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

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

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Speaker 2: Eyes on Munich today, there are a couple of important

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Speaker 2: stories that we're following. You've you've got negotiations, of course,

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Speaker 2: that are getting underway in Munich with regard to Ukraine.

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Speaker 2: You've also got an important deadline tomorrow in Gaza that

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Speaker 2: we're going to be talking to Michael Allen about. Here,

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Speaker 2: a high noon deadline put forth by Donald Trump said

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Speaker 2: all hell will break out if hostages are not released,

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Speaker 2: and hamas had been dragging its feet on the idea

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Speaker 2: of a continued release. Here it appears it will be

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Speaker 2: on schedule. Very unclear how many hostages and what condition

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Speaker 2: they will be in. Michael Allen is Managing director of

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Speaker 2: Beaking Global Strategies and spent time as special assistant to

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Speaker 2: President George W. Bush as part of his national security team.

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Speaker 2: It's great to see you, Welcome back. Good to see Jeff.

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Speaker 2: So we want to talk about a couple of things here,

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Speaker 2: and we'll start in Munich. I know you're no stranger

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Speaker 2: to the Munich Security Conference, and it is now apparently

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Speaker 2: the staging ground for at least the opening salvo in

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Speaker 2: talks over Ukraine. Jd Vance is talking about a lot

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Speaker 2: of things today, including the idea of American troops being

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Speaker 2: on the table in Ukraine. Do you buy that?

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Speaker 3: Wow?

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Speaker 4: I was shocked by the inclusion of that in jd

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Speaker 4: Vance's remarks. Of course, he means I believe a tripwire

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Speaker 4: force part of some sort of peacekeeping operation, but just

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Speaker 4: two days after Hegseth dismissed that there would be US

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Speaker 4: soldiers involved in such an arrangement. It was definitely a

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Speaker 4: surprise to see Vice President Vance come in and say, well,

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Speaker 4: not only US troops, but sanctions as well are on

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Speaker 4: the table.

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Speaker 2: So he's trying to talk tough against Russia. They're trying

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Speaker 2: to compel I guess Vladimir Putin to the table. But

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Speaker 2: Donald Trump was on the phone with him for an

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Speaker 2: hour and a half the other day. What they talk.

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Speaker 4: About, well, well, they talked about Ukraine. Certainly, it sounds

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Speaker 4: like the President also talked about wanting to get rid

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Speaker 4: of nuclear weapons. And they even talked about artificial intelligence,

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Speaker 4: but I think Ukraine was the most thing they talked about.

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Speaker 4: And I think he's trying to induce Putin to the table.

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Speaker 4: Maybe they meet in the Middle East in the coming weeks.

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Speaker 4: But I think it's Trump starting to set the conditions

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Speaker 4: under which he can get into a real negotiation.

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Speaker 2: He says, Vladimir Putin wants to get out Russia wants

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Speaker 2: to get out of this thing. Do you believe that?

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Speaker 2: Is he looking for an off ramp? How come he

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Speaker 2: couldn't find one with Joe Biden.

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Speaker 4: I believe it most that Putin's looking for is a

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Speaker 4: brief cease fire in order to re you know, Tavik

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Speaker 4: have his arms back.

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Speaker 2: With doubt his motivations entirely.

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Speaker 4: Well, because I don't think the underlying problems with why

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Speaker 4: there is a war going to be addressed, and which

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Speaker 4: is that Ukraine. He doesn't want them to exist. He

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Speaker 4: sees them as a security threat. He doesn't like NATO

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Speaker 4: approaching his orders. So Putin's been suffering. He needs more arms,

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Speaker 4: He needs time for his economy to recover. It's starting

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Speaker 4: to go down and down, And so I think at

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Speaker 4: most he would want to cease fire a peace agreement.

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Speaker 2: I doubt it. The idea of going back to pre

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Speaker 2: twenty fourteen boundaries Crimea included. Yeah, Secretary of Defense says unrealistic.

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Speaker 2: He had to walk back some of those remarks. Is

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Speaker 2: he right?

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Speaker 4: I think it's unrealistic to expect them to vacate Crimea

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Speaker 4: or really almost any territory.

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Speaker 2: That they already lost goes to Russia.

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Speaker 4: I'm afraid that at least half the don boss might

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Speaker 4: go to Russia, and maybe they put it in some

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Speaker 4: special status and try to say that there'll be a

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Speaker 4: vote sometime in the future, just to surrounds familiar Yeah,

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Speaker 4: to preserve some sort of face saving arrangement for Zelenski.

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Speaker 4: But yeah, it's hard to imagine. Can you see Russian

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Speaker 4: troops rolling back from any of the territory that they've

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Speaker 4: already gotten, Maybe only if they're trading Kursk and that's

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Speaker 4: the Russian territory that the Ukrainians have set.

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Speaker 2: Up camp testing. That was a pretty smart move Ileski.

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Speaker 2: Just big picture, then this does not sound like Michael Allen,

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Speaker 2: who expects this war to end. Well, certainly not on

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Speaker 2: day one, but in the initial stages of this new presidence.

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Speaker 4: I can't see it ending for a long period of time.

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Speaker 4: I mean this could come back again. I mean we

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Speaker 4: had twenty fourteen and then we had twenty twenty two,

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Speaker 4: and I think Vladimir Putin's got very serious designs on

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Speaker 4: this particular piece of territory. I'm hopeful that we won't

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Speaker 4: have a third war. If you will, if we have

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Speaker 4: a real European peacekeeping force, a real trip wire there,

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Speaker 4: we have to do actual security guarantees. If not NATO,

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Speaker 4: then they need to have some assurances that the West

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Speaker 4: will be there for them. Because what Zelensky needs is

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Speaker 4: he needs to have his country back. He needs to

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Speaker 4: feel safe enough, and companies need to feel safe enough

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Speaker 4: to go there and invest and attract his refugees back.

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Speaker 4: And if it feels like a cheap ceasefire, neither of

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Speaker 4: those things will happen.

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Speaker 2: And if Putin's goal is to reconstitute the Soviet Union,

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Speaker 2: were just spending a lot of time talking for nothing here, Yeah,

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Speaker 2: spending time with Michael Allen on balance of power. I

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Speaker 2: want to move to Israel and what might take place tomorrow.

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Speaker 2: We've seen a lot of cross currents here between Hamas

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Speaker 2: and Israel when it comes to hostages in Gaza approaching

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Speaker 2: a potential phase two under the ceasefire, Donald Trump this

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Speaker 2: week decides to say if they're not all out by

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Speaker 2: noontime Saturday, hell breaks out. That threat seemed to work

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Speaker 2: pretty well last time. Will it tomorrow?

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Speaker 4: I think so. A few hours ago, Hamas, through an

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Speaker 4: intermediary said here are the three hostages that we planned

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Speaker 4: to release. So I think things are still on track.

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Speaker 4: It's never great to feel super about until it actually happens.

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Speaker 4: There's definitely a lot of stress in the relationship. I

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Speaker 4: think the President constantly talking about Gaza and maybe the

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Speaker 4: Palestinians not being able to come back might be sort

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Speaker 4: of just stabilizing for this in the future. I think

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Speaker 4: they need to try and get Israel's commitments to roll

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Speaker 4: back their troops out of populated areas. That needs to

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Speaker 4: continue to happen so that the conditions that for us

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Speaker 4: to proceed down into phase two will obtain.

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Speaker 2: Boy, he said a lot the other day and indicated

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Speaker 2: that he needed to see more than three hostages. Did

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Speaker 2: you read his words to suggest the scheduled release much

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Speaker 2: must go forward, or that every hostage must be released tomorrow.

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Speaker 4: The latter I saw him say very clearly that I

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Speaker 4: want them all back now.

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Speaker 2: I don't know that.

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Speaker 4: I don't know that if he attached though all hell

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Speaker 4: break loose to all of them coming back on Saturday,

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Speaker 4: he definitely said I want them all back. I'm tired

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Speaker 4: of this process. But it may be enough that they're

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Speaker 4: back in train and that maybe that'll satisfy Trump.

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Speaker 2: This is what happens when you're trying to parse the

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Speaker 2: words here. I want to remind everybody that you were

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Speaker 2: the first person on this broadcast. I think it was

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Speaker 2: about two weeks ago, around the time Donald Trump met

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Speaker 2: with Benjamin dett Yahoo to say that they were in

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Speaker 2: fact talking about a lot more than Gaza. They were

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Speaker 2: talking about a preemptive strike against Iran and that this

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Speaker 2: is in fact something that is in the works. Reporting

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Speaker 2: in the days following our inner suggested that this is

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Speaker 2: in fact underway. Are we going to see and Israeli

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Speaker 2: strike against Iran?

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Speaker 4: I think it's honestly, it's getting more and more likely

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Speaker 4: because the conditions for Israel to be able to do

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Speaker 4: this are in good shape. It's because there is no

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Speaker 4: real air defense system radars in Syria. Even in Tehran,

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Speaker 4: there is a sense that because there's no Hezbola, they

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Speaker 4: have a freer shot in order to go hit Iran

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Speaker 4: inside Iran proper. I think what people are digesting now

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Speaker 4: is that will it be a complete destruction of their

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Speaker 4: nuclear program or just degrading. And it's going to be

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Speaker 4: just degrading. It's too spread out, It's been going on

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Speaker 4: for too long. I think what they're really down to

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Speaker 4: is do they have the precise weaponry to be able

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Speaker 4: to penetrate into the mountain complex that houses the main

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Speaker 4: centrifuge hub called ford Ou. That's I think what they're

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Speaker 4: looking for. They're rumors that the Israelis are getting the

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Speaker 4: right weaponry from US, but I don't know that I've

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Speaker 4: seen nick confirmed yet.

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Speaker 2: So they use American made bunker busting bombs. Exactly does

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Speaker 2: America help execute the operation by intelligence or any other meal?

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Speaker 4: I think by intelligence certainly. I don't know that. However,

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Speaker 4: Trump will allow one of our cargo planes or a

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Speaker 4: B two in order to do it. I mean, the Israelis,

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Speaker 4: I think, could do it through their own cargo plane.

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Speaker 4: But there are a lot of people trying to study

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Speaker 4: this right now.

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Speaker 2: What does Saudi Arabia think of this idea.

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Speaker 4: I think they're not excited about it. When you think

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Speaker 4: about Mohammed ben Salman, what he wants and what he's

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Speaker 4: been talking about forever is Vision twenty thirty. He wants

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Speaker 4: to be able to develop his economy diversified away from oil.

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Speaker 4: And I don't think even though he doesn't like the Iranians,

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Speaker 4: I don't think he really wants to see a war

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Speaker 4: breakout between the two. I think he, over time wants

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Speaker 4: to see some sort of progress with the Palestinians so

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Speaker 4: that he can normalize with Israel, because ultimately that's what's

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Speaker 4: good for his economy. That's like the Silicon Valley in

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Speaker 4: the Middle East, and he needs to have good relations there.

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Speaker 2: Fascinating. I'm guessing that King Abdullah of Jordan is not

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Speaker 2: sleeping well at night. He met with Donald Trump here

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Speaker 2: earlier in the week. Pretty awkward meeting. I mean, he's

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Speaker 2: being asked to essentially do the impossible in housing one

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Speaker 2: thousands more of Palestinians, which he's clearly not prepared to do.

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Speaker 2: But he needs the United States to exist, doesn't he.

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Speaker 4: We have supported them lockstock and barrel for many generations

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Speaker 4: and I don't see us stopping this anytime soon. I

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Speaker 4: hope that Trump was satisfied with the King of Jordan

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Speaker 4: saying I'll take two thousand sick and injured children. Maybe

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Speaker 4: he can do humanitarian things to assuage President Trump. But

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Speaker 4: I think the pressure goes back onto Egypt now they

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Speaker 4: canceled their trip over here. I think you'll hear Trump

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Speaker 4: will comment on that at some point in particular. And

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Speaker 4: don't forget about the UAE in Saudi. It seems like

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Speaker 4: the vice presidents I'm sorry, Rubio is going to go

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Speaker 4: over there soon. Mike Waltz might go over there soon.

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Speaker 4: So there's a lot of activity in the works.

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Speaker 2: Well, you know, the long game was normalized relations between

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Speaker 2: Israel and Saudi Arabia. We talk about this a lot,

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Speaker 2: that this cease fire might help to unlock negotiations. Again,

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Speaker 2: you start bombing Iran, we're walking away from that, right.

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Speaker 4: It could be yeah, because sometimes Iran says, well, you

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Speaker 4: know what, I'm going to hit your regional allies America.

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Speaker 4: If this happens here, I don't know that they would

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Speaker 4: do it. We would be over there in some sort

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Speaker 4: of presence to try and shoot down the missiles that

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Speaker 4: we're headed towards our allies.

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Speaker 2: But it would be an.

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Speaker 4: Iffy proposition and I don't think they're ready for it.

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Speaker 2: Benjamin NETANYAHUO does not want to see a phase two,

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Speaker 2: is the conventional wisdom.

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Speaker 3: Yeah.

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Speaker 2: Will he find a way to reignite this fight in Gaza.

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Speaker 2: He's promising intense fighting if hostages are not released tomorrow.

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Speaker 4: I think that he's under real pressure from President Trump.

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Speaker 4: It's so early in the Trump term. I know Rondhmer

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Speaker 4: and people that are close to him are saying, you

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Speaker 4: just can't defy the president right now when he's saying

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Speaker 4: he wants all the hostages done and he wants that

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Speaker 4: distraction over with. That's the real new factor that Netanyahu

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Speaker 4: has to deal with. It's no longer just Biden anymore

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Speaker 4: pushing for things. It's Trump. He's going to be here

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Speaker 4: for a long time, and Trump loves to use the

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Speaker 4: leverage and he doesn't want that relationship to go in

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Speaker 4: the ditch.

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Speaker 2: How long is the window for Iran by the time

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Speaker 2: they build up their defenses once again to make that impossible.

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Speaker 4: It's hard to say. It's probably a matter of six

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Speaker 4: months or more. They need new stuff back from Russia,

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Speaker 4: which obviously has a lot of other designs on their

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Speaker 4: own equipment, but it's not going to be there forever.

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Speaker 4: I mean, has Bela and Iran are already trying to rebuild,

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Speaker 4: so they need to think about doing it sooner rather

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Speaker 4: than later, and they need to figure out how many

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Speaker 4: sites they can hit.

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Speaker 2: Someday We're going to have a lighthearted conversation. I just

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Speaker 2: know it. Michael Allen, beaking Global Strategies. Thank you for

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Speaker 2: bringing your experience and expertise to the table as always

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Speaker 2: here on Balance of Power, I'm Joe, Matthew and Washington.

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Speaker 2: Glad you're with us. We'll assemble our panel next. Rick

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Speaker 2: Davis and Gdi Shanzano on the way in here on

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Speaker 2: Balance of Power. On Bloomberg TV and Radio.

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

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

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Speaker 1: on Apple, Cocklay and Android Auto with the Blueberg Business App.

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

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

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Speaker 2: They're been fired by email? How about voicemail? This does

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Speaker 2: happen from time to time and our little business, maybe yours,

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Speaker 2: and if you work for the federal government, it's part

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Speaker 2: of your new reality. As the purge begins, thousands of

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Speaker 2: workers laid off in messages delivered through pre recorded videos

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Speaker 2: that's cute, and on group calls. Some ordered to leave

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Speaker 2: the building within thirty minutes, not even enough time to

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Speaker 2: pack up the desk. Washington Post says the purge begins

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Speaker 2: now as the Trump administration moves swiftly to fire thousands,

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Speaker 2: directing to begin with agency heads to terminate trial and

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Speaker 2: probationary staff. If you've just gotten the bill, don't get comfortable.

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Speaker 2: That'll affect as many as two hundred thousand employees. Reaction

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Speaker 2: from the American Federation of Government Employees, the biggest union

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Speaker 2: representing federal workers. Employees were given no notice, no due process,

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Speaker 2: no opportunity to defend themselves in a playton violation of

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Speaker 2: the principles of fairness and merit that are supposed to

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Speaker 2: govern federal employment. But this is just the beginning, right

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Speaker 2: Not that many took out the buyout offer, and so

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Speaker 2: they are now being fired, not just here in Washington,

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Speaker 2: but all over the country, where most of the federal

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Speaker 2: workforce lives and works. This is of course, all going

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Speaker 2: back to the DOGE and the efforts of Elon Musk

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Speaker 2: and his team digging through various agencies trying to find

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Speaker 2: the cuts. If you ask Elon Musk, and to the

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Speaker 2: extent that he spoke to the World Government's summit in Dubai,

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Speaker 2: you just lop off the whole agency with nothing left.

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Speaker 2: Here's what he said, We.

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Speaker 5: Have to really delete entire agencies, many of them. And

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Speaker 5: that's not to say there won't be an increase over

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Speaker 5: time of bureaucracy in some new administration, but it will.

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Speaker 5: It'll be from a much lower baseline. So it's a

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Speaker 5: step in the right direction.

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Speaker 6: I think.

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Speaker 5: Well, the overwatching goal here is like, it's to lay

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Speaker 5: the foundation for prosperity that will last many decades, you know,

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Speaker 5: maybe centuries.

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Speaker 2: See what the panel thinks. We're joined now by Rick Davis,

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Speaker 2: partner at Stone Core Capital, republican strategist Genie Shanzino, democratic analyst,

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Speaker 2: political science professor at Iona University. They are both our

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Speaker 2: Bloomberg Politics contributors. What do you think about this idea

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Speaker 2: genie of deleting entire agencies. Elon Musk went on to say,

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Speaker 2: quote it's kind of like a weed. If we don't

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Speaker 2: remove the roots of the weed, then it's easy for

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Speaker 2: the weed to grow back. Is he right?

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Speaker 7: That is quite an analogy to describe people in our government.

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Speaker 8: You know.

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Speaker 7: The reality is we fought a revolutionary war to fight

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Speaker 7: back against a tyrant in the form of the King

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Speaker 7: of Great Britain, and we have clung to that importantly

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Speaker 7: throughout our almost two hundred and fifty year history, that

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Speaker 7: no one person should accumulate power in that way. And

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Speaker 7: now here we have an unelected person who is responsible

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Speaker 7: to no one, is not transparent in what he is

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Speaker 7: doing up there talking about making these kinds of cuts.

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Speaker 7: That is deeply concerning, and of course that's why we're

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Speaker 7: seeing all these lawsuits come out against this kind of

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Speaker 7: exercise of power. And already public opinion shows, public opinion

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Speaker 7: polls rather show how unpopular this is. Elon Musk's approval

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Speaker 7: rating is underwater. Yes, we can trim cut, we can

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Speaker 7: be more efficient, but that's not what they are doing,

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Speaker 7: and not what they are interested in, and not a

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Speaker 7: process that they are following that is legal or that

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Speaker 7: is something that we've ever seen in the United States.

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Speaker 7: And so all of those things are deeply concerning.

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Speaker 2: Rick. You've worked with your share of bureaucrats in your

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Speaker 2: time here in Washington, in the Senate and in the

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Speaker 2: White House. Elon Musk says, I think we do need

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Speaker 2: to delete entire agencies as opposed to leave a lot

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Speaker 2: of them behind. Will he accomplish it, Yeah, I think

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Speaker 2: he will be able to do that.

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Speaker 9: Look, there's nothing in the Constitution that specifies which agencies

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Speaker 9: a government should be existing, and many of these are

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Speaker 9: relatively modern affectations of expansion of the government role. You know,

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Speaker 9: Department of Education is a classic example. Since Ronald Reagan,

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Speaker 9: it's been orthodoxy in the Republican Party to say that

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Speaker 9: we're going to get rid of the Department of Education.

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Speaker 9: Lenna McMahon is just in a process of getting confirmed.

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Speaker 9: Maybe you know, she can just stay at home and

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Speaker 9: not have to worry about coming into the office. But

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Speaker 9: you know, this is a state function, not a federal function.

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Speaker 9: There's there's a lot of argument to be made that

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Speaker 9: those closest to the education and we have a you know,

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Speaker 9: quilt of different rules and regulations that govern education as well.

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Speaker 9: It should be the last thing we want is federal

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Speaker 9: intervention in the teaching of our children. And so you know,

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Speaker 9: nobody's making that argument, but that's been the argument for

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Speaker 9: fifty years. In the Republican Party Commerce department. Howard Lutnik

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Speaker 9: put him out of a job. You know, we have

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Speaker 9: duplicate trade roles, and and you know, you scratch your

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Speaker 9: head and you wonder, what do we really need a

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Speaker 9: commerce department for? If we have if we believe in

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Speaker 9: market economies and the free trade system. So at the

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Speaker 9: end of the day, I think, you know, we have

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Speaker 9: to understand there is only two elected officials in the

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Speaker 9: executive branch. Never has been more than that. President and

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Speaker 9: Vice president. They tell their staff and a cabinet secretary

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Speaker 9: is a staff member what to do every day. And

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Speaker 9: that's all that Elon Musk is doing. He's just a

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Speaker 9: little bit better at it than most have been in

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Speaker 9: the past. And so I'm not condoning all his tactics.

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Speaker 9: But at the end of the day, much like in

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Speaker 9: his first term, Donald Trump said, hey, you know, every

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Speaker 9: Republican president says they want to make Jerusalem the you know,

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Speaker 9: the location for our embassy, and he's the only one

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Speaker 9: who's done it. So and look at that's worked out

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Speaker 9: just fine, So at the end of the day, I

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Speaker 9: think we got to give them a little bit of

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Speaker 9: space here. And and Genie's right, you know, there is

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Speaker 9: a recourse go to the courts and and and let

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Speaker 9: them decide, you know, what is legal within our system.

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Speaker 2: How about that, Genie, your thoughts on the way Rick

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Speaker 2: just framed that having just heard Elon Musk say that

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Speaker 2: we're talking about laying the foundation for prosperity that may

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Speaker 2: last many decades, maybe centuries. So is the temporary pain

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Speaker 2: worth it?

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Speaker 7: You know? I don't think anybody said that the bureaucracy

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Speaker 7: is in the constitution. But when we reference the Constitution,

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Speaker 7: it is the fact that we live in a democratic

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Speaker 7: state and that the president not directly elected but indirectly elected,

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Speaker 7: and you do have members of the cabinet. They are

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Speaker 7: responsible and responsive to the Senate. Elon Musk is not

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Speaker 7: in that trect. Sure, presidents appoint all kinds of people,

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Speaker 7: including family members, but they do not wield this kind

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Speaker 7: of power, nor are they on the dole for the

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Speaker 7: federal government. Let's not forget Elon Musk and his companies

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Speaker 7: get huge amounts of money from the federal government and

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Speaker 7: we're not seeing any cuts there. So there is absolutely

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Speaker 7: a case to be made that what is being done

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Speaker 7: here is improper.

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Speaker 6: And we will see.

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Speaker 7: The courts have upheld certain things like the retirements the

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Speaker 7: buyouts at least at this point, but most of the

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Speaker 7: other things that this unelected efficient person has talked about,

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Speaker 7: they have not upheld at least so far, and they

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Speaker 7: have said, we have to take time to look at it.

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Speaker 6: And let's not forget.

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Speaker 7: This is all being done against a backdrop of a

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Speaker 7: Republican Congress that is talking about four point five billion

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Speaker 7: dollars trillion rather dollars in cuts so that they can

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Speaker 7: extend tax cuts for the wealthy. So this is the

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Speaker 7: environment in which this is being had, and so this

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Speaker 7: is the impropriety that people are feeling, and this is

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Speaker 7: the frustration that they are feeling, and people are starting

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Speaker 7: to voice concern about that. Yes, you can cut the

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Speaker 7: federal bureaucracy, but don't forget when they tried to do it,

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Speaker 7: what did George Bush end up coming in to do

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Speaker 7: in two thousand to take back education to the federal

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Speaker 7: level because it was that unpopular with the American public.

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Speaker 7: And we are still the sovereign people in the United States,

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Speaker 7: not people who are appointed by the president and beholden

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Speaker 7: to no one, especially not the wealthiest person in the world.

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Speaker 7: So there is so much wrong with how that was

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Speaker 7: just laid out.

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Speaker 2: Well, I'm glad you mentioned the budget resolution that was

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Speaker 2: passed out of committee last night. This followed twelve hours

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Speaker 2: of debate, the defeat of dozens of Democratic amendments. As

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Speaker 2: I said, we had a lot of noise in Washington yesterday,

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Speaker 2: a lot of talk about Donald Trump, no fewer than

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Speaker 2: four encounters in the last forty eight hours with the media,

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Speaker 2: a lot of threatening of tariffs. Nothing was actually implemented.

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Speaker 2: We did set the timeline on some to be the

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Speaker 2: real news yesterday, Rick. Was this a budget resolution approved

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Speaker 2: by the House Budget Committee, as Genie mentioned, four and

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Speaker 2: a half trillion dollars in tax cuts, at least one

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Speaker 2: and a half trillion in spending cuts. Is this something

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Speaker 2: the Freedom Caucus can endorse that could actually be passed

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Speaker 2: on the floor.

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Speaker 9: Well, I think you know, we heard from the chairman

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Speaker 9: of the Freedom Caucus that he got a deal cut.

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Speaker 9: His deal was that they would the Freedom Caucus would

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Speaker 9: be for this bill as long as you know, they

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Speaker 9: would be able to explore another five hundred billion in

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Speaker 9: cuts to get it to two trillion, you know, by

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Speaker 9: the time the tax cuts are approved. So so they

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Speaker 9: got bought in, and I see no opposition to this

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Speaker 9: bill at this stage, so you know, conceptually they could

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Speaker 9: win by one vote on the floor of the House

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Speaker 9: of Representatives and have one big, beautiful bill. So that'll

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Speaker 9: put actually a little pressure on the Senate now to

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Speaker 9: finalize their budget resolution that does not include the tax cuts.

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Speaker 9: What I'm hoping is that we get a step back,

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Speaker 9: and has been discussed on this program today, not just

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Speaker 9: look at taxes, but tax reform, because there's a lot

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Speaker 9: in the tax code that can save Americans a lot

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Speaker 9: of money that generates revenue without stifling our growth, and

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Speaker 9: be a better tax code gone in the days of

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Speaker 9: the debates about flat tax and things like that. But

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Speaker 9: the idea that we are going to spend this amount

437
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Speaker 9: of political capital in re upping these tax cuts and

438
00:23:16,000 --> 00:23:19,720
Speaker 9: not actually revised the tax code just seems to be

439
00:23:19,720 --> 00:23:20,879
Speaker 9: a missed opportunity to me.

440
00:23:22,600 --> 00:23:26,840
Speaker 2: Gene the democrat on that panel, ranking Democrat Brendan Boyle

441
00:23:27,040 --> 00:23:33,720
Speaker 2: Pennsylvania called the proposal cruel, heartless, and toxic, harmful to

442
00:23:33,720 --> 00:23:37,280
Speaker 2: low income families by slashing medicaid. We've only got about

443
00:23:37,280 --> 00:23:38,320
Speaker 2: thirty seconds, is he right?

444
00:23:39,680 --> 00:23:42,280
Speaker 7: Well, it's not only Brendan Boyle, He's absolutely right. It's

445
00:23:42,320 --> 00:23:46,560
Speaker 7: also Steve Bannon, who warned everybody last night that a

446
00:23:46,600 --> 00:23:49,960
Speaker 7: lot of MAGA supporters in Red States really, really like

447
00:23:50,080 --> 00:23:53,320
Speaker 7: medicaid and are on it, and these cuts are draconian.

448
00:23:53,680 --> 00:23:57,240
Speaker 7: The President has said privately he agrees this is the

449
00:23:57,359 --> 00:24:00,640
Speaker 7: challenge they have with eight hundred billion cuts Medicaid.

450
00:24:02,040 --> 00:24:05,199
Speaker 2: Great conversation with our signature panel, GENI thank you and

451
00:24:05,280 --> 00:24:08,840
Speaker 2: Rick as well, Genie Shanzano and Rick Davis, Bloomberg Politics contributors.

452
00:24:09,040 --> 00:24:12,400
Speaker 2: I'm Joe Matthew in Washington on the fastest show in politics.

453
00:24:12,440 --> 00:24:14,920
Speaker 2: We're going to turn our attention back to Ukraine talks

454
00:24:15,000 --> 00:24:17,560
Speaker 2: under way today in Munich. Blenda Herring from the Atlantic

455
00:24:17,600 --> 00:24:19,440
Speaker 2: councils up next on Bloomberg.

456
00:24:22,960 --> 00:24:26,440
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

457
00:24:26,480 --> 00:24:29,480
Speaker 1: us live weekdays at noon and five pm Eastern on

458
00:24:29,640 --> 00:24:32,880
Speaker 1: Alma Coarckley and Android Auto with the Bloomberg Business App.

459
00:24:33,040 --> 00:24:36,280
Speaker 1: Listen on demand wherever you get your podcasts, or watch

460
00:24:36,400 --> 00:24:39,159
Speaker 1: us live on YouTube.

461
00:24:39,359 --> 00:24:43,040
Speaker 2: President Trump is set to sign more executive actions. There

462
00:24:43,040 --> 00:24:45,480
Speaker 2: has been some reporting that it will be directed at

463
00:24:45,520 --> 00:24:48,560
Speaker 2: the Department of Education, but we have not seen the

464
00:24:48,560 --> 00:24:50,639
Speaker 2: president yet. He's going to be soon making tracks for

465
00:24:50,760 --> 00:24:53,480
Speaker 2: mar Alago, where he'll be spending the weekend.

466
00:24:53,520 --> 00:24:53,760
Speaker 3: Here.

467
00:24:53,880 --> 00:24:57,600
Speaker 2: Jd Vance, the Vice President, carrying the message of the

468
00:24:57,640 --> 00:25:02,560
Speaker 2: administration today at the Munich Secure Conference, where Ukraine is

469
00:25:02,840 --> 00:25:06,399
Speaker 2: story and issue number one. In fact, it's not just

470
00:25:06,520 --> 00:25:08,679
Speaker 2: jd Vance he was meeting a short time ago. They

471
00:25:08,720 --> 00:25:12,119
Speaker 2: could still be underway with Voladimir Zelenski, the President of

472
00:25:12,240 --> 00:25:15,880
Speaker 2: Ukraine there as well. Following a speech by jd Vance

473
00:25:15,960 --> 00:25:19,439
Speaker 2: that really raised a lot of eyebrows directed towards Europe,

474
00:25:19,440 --> 00:25:24,479
Speaker 2: but also in an interview with Politico suggesting the troops

475
00:25:24,480 --> 00:25:30,320
Speaker 2: are very much on the table, suggesting as well that

476
00:25:30,440 --> 00:25:34,480
Speaker 2: sanctions against Russia may also be employed if no deal

477
00:25:34,520 --> 00:25:37,679
Speaker 2: can be reached. The gears are starting to turn. We

478
00:25:37,720 --> 00:25:40,320
Speaker 2: did hear from Vladimirer Zelensky in Munich earlier today.

479
00:25:40,359 --> 00:25:44,840
Speaker 3: Here he is I will meet with Russians with only

480
00:25:44,920 --> 00:25:49,439
Speaker 3: one Russian guy, with Putin only after we will have

481
00:25:49,560 --> 00:25:53,080
Speaker 3: common plan with Trump Europe and we will sit it

482
00:25:53,119 --> 00:25:56,280
Speaker 3: with Putin and stop the war. Only in this case

483
00:25:56,480 --> 00:26:01,280
Speaker 3: I'm ready to meet, not in other compromus platorms.

484
00:26:02,960 --> 00:26:05,840
Speaker 2: That's where we start our conversation with the true expert.

485
00:26:05,880 --> 00:26:07,960
Speaker 2: We wanted to reach out to Melinda Harring because she's

486
00:26:07,960 --> 00:26:10,840
Speaker 2: been with us every step of the way since Russia's

487
00:26:10,840 --> 00:26:14,640
Speaker 2: invasion of Ukraine, and as we seek peace, we want

488
00:26:14,680 --> 00:26:16,800
Speaker 2: to talk with the senior fellow at the Atlantic count

489
00:26:17,200 --> 00:26:21,479
Speaker 2: Council's Eurasia Center. She's senior advisor rasm for Ukraine. Melinda,

490
00:26:21,520 --> 00:26:24,919
Speaker 2: great to have you back here on Bloomberg TV in radio.

491
00:26:25,000 --> 00:26:29,800
Speaker 2: How seriously are you taking the opening salvo in these negotiations?

492
00:26:29,840 --> 00:26:31,760
Speaker 2: It was an interview with the Wall Street Journal in fact,

493
00:26:31,760 --> 00:26:34,400
Speaker 2: where Jade Vance said, everything is on the table. How

494
00:26:34,480 --> 00:26:38,359
Speaker 2: is the Trump administration posturing itself ahead of talks?

495
00:26:39,600 --> 00:26:41,600
Speaker 6: Hey, Joe, thanks for having me back. So it's been

496
00:26:41,640 --> 00:26:45,199
Speaker 6: a big week for the war in Ukraine and we

497
00:26:45,240 --> 00:26:49,160
Speaker 6: saw the actual opening salvo was Donald Trump's tweet this week,

498
00:26:49,760 --> 00:26:52,240
Speaker 6: and he said a lot of things, but it opened

499
00:26:52,480 --> 00:26:55,040
Speaker 6: the question of territory, It opened the question of NATO,

500
00:26:55,400 --> 00:26:58,240
Speaker 6: It opened the question of long term security guarantees, and

501
00:26:58,280 --> 00:27:01,320
Speaker 6: also the question of American boots on the ground. And

502
00:27:01,400 --> 00:27:04,840
Speaker 6: we've seen the administration pull back and where they are

503
00:27:04,840 --> 00:27:08,600
Speaker 6: today and the way that it looks could obviously change tomorrow.

504
00:27:08,760 --> 00:27:12,160
Speaker 6: But the administration is currently saying that the nineteen ninety

505
00:27:12,200 --> 00:27:14,840
Speaker 6: one borders, so a much larger Ukraine than what we

506
00:27:14,880 --> 00:27:19,000
Speaker 6: see right now is possible, NATO membership is possible. They

507
00:27:19,160 --> 00:27:22,080
Speaker 6: ruled out American boots on the ground, so that was

508
00:27:22,160 --> 00:27:22,760
Speaker 6: one no go.

509
00:27:23,200 --> 00:27:23,640
Speaker 3: But in the.

510
00:27:23,600 --> 00:27:26,800
Speaker 6: Original statement, it doesn't mean that American troops couldn't be

511
00:27:27,000 --> 00:27:31,159
Speaker 6: in Poland or in nearby NATO territory. But really the

512
00:27:31,240 --> 00:27:34,800
Speaker 6: issue is about long term security guarantees, and jd Vance

513
00:27:34,840 --> 00:27:37,800
Speaker 6: said today that we're going to put a plan together

514
00:27:37,840 --> 00:27:43,159
Speaker 6: that gives Ukraine real security guarantees and we're all waiting

515
00:27:43,400 --> 00:27:45,280
Speaker 6: for what those details are. Joe.

516
00:27:46,359 --> 00:27:50,480
Speaker 2: This follows what we heard from the Defense Secretary yesterday, Melinda,

517
00:27:50,520 --> 00:27:52,960
Speaker 2: and I'm sure you were listening when Pete Hegseth ruled

518
00:27:52,960 --> 00:27:56,680
Speaker 2: out US troops for Ukraine, suggested that a return to

519
00:27:56,800 --> 00:28:01,399
Speaker 2: Ukraine's pre twenty fourteen borders was an un realistic objective

520
00:28:01,960 --> 00:28:04,639
Speaker 2: and suggested that the country would never be able to

521
00:28:04,760 --> 00:28:07,439
Speaker 2: join NATO, which do you believe?

522
00:28:08,840 --> 00:28:11,639
Speaker 6: So I believe today's version. So you have to remember

523
00:28:11,680 --> 00:28:15,120
Speaker 6: that the Defense Secretary has waffled, his positions have been

524
00:28:15,240 --> 00:28:18,239
Speaker 6: all over the place. He's not the decider, as George W.

525
00:28:18,280 --> 00:28:20,199
Speaker 6: Bush would like to say, So I'm going to go

526
00:28:20,240 --> 00:28:22,879
Speaker 6: with today's version, and if I have to go with

527
00:28:22,960 --> 00:28:25,440
Speaker 6: yesterday'st version, Joe, I want to parse it a little bit.

528
00:28:25,680 --> 00:28:28,280
Speaker 6: The headlines were not as bad as they were made

529
00:28:28,280 --> 00:28:32,200
Speaker 6: out to be. So even if it even if Pete

530
00:28:32,240 --> 00:28:36,600
Speaker 6: Heegsath's version wins, the US is not recognizing the twenty

531
00:28:36,600 --> 00:28:40,720
Speaker 6: percent of Ukraine that Russia currently occupies as Russian. So

532
00:28:40,760 --> 00:28:44,760
Speaker 6: that's one they're not Washington is not saying NATO membership

533
00:28:44,800 --> 00:28:47,480
Speaker 6: is never going to happen. They're saying it won't happen now.

534
00:28:47,840 --> 00:28:50,720
Speaker 6: And there's a possibility of putting US troops in NATO

535
00:28:50,840 --> 00:28:54,040
Speaker 6: territory to back up European troops. So even if the

536
00:28:54,080 --> 00:28:57,160
Speaker 6: worst case scenario, what heg Seth said is true that

537
00:28:57,400 --> 00:28:59,800
Speaker 6: if that turns out to be policy, it's not terrible.

538
00:28:59,840 --> 00:29:02,200
Speaker 6: It's not great, but it's not terrible and we can

539
00:29:02,200 --> 00:29:02,680
Speaker 6: work with it.

540
00:29:02,760 --> 00:29:05,600
Speaker 2: Okay, Well, that's good perspective when it comes to pre

541
00:29:05,680 --> 00:29:09,160
Speaker 2: twenty fourteen borders, though, Melinda, how realistic is it? In

542
00:29:09,200 --> 00:29:12,080
Speaker 2: any conversation to have Crimea return to Ukraine.

543
00:29:13,280 --> 00:29:16,720
Speaker 6: So joe Crimea is the tricky question. You'll remember that

544
00:29:16,760 --> 00:29:19,800
Speaker 6: the Russians illegally annexed Crimea. This is the boot of

545
00:29:19,880 --> 00:29:23,680
Speaker 6: Ukraine the peninsula in twenty fourteen in a sham referendum,

546
00:29:24,000 --> 00:29:27,960
Speaker 6: and the status of Crimea is still disputed. The Russians

547
00:29:28,160 --> 00:29:30,920
Speaker 6: occupy it and they have a military operation there, but

548
00:29:31,040 --> 00:29:34,840
Speaker 6: Ukraine says it's ours. And the best historical example that

549
00:29:34,920 --> 00:29:37,960
Speaker 6: the international community looks to are the Baltic States. So

550
00:29:38,120 --> 00:29:41,200
Speaker 6: even when the Soviets occupy the Baltic States, they refuse

551
00:29:41,280 --> 00:29:44,440
Speaker 6: to recognize them as Soviet and the international community has

552
00:29:44,480 --> 00:29:47,600
Speaker 6: done the same thing for Crimea. So in these negotiations,

553
00:29:47,960 --> 00:29:51,320
Speaker 6: I don't expect to see Crimea formally change hands. I

554
00:29:51,320 --> 00:29:53,080
Speaker 6: don't think that Ukraine is going to be able to

555
00:29:53,120 --> 00:29:56,320
Speaker 6: get it back legally right now. But the international community

556
00:29:56,400 --> 00:29:59,720
Speaker 6: and Ukraine will continue to recognize that it was illegally

557
00:29:59,720 --> 00:30:03,120
Speaker 6: taken and they have the hope and aspiration that Crimea

558
00:30:03,200 --> 00:30:04,800
Speaker 6: will be returned to Ukraine someday.

559
00:30:06,000 --> 00:30:10,640
Speaker 2: Yeah. We talked a little earlier with Michael Allen this hour, Melinda,

560
00:30:10,680 --> 00:30:15,680
Speaker 2: and he was very skeptical of Vladimir Putin's objectives here.

561
00:30:15,760 --> 00:30:19,160
Speaker 2: Some see a Russian president seeking an off ramp. Michael

562
00:30:19,160 --> 00:30:21,680
Speaker 2: Allen said he's only looking for a short term ceasefire

563
00:30:21,760 --> 00:30:23,920
Speaker 2: so he can regroup in Ukraine. What do you think.

564
00:30:24,920 --> 00:30:26,760
Speaker 6: I think that's right. I think Michael Allen has put

565
00:30:26,760 --> 00:30:29,280
Speaker 6: his finger on it. I don't see a lot of

566
00:30:29,640 --> 00:30:33,200
Speaker 6: momentum on Putin's part or desire on his part to

567
00:30:33,800 --> 00:30:37,480
Speaker 6: seek a ceasefire. He thinks he's winning. He's still taking territory.

568
00:30:37,680 --> 00:30:41,320
Speaker 6: It's slow going, but he has momentum, particularly in the

569
00:30:41,400 --> 00:30:45,240
Speaker 6: Dawn Boss, and there's no reason for him to jump ship.

570
00:30:45,440 --> 00:30:48,959
Speaker 6: He wants to destroy Ukraine, Joe. That's his goal, and

571
00:30:49,000 --> 00:30:52,680
Speaker 6: he's doing it slowly but surely. And he's betting that

572
00:30:52,840 --> 00:30:56,480
Speaker 6: he cares more about Ukraine than the United States or

573
00:30:56,520 --> 00:30:59,440
Speaker 6: Europe does. And that's still That was the decision and

574
00:30:59,480 --> 00:31:02,320
Speaker 6: the calculate he made in twenty two and that's his calculus.

575
00:31:02,360 --> 00:31:02,640
Speaker 9: Now.

576
00:31:03,680 --> 00:31:07,480
Speaker 2: Well, surely Donald Trump knows this right. How can you

577
00:31:07,640 --> 00:31:11,200
Speaker 2: negotiate with an actor who does not have a motivation

578
00:31:11,400 --> 00:31:12,080
Speaker 2: to seek peace?

579
00:31:13,800 --> 00:31:17,360
Speaker 6: So that's a really good question. It's unclear what Donald

580
00:31:17,400 --> 00:31:21,120
Speaker 6: Trump thinks about Putin and his motivations. I think are

581
00:31:21,160 --> 00:31:24,880
Speaker 6: opaque to be generous. So I think Donald Trump wants

582
00:31:24,960 --> 00:31:28,600
Speaker 6: to be a peacemaker, which is a great impulse. You know,

583
00:31:28,760 --> 00:31:31,719
Speaker 6: the New Testament says, blessed are the peacemakers, for they

584
00:31:31,720 --> 00:31:34,280
Speaker 6: should be children of God. We all want to be peacemakers.

585
00:31:34,640 --> 00:31:37,880
Speaker 6: But the conflict in Russia and Ukraine, the war in

586
00:31:38,000 --> 00:31:41,160
Speaker 6: Russia and Ukraine is very difficult, and I think Donald

587
00:31:41,200 --> 00:31:45,080
Speaker 6: Trump is learning the hard way that the devil is

588
00:31:45,080 --> 00:31:47,400
Speaker 6: in the details, and it's going to be difficult for

589
00:31:47,520 --> 00:31:52,560
Speaker 6: him to broker a real, lasting and just peace in Ukraine.

590
00:31:52,720 --> 00:31:55,920
Speaker 6: So I think we're going to have to wait and see.

591
00:31:56,280 --> 00:32:01,160
Speaker 2: The headlines from Ukraine today are not terribly incouraging. As

592
00:32:01,440 --> 00:32:06,040
Speaker 2: Zelenski continues his trip to Munich, Ukraine says a Russian

593
00:32:06,120 --> 00:32:11,400
Speaker 2: drone hit Chernobyl. The nuclear plan actually targeted Chernobyl on purpose, Melinda,

594
00:32:11,440 --> 00:32:17,400
Speaker 2: causing significant damage to the containment shelter that surrounds the reactor.

595
00:32:18,120 --> 00:32:22,000
Speaker 2: Russia says Ukraine staged the attack, which is straight out

596
00:32:22,000 --> 00:32:25,120
Speaker 2: of the playbook that we've seen over the past couple

597
00:32:25,120 --> 00:32:27,959
Speaker 2: of years. Are we about to see a fit of

598
00:32:28,200 --> 00:32:31,640
Speaker 2: additional violence in Ukraine ahead of any kind of a deal?

599
00:32:33,960 --> 00:32:36,880
Speaker 6: Joe, we don't know exactly what we're gonna see, but

600
00:32:36,920 --> 00:32:40,560
Speaker 6: the drone attack on Chernobyl is part of a larger

601
00:32:40,600 --> 00:32:43,000
Speaker 6: pattern every day. I just got back from Ukraine. I

602
00:32:43,040 --> 00:32:45,800
Speaker 6: was in Denipro, in Harky ven Kiev for ten days,

603
00:32:46,120 --> 00:32:48,640
Speaker 6: and every day is uncertain. You don't know if you're

604
00:32:48,680 --> 00:32:50,480
Speaker 6: going to wake up the next day. You don't know

605
00:32:50,520 --> 00:32:52,800
Speaker 6: if you'll if you'll hear drones in the morning. You

606
00:32:52,840 --> 00:32:54,840
Speaker 6: don't know if your apartment building will be hit with

607
00:32:54,880 --> 00:32:58,000
Speaker 6: a ballistic missile. You don't know if your train will

608
00:32:58,040 --> 00:33:00,640
Speaker 6: be struck. This is the uncertainty that people live with

609
00:33:00,760 --> 00:33:04,520
Speaker 6: every day. But I expect Putin to continue what he's doing.

610
00:33:04,840 --> 00:33:09,440
Speaker 6: He's trying to destroy Ukraine as a sovereign, independent country. Joe,

611
00:33:09,440 --> 00:33:11,959
Speaker 6: I went out to one of the old villages, one

612
00:33:11,960 --> 00:33:15,760
Speaker 6: of the small villages in Harkiv Oblast, near Izoom, and

613
00:33:15,800 --> 00:33:18,480
Speaker 6: this is a city that you'll remember that the Russians occupied.

614
00:33:18,680 --> 00:33:21,200
Speaker 6: Went out to a village and in the gymnasium there

615
00:33:21,200 --> 00:33:23,240
Speaker 6: were books tied up, and I said, what are these books?

616
00:33:23,480 --> 00:33:25,560
Speaker 6: And there were books that the Russians had taken in

617
00:33:25,600 --> 00:33:27,960
Speaker 6: this Ukrainian school. They tied them up in rope and

618
00:33:27,960 --> 00:33:30,320
Speaker 6: they were planning to burn the books because they want

619
00:33:30,360 --> 00:33:33,400
Speaker 6: to destroy Ukraine's educational system. The books were in Russian

620
00:33:33,680 --> 00:33:37,800
Speaker 6: and Ukrainian. That's Russia's vision for Ukraine. They want to

621
00:33:37,800 --> 00:33:40,320
Speaker 6: destroy the educational system and they don't want the country

622
00:33:40,360 --> 00:33:40,960
Speaker 6: to exist.

623
00:33:42,120 --> 00:33:42,479
Speaker 3: Wow.

624
00:33:43,120 --> 00:33:45,480
Speaker 2: These are the first hand stories that Melinda brings us

625
00:33:46,080 --> 00:33:48,680
Speaker 2: that you won't hear anywhere else. I want to bring

626
00:33:48,720 --> 00:33:51,600
Speaker 2: you back to that speech from jd Vance Melinda, the

627
00:33:51,680 --> 00:33:55,600
Speaker 2: Vice President, speaking earlier today in Munich, with a focus

628
00:33:55,680 --> 00:33:58,240
Speaker 2: directly on our European allies. Here's what he said.

629
00:33:58,800 --> 00:34:01,600
Speaker 10: The threat that I worry the most about visa e

630
00:34:01,600 --> 00:34:05,080
Speaker 10: Europe is not Russia, it's not China, it's not any

631
00:34:05,120 --> 00:34:08,719
Speaker 10: other external actor. And what I worry about is the

632
00:34:08,760 --> 00:34:13,880
Speaker 10: threat from within, the retreat of Europe from some of

633
00:34:13,920 --> 00:34:17,400
Speaker 10: its most fundamental values, values shared with the United States

634
00:34:17,440 --> 00:34:18,000
Speaker 10: of America.

635
00:34:19,480 --> 00:34:21,520
Speaker 2: Not of a lot of applause in the room, there,

636
00:34:21,920 --> 00:34:24,440
Speaker 2: not a shocker, Melinda. I'm not sure what you thought

637
00:34:24,920 --> 00:34:29,480
Speaker 2: he was referring to there. But is he strengthening America's hands?

638
00:34:29,520 --> 00:34:33,720
Speaker 2: Is he strengthening Ukraine's hand by turning criticism on Europe

639
00:34:33,800 --> 00:34:34,200
Speaker 2: right now?

640
00:34:35,680 --> 00:34:38,080
Speaker 6: So, Joe, I want to take the most generous assessment

641
00:34:38,120 --> 00:34:41,160
Speaker 6: of JD Vance's speech, and I think the most generous

642
00:34:41,160 --> 00:34:43,560
Speaker 6: assessment I can give you is that he is trying

643
00:34:43,560 --> 00:34:46,759
Speaker 6: to provoke the Europeans into action, and he's right to

644
00:34:46,800 --> 00:34:49,640
Speaker 6: do it. The Europeans have been lazy and they have

645
00:34:49,880 --> 00:34:52,560
Speaker 6: talked a big game. And here I'm pointing my finger

646
00:34:52,880 --> 00:34:55,440
Speaker 6: at Germany in France in particular. You know, there's a

647
00:34:55,480 --> 00:34:58,560
Speaker 6: lot of good countries like Poland and the Lithuanians and

648
00:34:58,680 --> 00:35:01,320
Speaker 6: also the Nordic countries that have done a huge amount

649
00:35:01,320 --> 00:35:05,040
Speaker 6: for Ukraine, but Germany and France in particular, they like

650
00:35:05,080 --> 00:35:07,560
Speaker 6: to talk and they don't do. So I think he's

651
00:35:07,680 --> 00:35:11,360
Speaker 6: right to point out that Ukraine is in Europe's backyard

652
00:35:11,680 --> 00:35:14,480
Speaker 6: and it's time to actually do to make good on

653
00:35:14,560 --> 00:35:18,640
Speaker 6: all the promises and and secure Europe.

654
00:35:19,840 --> 00:35:24,200
Speaker 2: What promises are we talking beyond paying dues to NATO

655
00:35:24,280 --> 00:35:26,960
Speaker 2: and beyond investing in each country's own military? Is that

656
00:35:27,000 --> 00:35:28,400
Speaker 2: what we're talking about? Is there more than that?

657
00:35:29,520 --> 00:35:31,160
Speaker 6: No, there's more than that. So if you go to

658
00:35:31,160 --> 00:35:34,080
Speaker 6: the Keel Institute's website, it's a great think tank in Germany.

659
00:35:34,239 --> 00:35:37,360
Speaker 6: It looks at the commitments that country donor governments have

660
00:35:37,440 --> 00:35:40,160
Speaker 6: made and then the actual amount of military kit that

661
00:35:40,160 --> 00:35:42,440
Speaker 6: they've delivered, and in many of these cases there's a

662
00:35:42,520 --> 00:35:46,239
Speaker 6: huge gap between the promise and the delivery. So I'm

663
00:35:46,280 --> 00:35:49,719
Speaker 6: saying Germany and France in particular need to make good

664
00:35:49,840 --> 00:35:52,160
Speaker 6: on the promises that they've made and deliver.

665
00:35:53,360 --> 00:35:57,800
Speaker 2: We've rarely heard your commentary hit Europe so hard, Melinda.

666
00:35:57,880 --> 00:36:00,640
Speaker 2: What's the big picture here? If talks are starting now,

667
00:36:00,719 --> 00:36:03,120
Speaker 2: Donald Trump Vladimir Putin apparently are going to get together.

668
00:36:03,480 --> 00:36:06,560
Speaker 2: At one point floated to get together in Saudi Arabia.

669
00:36:06,560 --> 00:36:09,640
Speaker 2: Apparently that's not going to happen. What's the window for negotiations?

670
00:36:09,680 --> 00:36:11,600
Speaker 2: When does this war end?

671
00:36:12,239 --> 00:36:16,600
Speaker 6: So this war ends when Vladimir Putin decides that it ends.

672
00:36:16,680 --> 00:36:20,799
Speaker 6: That's the hard truth. If Donald Trump pulls out and

673
00:36:20,840 --> 00:36:24,440
Speaker 6: sends no more military assistance, Ukraine will keep fighting and

674
00:36:24,480 --> 00:36:27,400
Speaker 6: the Ukrainians have six to eight months more where they

675
00:36:27,400 --> 00:36:30,359
Speaker 6: can continue at about the same pace. So even if

676
00:36:30,400 --> 00:36:32,960
Speaker 6: the United States says no more, it's over, that doesn't

677
00:36:32,960 --> 00:36:36,080
Speaker 6: mean it's over. And you hear you heard Vladimir Zelensky

678
00:36:36,160 --> 00:36:40,760
Speaker 6: saying any negotiations have to involve Ukraine. So don't try

679
00:36:40,880 --> 00:36:44,640
Speaker 6: this y Alta like format where you exclude Ukraine. We're

680
00:36:44,640 --> 00:36:47,160
Speaker 6: not going to agree to it. So I think we

681
00:36:47,200 --> 00:36:50,560
Speaker 6: are getting closer and closer. We see Trump wants, he

682
00:36:50,640 --> 00:36:53,279
Speaker 6: wants peace, he wants the rumor is Joe that he

683
00:36:53,280 --> 00:36:56,080
Speaker 6: wants the Nobel Prize and he thinks that bringing peace

684
00:36:56,120 --> 00:36:58,799
Speaker 6: to Ukraine might give him that. And let's hope, you know,

685
00:36:58,840 --> 00:37:01,719
Speaker 6: if he can do it sutely. But it's really a

686
00:37:01,840 --> 00:37:05,320
Speaker 6: question of when Putin has decided that the costs exceed

687
00:37:05,360 --> 00:37:10,200
Speaker 6: the benefits, and they don't at this point. For Moscow, does.

688
00:37:10,000 --> 00:37:11,920
Speaker 2: A peace plan need to be permanent to win the

689
00:37:11,920 --> 00:37:13,720
Speaker 2: Nobel Prize?

690
00:37:14,200 --> 00:37:17,440
Speaker 6: You'd have to ask the committee that one. I would

691
00:37:17,560 --> 00:37:20,400
Speaker 6: urge them though, to only issue a peace plan that

692
00:37:20,520 --> 00:37:23,320
Speaker 6: involves a just and lasting piece. And that's going to

693
00:37:23,520 --> 00:37:27,840
Speaker 6: mean some kind of security arrangement with permanent presence of

694
00:37:27,920 --> 00:37:32,040
Speaker 6: troops in Ukraine, and it means Article five guarantees. And

695
00:37:32,120 --> 00:37:35,200
Speaker 6: unfortunately NATO membership is not on the cards right now.

696
00:37:35,600 --> 00:37:38,520
Speaker 6: As Pete haig Seth mentioned yesterday.

697
00:37:39,239 --> 00:37:41,560
Speaker 2: Wellind I'm really glad you could join us today. Welnda Herring,

698
00:37:42,000 --> 00:37:45,840
Speaker 2: Senior Fellow for the Atlantic Council's Eurasia Center, Senior Advisor

699
00:37:45,960 --> 00:37:49,680
Speaker 2: RASM for Ukraine and just back from Kiev, as Melinda mentioned,

700
00:37:49,719 --> 00:37:53,160
Speaker 2: thank you for the insights. As always, Melinda, fascinating conversation

701
00:37:53,239 --> 00:37:56,240
Speaker 2: as we try to track the ball here on negotiations

702
00:37:56,360 --> 00:37:59,080
Speaker 2: surrounding Europe. We've got another day in Munich tomorrow as

703
00:37:59,120 --> 00:38:00,120
Speaker 2: talks will continue.

704
00:38:02,280 --> 00:38:05,759
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

705
00:38:05,840 --> 00:38:08,880
Speaker 1: us live weekdays at noon and five pm Eastern on

706
00:38:09,000 --> 00:38:12,239
Speaker 1: Apple Cockley and Android Auto with the Bloomberg Business app.

707
00:38:12,280 --> 00:38:15,319
Speaker 1: You can also listen live on Amazon Alexa from our

708
00:38:15,360 --> 00:38:20,520
Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty.

709
00:38:21,320 --> 00:38:22,680
Speaker 2: Yeah, you made it to the end of the week,

710
00:38:22,719 --> 00:38:27,279
Speaker 2: and boy, I haven't even mentioned Valentine's Day. Happy Valentine's Day.

711
00:38:27,280 --> 00:38:30,280
Speaker 2: It's not just the Friday edition, it's the Cupid edition.

712
00:38:30,560 --> 00:38:32,480
Speaker 2: And the White House knows this too. If you check

713
00:38:32,480 --> 00:38:36,080
Speaker 2: out the Twitter page at the White House, Producer James

714
00:38:36,120 --> 00:38:39,480
Speaker 2: pointed me to this. Roses are red, violets are blue.

715
00:38:39,520 --> 00:38:45,320
Speaker 2: It says, come here illegally and we'll deport you. Donald Trump,

716
00:38:45,360 --> 00:38:48,759
Speaker 2: the last of the Romantics. It's a big day at

717
00:38:48,800 --> 00:38:53,800
Speaker 2: sixteen hundred Pennsylvania Avenue, so we have to talk about

718
00:38:54,120 --> 00:38:57,560
Speaker 2: some hard decisions. An important thing happened last night. By

719
00:38:57,560 --> 00:38:59,239
Speaker 2: the way, we talk about all the noise that comes

720
00:38:59,239 --> 00:39:01,200
Speaker 2: out of the West Wing every day, and there are

721
00:39:01,239 --> 00:39:03,560
Speaker 2: going to be more executive orders, we're told being signed

722
00:39:03,600 --> 00:39:07,880
Speaker 2: around one pm Eastern time. Sometimes you forget what to

723
00:39:07,920 --> 00:39:09,640
Speaker 2: pay attention to, and I got into that a little

724
00:39:09,680 --> 00:39:11,560
Speaker 2: bit yesterday. We're going to be the flashlight in the

725
00:39:11,640 --> 00:39:14,840
Speaker 2: dark for you where there's actual news, because well, Donald

726
00:39:14,840 --> 00:39:17,640
Speaker 2: Trump was threatening reciprocal tariffs all day long, none of

727
00:39:17,640 --> 00:39:20,560
Speaker 2: them implemented. Maybe they will be someday, maybe they won't.

728
00:39:21,320 --> 00:39:25,400
Speaker 2: Something actually happened last night. A budget got out of

729
00:39:25,480 --> 00:39:28,680
Speaker 2: committee in the House. This is a big deal. If

730
00:39:28,680 --> 00:39:30,719
Speaker 2: you listen to this broadcast. We had Ralph Norman on

731
00:39:30,800 --> 00:39:33,560
Speaker 2: yesterday talking about some of the tough decisions that they

732
00:39:33,560 --> 00:39:35,880
Speaker 2: need to make here when it comes to spending cuts

733
00:39:35,880 --> 00:39:39,200
Speaker 2: to make the freedom COCKUS happy, tax cuts to make

734
00:39:39,360 --> 00:39:42,839
Speaker 2: Donald Trump happy. There are a lot of moving parts here,

735
00:39:43,200 --> 00:39:45,279
Speaker 2: so they get it out of committee even as the

736
00:39:45,280 --> 00:39:48,920
Speaker 2: Senate is marking up its own bill. The big questions, though, remain,

737
00:39:50,080 --> 00:39:52,480
Speaker 2: beginning with how you pay for it, And this is

738
00:39:52,480 --> 00:39:55,120
Speaker 2: where things got complicated. When you add salt, no tax

739
00:39:55,160 --> 00:39:57,720
Speaker 2: on tips, no tax on overtime, no tax on anything.

740
00:39:57,760 --> 00:40:00,880
Speaker 2: I guess anymore, and so decisions are going to have

741
00:40:00,920 --> 00:40:04,040
Speaker 2: to be made. I dared you to stay with us

742
00:40:04,160 --> 00:40:07,399
Speaker 2: for this conversation. You hear about the sausage being made.

743
00:40:07,440 --> 00:40:09,319
Speaker 2: We're going to do this right now and figure this

744
00:40:09,360 --> 00:40:11,360
Speaker 2: out a little bit together and try on some ideas.

745
00:40:11,400 --> 00:40:15,320
Speaker 2: Because a group called Arnold Ventures just produced a report

746
00:40:15,360 --> 00:40:18,520
Speaker 2: on wasteful spending and proposed ways to cut and save.

747
00:40:19,200 --> 00:40:22,760
Speaker 2: The face of that study is George Callis, who served

748
00:40:22,760 --> 00:40:26,040
Speaker 2: for fifteen years on Capitol Hill, a senior tax council

749
00:40:26,080 --> 00:40:28,400
Speaker 2: in the US House of Representatives, was on ways and means.

750
00:40:28,400 --> 00:40:32,080
Speaker 2: Former Speaker Paul Ryan also served as counsel for the

751
00:40:32,120 --> 00:40:35,840
Speaker 2: House Budget Committee. So we have the perfect voice for

752
00:40:35,920 --> 00:40:39,439
Speaker 2: this right now. The report offers twenty reforms, okay, ten

753
00:40:39,520 --> 00:40:43,440
Speaker 2: spending cuts, ten tax loopholes to close. You will not

754
00:40:43,480 --> 00:40:46,400
Speaker 2: agree with them all, but according to this research, if

755
00:40:46,440 --> 00:40:49,520
Speaker 2: they all ended up in the legislation, Trump tax cuts

756
00:40:49,520 --> 00:40:52,120
Speaker 2: are paid for. What a concept. George Callis is with

757
00:40:52,200 --> 00:40:53,759
Speaker 2: us right now in the studio. It's great to see you,

758
00:40:53,760 --> 00:40:56,680
Speaker 2: Thanks for coming in. I hope I framed that close

759
00:40:56,719 --> 00:41:00,520
Speaker 2: to being what we have here. You've got cuts, you've

760
00:41:00,520 --> 00:41:02,520
Speaker 2: got loopholes. I want to walk through some of these

761
00:41:02,560 --> 00:41:04,440
Speaker 2: specifically year. But as you sit in front of me

762
00:41:04,520 --> 00:41:07,640
Speaker 2: right now, having been through this process before, do you

763
00:41:07,680 --> 00:41:10,160
Speaker 2: actually believe that all of these proposals that Donald Trump

764
00:41:10,280 --> 00:41:12,920
Speaker 2: rolled out during the campaign, on top of the twenty

765
00:41:12,960 --> 00:41:15,279
Speaker 2: seventeen tax cuts, we'll end up in a final piece

766
00:41:15,320 --> 00:41:15,960
Speaker 2: of legislation.

767
00:41:16,960 --> 00:41:19,040
Speaker 8: Well, first of all, Joe, it's great to be here.

768
00:41:19,080 --> 00:41:22,520
Speaker 8: Appreciate you having me on. It is hard for me

769
00:41:22,680 --> 00:41:27,239
Speaker 8: to prognosticate. You know, you watch Congress just like I do,

770
00:41:27,400 --> 00:41:29,759
Speaker 8: and it's hard to know what's going to happen in

771
00:41:29,760 --> 00:41:32,200
Speaker 8: twenty four hours, much less as we get to the endgame.

772
00:41:32,239 --> 00:41:35,480
Speaker 8: I think yesterday's markup at the House Budget Committee was

773
00:41:35,640 --> 00:41:38,719
Speaker 8: the first step in a long and winding road to

774
00:41:38,920 --> 00:41:42,400
Speaker 8: quote a Beatles song, and there'll be a lot of

775
00:41:42,400 --> 00:41:45,480
Speaker 8: twists and turns before this thing, you know, gets to

776
00:41:45,520 --> 00:41:49,640
Speaker 8: an endgame. I think I don't know about the President's

777
00:41:49,680 --> 00:41:54,600
Speaker 8: proposals my senses. Some of them are maybe higher priorities

778
00:41:54,600 --> 00:41:58,359
Speaker 8: than others. They certainly add a lot to the four

779
00:41:58,360 --> 00:42:01,920
Speaker 8: point five trillion dollar cost of simply making permanent the

780
00:42:02,040 --> 00:42:06,279
Speaker 8: expiring tax provisions from twenty seventeen, and digs are whole

781
00:42:06,320 --> 00:42:09,279
Speaker 8: even deeper you know, we put out this report and

782
00:42:09,640 --> 00:42:12,040
Speaker 8: it wasn't it wasn't just me, it was you know,

783
00:42:12,040 --> 00:42:15,480
Speaker 8: at Arnold Ventures, we have experts. I'm a tax expert,

784
00:42:15,520 --> 00:42:18,360
Speaker 8: we have healthcare experts, higher education experts, and this was

785
00:42:18,400 --> 00:42:21,359
Speaker 8: a collaborative effort to come up with what was what

786
00:42:21,400 --> 00:42:24,600
Speaker 8: we thought of as a balanced proposal. You know, twenty

787
00:42:24,719 --> 00:42:28,760
Speaker 8: spending cuts or sorry, ten spending cuts, ten tax loophole

788
00:42:28,800 --> 00:42:32,560
Speaker 8: closers that we that are we think are politically viable,

789
00:42:33,280 --> 00:42:36,040
Speaker 8: and therefore we really want to put them on the

790
00:42:36,040 --> 00:42:38,800
Speaker 8: table and have Congress take a close look at them.

791
00:42:38,840 --> 00:42:43,879
Speaker 8: You know, our view is that Congress can do both

792
00:42:43,920 --> 00:42:45,600
Speaker 8: and should do both. And what I mean by that

793
00:42:45,760 --> 00:42:50,680
Speaker 8: is both make permanent and extend pro growth tax policy,

794
00:42:51,000 --> 00:42:55,680
Speaker 8: tax policies that simplify tax filing for American families, make

795
00:42:55,719 --> 00:42:58,960
Speaker 8: the tax code fairer, but also do it without increasing

796
00:42:59,000 --> 00:43:01,360
Speaker 8: are already unsustained able dead burden.

797
00:43:01,480 --> 00:43:03,480
Speaker 2: Well, that would be a feat based on what we've

798
00:43:03,520 --> 00:43:05,760
Speaker 2: been hearing. So just to be clear before I start

799
00:43:05,760 --> 00:43:09,480
Speaker 2: getting specific, you're looking at TCJA without all of the

800
00:43:09,520 --> 00:43:13,640
Speaker 2: other additives, without tips, without overtime, without moving salt. Is

801
00:43:13,640 --> 00:43:15,920
Speaker 2: that fair to say? We're looking at this in the

802
00:43:15,960 --> 00:43:17,200
Speaker 2: twenty seventeen structure.

803
00:43:17,960 --> 00:43:20,239
Speaker 11: That that's how this project started. I mean that was

804
00:43:20,280 --> 00:43:21,759
Speaker 11: the yes, that was the basis.

805
00:43:21,400 --> 00:43:23,959
Speaker 2: Just to set the baseline here. So number one, let's

806
00:43:24,000 --> 00:43:27,680
Speaker 2: start with spending cuts. You find up to a trillion

807
00:43:27,800 --> 00:43:33,799
Speaker 2: dollars by modifying risk adjustment payments to Medicare advantage insurers.

808
00:43:34,160 --> 00:43:37,080
Speaker 2: This is heady stuff, it's complicated, but as you write,

809
00:43:37,080 --> 00:43:40,800
Speaker 2: insurers receive higher payments for enrollees with higher risk scores.

810
00:43:41,160 --> 00:43:43,759
Speaker 2: You make the argument that creates strong financial incentives for

811
00:43:43,800 --> 00:43:47,279
Speaker 2: insurers to make their patients appear sicker than they actually are.

812
00:43:48,120 --> 00:43:48,960
Speaker 2: So what do you do with it?

813
00:43:49,560 --> 00:43:49,759
Speaker 11: Right?

814
00:43:49,840 --> 00:43:51,960
Speaker 8: And so this you know, this is a policy that

815
00:43:52,040 --> 00:43:54,680
Speaker 8: can save up to one trillion dollars. There's a lot

816
00:43:54,760 --> 00:43:58,160
Speaker 8: of money there's you can, as we say in kind

817
00:43:58,200 --> 00:44:01,840
Speaker 8: of DC parlance, you can dial you can do less

818
00:44:02,400 --> 00:44:05,560
Speaker 8: than the whole. It's not everything or nothing kind of policy,

819
00:44:06,160 --> 00:44:09,680
Speaker 8: but it's a good representation of the kinds of policies

820
00:44:10,000 --> 00:44:13,759
Speaker 8: that we proposed in that we think, not only can

821
00:44:13,800 --> 00:44:17,120
Speaker 8: Congress save trillions of dollars, but they can save trillions

822
00:44:17,160 --> 00:44:19,440
Speaker 8: of dollars before they have to go straight to things

823
00:44:19,520 --> 00:44:22,040
Speaker 8: like cutting benefits or raising.

824
00:44:21,719 --> 00:44:24,239
Speaker 11: People's tax right, This would not cut benefit, that's right.

825
00:44:24,280 --> 00:44:27,360
Speaker 8: This is about ringing inefficiencies and waste out of the system.

826
00:44:27,400 --> 00:44:31,560
Speaker 2: Yep, got it. Simplifying student loan repayment, you find over

827
00:44:31,640 --> 00:44:36,320
Speaker 2: two hundred billion dollars there by simply streamlining seven plans

828
00:44:36,320 --> 00:44:37,719
Speaker 2: into two. How easy would that be?

829
00:44:37,920 --> 00:44:38,359
Speaker 11: That's right?

830
00:44:38,440 --> 00:44:42,840
Speaker 8: Well, I think from a technical perspective it's pretty easy.

831
00:44:42,880 --> 00:44:45,799
Speaker 8: In fact, legislation to that effect has already been introduced.

832
00:44:46,000 --> 00:44:49,680
Speaker 8: So there was clearly congressional Republican support on the Hill

833
00:44:49,719 --> 00:44:53,279
Speaker 8: for it. You know, politically, of course, as we know,

834
00:44:53,480 --> 00:44:55,720
Speaker 8: one or two votes in the House on a partisan

835
00:44:55,760 --> 00:44:59,480
Speaker 8: bill can stop anything, so but there is clearly interest

836
00:44:59,520 --> 00:45:02,440
Speaker 8: in doing the We think the policy case is strong.

837
00:45:02,800 --> 00:45:04,680
Speaker 8: You know, a lot of this money is going to

838
00:45:04,920 --> 00:45:08,960
Speaker 8: law students and medical students who earn a lot of money.

839
00:45:09,200 --> 00:45:12,680
Speaker 11: A lot of it goes to professional students.

840
00:45:12,360 --> 00:45:15,319
Speaker 8: Who just get degree after degree after degree that may

841
00:45:15,360 --> 00:45:17,120
Speaker 8: not be worth a whole lot and then get their

842
00:45:17,160 --> 00:45:21,400
Speaker 8: loans forgiven. So there's a lot of you know, poorly

843
00:45:21,560 --> 00:45:24,759
Speaker 8: targeted money there that could be targeted better at the

844
00:45:24,760 --> 00:45:27,160
Speaker 8: students who are really using it appropriately.

845
00:45:27,920 --> 00:45:32,480
Speaker 2: You call for repealing the IRA expansion of the EV

846
00:45:32,840 --> 00:45:36,160
Speaker 2: tax credit, Electric vehicles. That is, the savings of one

847
00:45:36,200 --> 00:45:38,880
Speaker 2: hundred you find another one hundred billion dollars there alone.

848
00:45:39,000 --> 00:45:40,399
Speaker 2: Elon Muskin to let you do that.

849
00:45:42,239 --> 00:45:43,319
Speaker 11: We'll have to see.

850
00:45:43,520 --> 00:45:45,840
Speaker 8: I don't think he's from what I've seen, he hasn't

851
00:45:45,880 --> 00:45:50,880
Speaker 8: been to shown much concern about reducing the EV subsidies.

852
00:45:50,920 --> 00:45:54,560
Speaker 8: I think there's a view that of the IRA Green

853
00:45:54,719 --> 00:45:57,520
Speaker 8: Energy Package of the Democrats enacted in twenty twenty two,

854
00:45:58,040 --> 00:46:00,719
Speaker 8: the EV subsidies have, like the Lead East bang for

855
00:46:00,800 --> 00:46:04,080
Speaker 8: the buck. They cost the most relative to the climate

856
00:46:04,120 --> 00:46:06,800
Speaker 8: impact they have. And so if there's any low hanging

857
00:46:06,880 --> 00:46:09,319
Speaker 8: fruit in the green energy space, I think it's the

858
00:46:09,360 --> 00:46:10,520
Speaker 8: electric vehicle area.

859
00:46:10,600 --> 00:46:13,040
Speaker 2: All right, So we're flying along pretty smooth flights so far,

860
00:46:13,120 --> 00:46:17,760
Speaker 2: we're about to hit massive turbulence. Ready, apply the salt

861
00:46:17,840 --> 00:46:22,279
Speaker 2: cap to businesses. Brace yourself. Eight hundred and twenty three

862
00:46:22,320 --> 00:46:25,279
Speaker 2: billion dollars. I thought we were going to raise the

863
00:46:25,360 --> 00:46:28,200
Speaker 2: cap on salt for individuals. I'm assuming you don't want

864
00:46:28,200 --> 00:46:29,799
Speaker 2: to see that happen, and you want to add it

865
00:46:29,840 --> 00:46:30,400
Speaker 2: to business.

866
00:46:30,440 --> 00:46:31,560
Speaker 3: Is that right? Well?

867
00:46:31,640 --> 00:46:32,040
Speaker 11: Right, right?

868
00:46:32,080 --> 00:46:34,360
Speaker 8: So there's a currently a ten thousand dollars PA on

869
00:46:34,400 --> 00:46:35,200
Speaker 8: the salt deduction.

870
00:46:35,440 --> 00:46:38,120
Speaker 11: If you if you simply extend everything. It stays there.

871
00:46:38,960 --> 00:46:41,720
Speaker 8: You know, I think from a policy perspective, the ideal

872
00:46:41,800 --> 00:46:43,160
Speaker 8: salt cap is zero dollars.

873
00:46:44,320 --> 00:46:46,720
Speaker 2: Someone's screaming right now in New York. I could hear it.

874
00:46:46,760 --> 00:46:48,640
Speaker 11: Well, I like, I like to say I would double

875
00:46:48,680 --> 00:46:51,280
Speaker 11: that amount for married couples, double the zero.

876
00:46:53,120 --> 00:46:54,080
Speaker 2: Mike Lawler's calling.

877
00:46:54,160 --> 00:46:56,560
Speaker 8: He wants to I suspect, yes, I suspect they'll have

878
00:46:56,600 --> 00:46:59,200
Speaker 8: a note from his office when I get back later

879
00:46:59,239 --> 00:47:02,799
Speaker 8: this afternoon. But you know, the policy rationale is that

880
00:47:03,920 --> 00:47:06,920
Speaker 8: if somebody's in the thirty seven percent federal tax bracket

881
00:47:06,960 --> 00:47:11,080
Speaker 8: and their state raises their taxes by one hundred dollars,

882
00:47:11,680 --> 00:47:14,839
Speaker 8: if there's an unlimited salt deduction, it only cost them

883
00:47:14,880 --> 00:47:18,480
Speaker 8: sixty seven dollars or sixty three dollars. They just right,

884
00:47:18,480 --> 00:47:20,680
Speaker 8: and the other thirty seven dollars is basically paid for

885
00:47:20,800 --> 00:47:22,920
Speaker 8: by the rest of the country. And so you know,

886
00:47:23,400 --> 00:47:28,960
Speaker 8: that rationale applies to both individual taxes and to business taxes. Now,

887
00:47:29,000 --> 00:47:32,760
Speaker 8: I would say the revenue from extending it to business

888
00:47:32,800 --> 00:47:36,440
Speaker 8: taxes is pretty substantial, and there are a lot of

889
00:47:36,480 --> 00:47:40,480
Speaker 8: good pro growth business and corporate tax relief provisions on

890
00:47:40,600 --> 00:47:43,320
Speaker 8: the table as well, provisions that I think we would

891
00:47:43,360 --> 00:47:47,279
Speaker 8: say are good policy, and so maybe the corporate salt

892
00:47:47,320 --> 00:47:52,080
Speaker 8: deduction revenues should be allocated mostly to those provisions. Whether

893
00:47:52,120 --> 00:47:56,279
Speaker 8: it's Trump wants to reduce the corporate rate further, sure depreciation,

894
00:47:56,520 --> 00:47:57,759
Speaker 8: R and D, things like that.

895
00:47:58,200 --> 00:48:01,080
Speaker 2: My terminal is exploding right now on this. All right,

896
00:48:01,320 --> 00:48:03,920
Speaker 2: if I had time to mention one more this loophole,

897
00:48:04,360 --> 00:48:07,000
Speaker 2: this is right down the middle for the Bloomberg audience,

898
00:48:07,520 --> 00:48:12,399
Speaker 2: reduce tax preference for stock buybacks over dividends. A lot

899
00:48:12,440 --> 00:48:14,279
Speaker 2: of people watching and listening right now are going to

900
00:48:14,320 --> 00:48:16,000
Speaker 2: bristle at this idea. Why would it work?

901
00:48:17,000 --> 00:48:20,759
Speaker 8: So that's a good example of another principle we had

902
00:48:20,800 --> 00:48:23,759
Speaker 8: with a lot of these proposals, which is we're not

903
00:48:24,280 --> 00:48:27,719
Speaker 8: trying to punish people. We're trying to find areas where

904
00:48:27,760 --> 00:48:32,160
Speaker 8: there's non neutrality, where there's economic distortions, and move closer

905
00:48:32,200 --> 00:48:35,000
Speaker 8: to economic neutrality because in the long run that leads

906
00:48:35,040 --> 00:48:38,600
Speaker 8: to more economic efficiency, more economic growth, a stronger economy.

907
00:48:38,760 --> 00:48:42,920
Speaker 8: There is a tax distortion that from a tax perspective,

908
00:48:43,760 --> 00:48:47,920
Speaker 8: Using stock buybacks to return cash to shareholders is favored

909
00:48:47,920 --> 00:48:51,040
Speaker 8: from a tax perspective compared to just paying out dividends.

910
00:48:51,120 --> 00:48:52,200
Speaker 2: Why they just keep buying stock.

911
00:48:52,239 --> 00:48:53,240
Speaker 11: That's why they keep buying.

912
00:48:53,120 --> 00:48:55,800
Speaker 8: Right, right, And like we're not against stock buybacks, but

913
00:48:55,840 --> 00:48:58,839
Speaker 8: there shouldn't be a tax subsidy for stock buybacks, right.

914
00:48:59,160 --> 00:49:01,320
Speaker 11: Penwharton budget Model did an estimate.

915
00:49:01,560 --> 00:49:06,280
Speaker 8: There's currently a one percent tax on stock buybacks. Penwharton

916
00:49:06,320 --> 00:49:09,200
Speaker 8: Budget Model did an estimate that said the economically neutral

917
00:49:09,280 --> 00:49:12,360
Speaker 8: tax would be about four point six percent. That would

918
00:49:12,400 --> 00:49:15,400
Speaker 8: that would eliminate the tax advantage and make them money.

919
00:49:15,200 --> 00:49:16,200
Speaker 11: Equal with dividends.

920
00:49:16,600 --> 00:49:20,000
Speaker 8: So we've proposed, you know, not going over four point

921
00:49:20,120 --> 00:49:23,320
Speaker 8: six if anything, undershooting to reduce that distortion.

922
00:49:24,480 --> 00:49:25,760
Speaker 11: Let's set the market decide.

923
00:49:25,800 --> 00:49:29,319
Speaker 8: Have you sent this research to the dough We've we

924
00:49:29,360 --> 00:49:32,680
Speaker 8: have distributed it widely to yes, the policymakers in both

925
00:49:32,719 --> 00:49:36,719
Speaker 8: the executive and legislative reaction. Again, I haven't heard from

926
00:49:36,719 --> 00:49:40,680
Speaker 8: Elon yet, Okay, but we've gotten a lot of interest.

927
00:49:41,120 --> 00:49:42,759
Speaker 8: We've got a lot of interest from Capitol Hill.

928
00:49:42,800 --> 00:49:45,040
Speaker 2: I'm sure each office finds a different component that they

929
00:49:45,160 --> 00:49:45,440
Speaker 2: like here.

930
00:49:45,680 --> 00:49:47,520
Speaker 11: They right, So then they.

931
00:49:47,400 --> 00:49:49,760
Speaker 2: All go on the room, they bang their heads against

932
00:49:49,760 --> 00:49:51,480
Speaker 2: the wall and try to come up with something. When

933
00:49:51,560 --> 00:49:55,239
Speaker 2: you add politics to this document, how realistic is any

934
00:49:55,280 --> 00:49:55,400
Speaker 2: of this?

935
00:49:56,080 --> 00:49:57,320
Speaker 11: That's a that's a great question.

936
00:49:57,440 --> 00:50:00,560
Speaker 8: So again, if you're assuming that this is a part

937
00:50:00,640 --> 00:50:02,880
Speaker 8: is an exercise, and yes, every Democrat is going to

938
00:50:02,960 --> 00:50:05,520
Speaker 8: vote no, you know better. We know that everything is

939
00:50:05,640 --> 00:50:07,560
Speaker 8: difficult in the House because they have a one or

940
00:50:07,560 --> 00:50:10,160
Speaker 8: two vote margin. Senate has a little more of a cushion,

941
00:50:10,640 --> 00:50:12,360
Speaker 8: so everything is politically difficult.

942
00:50:12,360 --> 00:50:14,760
Speaker 11: It's sort of a baseline matter. Now.

943
00:50:14,880 --> 00:50:18,320
Speaker 8: We did apply kind of a political viability test to

944
00:50:18,680 --> 00:50:22,240
Speaker 8: identify our top twenty, and we think there's enough interest

945
00:50:22,239 --> 00:50:23,560
Speaker 8: in these proposals to make them.

946
00:50:23,520 --> 00:50:27,600
Speaker 2: Viable achieving fiscally responsible tax reform. I've got the hard

947
00:50:27,640 --> 00:50:30,680
Speaker 2: copy here, you can find it online. It's pretty remarkable,

948
00:50:30,719 --> 00:50:32,440
Speaker 2: arnold ventures you want to agree with it all, but

949
00:50:32,480 --> 00:50:35,000
Speaker 2: at least somebody has taken a crack at this great

950
00:50:35,120 --> 00:50:37,880
Speaker 2: conversation and many thanks for being with us, George Kallis,

951
00:50:38,280 --> 00:50:45,319
Speaker 2: pleasure to have you with us here on Bloomberg. Thanks

952
00:50:45,360 --> 00:50:48,480
Speaker 2: for listening to the Balance of Power podcast. Make sure

953
00:50:48,520 --> 00:50:51,400
Speaker 2: to subscribe if you haven't already, at Apple, Spotify, or

954
00:50:51,440 --> 00:50:54,120
Speaker 2: wherever you get your podcasts, and you can find us

955
00:50:54,160 --> 00:50:57,719
Speaker 2: live every weekday from Washington, DC at noontime Eastern at

956
00:50:57,719 --> 00:50:58,960
Speaker 2: Bloomberg dot com.