:39.159 to be getting worse rather than better, even though we 0:19:39.200 --> 0:19:43.560 have vaccines that are available. And second, the impeachment process 0:19:43.600 --> 0:19:46.000 now going on, and that things related to January six, 0:19:46.480 --> 0:19:49.720 that's gonna scar our democracy for quite some time. The 0:19:49.760 --> 0:19:52.040 country has been through a real stress test the last 0:19:52.040 --> 0:19:55.199 few weeks, and I think we'll survive, for sure, but 0:19:55.280 --> 0:19:58.480 there's no doubt that the political repercussions are gonna be great. 0:19:58.520 --> 0:20:00.480 I think the Democrats and Republicans are to be further 0:20:00.480 --> 0:20:03.560 divided than they've ever been. And whether President Trump is 0:20:03.720 --> 0:20:06.840 impeached or whether he's convicted, you're gonna have big divisions 0:20:06.880 --> 0:20:10.520 between Democrats Republicans for quite some time, so it's it's 0:20:10.520 --> 0:20:12.880 gonna take a while for President elect Biden to really 0:20:12.880 --> 0:20:15.240 be able to bring this both sides together in my view. 0:20:15.560 --> 0:20:18.880 That was David Rubinstein, Co executive chairman of the Carlisle 0:20:18.920 --> 0:20:22.879 Group and host of Peer to Peer on Bloomberg. Coming up, 0:20:23.000 --> 0:20:25.440 we wrap up the week with our special contributor Larry 0:20:25.480 --> 0:20:29.320 Summers of Harvard. That's next on Wall Street Week on Bloomberg. 0:20:34.320 --> 0:20:38.240 This is Bloomberg Wall Street Week with David Weston from 0:20:38.400 --> 0:20:41.199 Bloomberg Radio. To conclude the week, as we always do, 0:20:41.320 --> 0:20:44.520 with our special contributor to Larry Summers of Harvard. So, Larry, 0:20:44.760 --> 0:20:46.960 I guess the really big issue this week for the 0:20:46.960 --> 0:20:50.400 economy was this one point nine trillion dollars students package 0:20:50.480 --> 0:20:52.800 that was announced by President Like Biden. You've been the 0:20:52.800 --> 0:20:54.840 Secretary of Treasure. You've been there when there was a 0:20:54.920 --> 0:20:57.080 huge package that you had to get out of Capitol Hill. 0:20:57.320 --> 0:20:59.639 Let me start with the most obvious question, perhaps where's 0:20:59.680 --> 0:21:01.960 the most bang for the buck? What is really going 0:21:02.040 --> 0:21:05.679 to make the most difference in the economy. This is 0:21:05.720 --> 0:21:10.840 probably the boldest economic proposal since the Great Society, and 0:21:11.080 --> 0:21:16.480 perhaps the boldest economic proposal since UH the New Deal. 0:21:17.280 --> 0:21:20.719 One way to look at it is UH this In 0:21:20.920 --> 0:21:26.320 two thousand and nine, the incoming Obama administration proposed a 0:21:26.359 --> 0:21:33.560 fiscal plan that represented filled perhaps of the output gap. 0:21:34.640 --> 0:21:39.520 This plan would be perhaps three times as large as 0:21:39.560 --> 0:21:43.040 the output gap, So relative to the size of the 0:21:43.119 --> 0:21:48.280 economic problem, we're talking about something more than five times 0:21:49.080 --> 0:21:55.720 as large. And that reflects a conviction that's surely right 0:21:56.119 --> 0:21:59.720 that too little was done in two thousand and eight, 0:22:00.280 --> 0:22:04.399 but two thousand nine, But five times is a lot. 0:22:05.040 --> 0:22:11.240 It also reflects a interesting and I think important desire 0:22:11.359 --> 0:22:17.920 to combine the macro economic element with the structural fairness element, 0:22:18.359 --> 0:22:23.440 and so these would be historic reductions in child poverty 0:22:23.480 --> 0:22:28.440 if achieved through the child care credit. UM. I think 0:22:28.480 --> 0:22:32.000 that the most important pieces of this package are the 0:22:32.080 --> 0:22:37.720 reinforcements of the vaccination effort and the support for state 0:22:37.760 --> 0:22:43.560 and local governments. I think the question about this package 0:22:43.840 --> 0:22:47.640 is going to be how the macro economics add up. 0:22:48.280 --> 0:22:51.320 And here I think it's important to understand that this 0:22:51.440 --> 0:22:54.840 was probably as much an attempt to frame a debate 0:22:55.000 --> 0:22:59.000 that's going to come as it was a proposal to 0:22:59.080 --> 0:23:03.560 be implemented to in its literal form, and so I 0:23:03.600 --> 0:23:06.639 don't think the right question is whether this package would 0:23:06.720 --> 0:23:10.120 overheat the economy. I think if it were past as written, 0:23:10.400 --> 0:23:15.399 it would overheat the economy. But will this shift the 0:23:15.480 --> 0:23:22.000 debate towards our doing more? Will this shift the debate, uh, 0:23:22.160 --> 0:23:25.159 towards doing more for those who have been left behind? 0:23:25.280 --> 0:23:29.520 And I think they're uh. The answers yes, But we 0:23:29.600 --> 0:23:32.760 are going to have to watch this economy very carefully, 0:23:32.800 --> 0:23:39.320 and I do think the conventional wisdom is underestimating the 0:23:39.520 --> 0:23:46.760 risks of hitting capacity. And if we do anything approaching this, 0:23:47.720 --> 0:23:50.199 we are going to be managing the economy with the 0:23:50.280 --> 0:23:54.399 accelerator more on the floor than at any time in 0:23:54.520 --> 0:23:58.760 peacetime history. So where are you say it frames the debate? 0:23:58.880 --> 0:24:00.920 Do we have time for that debate? Does the economy 0:24:00.960 --> 0:24:03.080 of time for that debate? Because there's going to be 0:24:03.119 --> 0:24:05.399