WEBVTT - Vance, Zelenskiy Meet in Munich

0:00:02.520 --> 0:00:10.119
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

0:00:10.119 --> 0:00:13.880
<v Speaker 1>Bloomberg Balance of Power podcast. Catch us live weekdays at

0:00:13.920 --> 0:00:17.119
<v Speaker 1>noon and five pm Eastern on Apple Coarckley and Android

0:00:17.160 --> 0:00:20.560
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:00:20.600 --> 0:00:25.080
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:00:25.360 --> 0:00:27.920
<v Speaker 2>Eyes on Munich today, there are a couple of important

0:00:27.960 --> 0:00:32.040
<v Speaker 2>stories that we're following. You've you've got negotiations, of course,

0:00:32.080 --> 0:00:34.400
<v Speaker 2>that are getting underway in Munich with regard to Ukraine.

0:00:35.000 --> 0:00:38.519
<v Speaker 2>You've also got an important deadline tomorrow in Gaza that

0:00:38.560 --> 0:00:40.800
<v Speaker 2>we're going to be talking to Michael Allen about. Here,

0:00:40.840 --> 0:00:44.040
<v Speaker 2>a high noon deadline put forth by Donald Trump said

0:00:44.040 --> 0:00:46.800
<v Speaker 2>all hell will break out if hostages are not released,

0:00:46.840 --> 0:00:49.360
<v Speaker 2>and hamas had been dragging its feet on the idea

0:00:49.800 --> 0:00:52.920
<v Speaker 2>of a continued release. Here it appears it will be

0:00:53.400 --> 0:00:57.600
<v Speaker 2>on schedule. Very unclear how many hostages and what condition

0:00:57.800 --> 0:01:00.640
<v Speaker 2>they will be in. Michael Allen is Managing director of

0:01:00.680 --> 0:01:03.880
<v Speaker 2>Beaking Global Strategies and spent time as special assistant to

0:01:03.920 --> 0:01:08.080
<v Speaker 2>President George W. Bush as part of his national security team.

0:01:08.120 --> 0:01:10.000
<v Speaker 2>It's great to see you, Welcome back. Good to see Jeff.

0:01:10.000 --> 0:01:11.720
<v Speaker 2>So we want to talk about a couple of things here,

0:01:11.720 --> 0:01:13.880
<v Speaker 2>and we'll start in Munich. I know you're no stranger

0:01:13.880 --> 0:01:16.440
<v Speaker 2>to the Munich Security Conference, and it is now apparently

0:01:16.440 --> 0:01:19.039
<v Speaker 2>the staging ground for at least the opening salvo in

0:01:19.120 --> 0:01:23.360
<v Speaker 2>talks over Ukraine. Jd Vance is talking about a lot

0:01:23.400 --> 0:01:25.720
<v Speaker 2>of things today, including the idea of American troops being

0:01:25.800 --> 0:01:27.319
<v Speaker 2>on the table in Ukraine. Do you buy that?

0:01:27.600 --> 0:01:27.759
<v Speaker 3>Wow?

0:01:27.840 --> 0:01:30.760
<v Speaker 4>I was shocked by the inclusion of that in jd

0:01:31.040 --> 0:01:34.959
<v Speaker 4>Vance's remarks. Of course, he means I believe a tripwire

0:01:35.120 --> 0:01:39.560
<v Speaker 4>force part of some sort of peacekeeping operation, but just

0:01:39.600 --> 0:01:42.720
<v Speaker 4>two days after Hegseth dismissed that there would be US

0:01:42.800 --> 0:01:46.280
<v Speaker 4>soldiers involved in such an arrangement. It was definitely a

0:01:46.319 --> 0:01:49.360
<v Speaker 4>surprise to see Vice President Vance come in and say, well,

0:01:49.400 --> 0:01:52.440
<v Speaker 4>not only US troops, but sanctions as well are on

0:01:52.520 --> 0:01:53.000
<v Speaker 4>the table.

0:01:53.200 --> 0:01:55.960
<v Speaker 2>So he's trying to talk tough against Russia. They're trying

0:01:55.960 --> 0:01:58.720
<v Speaker 2>to compel I guess Vladimir Putin to the table. But

0:01:58.760 --> 0:02:00.160
<v Speaker 2>Donald Trump was on the phone with him for an

0:02:00.200 --> 0:02:01.680
<v Speaker 2>hour and a half the other day. What they talk.

0:02:01.560 --> 0:02:04.840
<v Speaker 4>About, well, well, they talked about Ukraine. Certainly, it sounds

0:02:04.880 --> 0:02:07.640
<v Speaker 4>like the President also talked about wanting to get rid

0:02:07.680 --> 0:02:10.640
<v Speaker 4>of nuclear weapons. And they even talked about artificial intelligence,

0:02:10.680 --> 0:02:15.400
<v Speaker 4>but I think Ukraine was the most thing they talked about.

0:02:15.480 --> 0:02:18.440
<v Speaker 4>And I think he's trying to induce Putin to the table.

0:02:18.880 --> 0:02:21.960
<v Speaker 4>Maybe they meet in the Middle East in the coming weeks.

0:02:22.280 --> 0:02:24.959
<v Speaker 4>But I think it's Trump starting to set the conditions

0:02:25.160 --> 0:02:27.239
<v Speaker 4>under which he can get into a real negotiation.

0:02:27.400 --> 0:02:30.720
<v Speaker 2>He says, Vladimir Putin wants to get out Russia wants

0:02:30.760 --> 0:02:33.240
<v Speaker 2>to get out of this thing. Do you believe that?

0:02:33.760 --> 0:02:35.640
<v Speaker 2>Is he looking for an off ramp? How come he

0:02:35.639 --> 0:02:37.080
<v Speaker 2>couldn't find one with Joe Biden.

0:02:37.280 --> 0:02:40.280
<v Speaker 4>I believe it most that Putin's looking for is a

0:02:40.320 --> 0:02:45.239
<v Speaker 4>brief cease fire in order to re you know, Tavik

0:02:45.280 --> 0:02:46.119
<v Speaker 4>have his arms back.

0:02:46.240 --> 0:02:48.560
<v Speaker 2>With doubt his motivations entirely.

0:02:48.400 --> 0:02:51.959
<v Speaker 4>Well, because I don't think the underlying problems with why

0:02:52.000 --> 0:02:54.160
<v Speaker 4>there is a war going to be addressed, and which

0:02:54.240 --> 0:02:56.720
<v Speaker 4>is that Ukraine. He doesn't want them to exist. He

0:02:56.760 --> 0:02:59.160
<v Speaker 4>sees them as a security threat. He doesn't like NATO

0:02:59.240 --> 0:03:04.040
<v Speaker 4>approaching his orders. So Putin's been suffering. He needs more arms,

0:03:04.040 --> 0:03:06.520
<v Speaker 4>He needs time for his economy to recover. It's starting

0:03:06.560 --> 0:03:09.000
<v Speaker 4>to go down and down, And so I think at

0:03:09.080 --> 0:03:12.040
<v Speaker 4>most he would want to cease fire a peace agreement.

0:03:12.120 --> 0:03:14.400
<v Speaker 2>I doubt it. The idea of going back to pre

0:03:14.520 --> 0:03:21.400
<v Speaker 2>twenty fourteen boundaries Crimea included. Yeah, Secretary of Defense says unrealistic.

0:03:21.440 --> 0:03:23.520
<v Speaker 2>He had to walk back some of those remarks. Is

0:03:23.560 --> 0:03:23.919
<v Speaker 2>he right?

0:03:24.720 --> 0:03:28.520
<v Speaker 4>I think it's unrealistic to expect them to vacate Crimea

0:03:28.680 --> 0:03:30.840
<v Speaker 4>or really almost any territory.

0:03:30.360 --> 0:03:32.200
<v Speaker 2>That they already lost goes to Russia.

0:03:32.440 --> 0:03:34.639
<v Speaker 4>I'm afraid that at least half the don boss might

0:03:34.680 --> 0:03:36.520
<v Speaker 4>go to Russia, and maybe they put it in some

0:03:36.560 --> 0:03:39.120
<v Speaker 4>special status and try to say that there'll be a

0:03:39.200 --> 0:03:42.600
<v Speaker 4>vote sometime in the future, just to surrounds familiar Yeah,

0:03:42.640 --> 0:03:47.520
<v Speaker 4>to preserve some sort of face saving arrangement for Zelenski.

0:03:47.920 --> 0:03:50.880
<v Speaker 4>But yeah, it's hard to imagine. Can you see Russian

0:03:50.920 --> 0:03:53.480
<v Speaker 4>troops rolling back from any of the territory that they've

0:03:53.520 --> 0:03:57.920
<v Speaker 4>already gotten, Maybe only if they're trading Kursk and that's

0:03:57.960 --> 0:04:01.400
<v Speaker 4>the Russian territory that the Ukrainians have set.

0:04:01.280 --> 0:04:04.040
<v Speaker 2>Up camp testing. That was a pretty smart move Ileski.

0:04:04.120 --> 0:04:07.280
<v Speaker 2>Just big picture, then this does not sound like Michael Allen,

0:04:07.320 --> 0:04:10.080
<v Speaker 2>who expects this war to end. Well, certainly not on

0:04:10.200 --> 0:04:13.360
<v Speaker 2>day one, but in the initial stages of this new presidence.

0:04:13.480 --> 0:04:16.120
<v Speaker 4>I can't see it ending for a long period of time.

0:04:16.240 --> 0:04:18.279
<v Speaker 4>I mean this could come back again. I mean we

0:04:18.279 --> 0:04:20.880
<v Speaker 4>had twenty fourteen and then we had twenty twenty two,

0:04:21.320 --> 0:04:24.800
<v Speaker 4>and I think Vladimir Putin's got very serious designs on

0:04:24.800 --> 0:04:27.880
<v Speaker 4>this particular piece of territory. I'm hopeful that we won't

0:04:27.880 --> 0:04:29.919
<v Speaker 4>have a third war. If you will, if we have

0:04:30.040 --> 0:04:33.800
<v Speaker 4>a real European peacekeeping force, a real trip wire there,

0:04:34.040 --> 0:04:37.919
<v Speaker 4>we have to do actual security guarantees. If not NATO,

0:04:38.120 --> 0:04:41.040
<v Speaker 4>then they need to have some assurances that the West

0:04:41.080 --> 0:04:44.240
<v Speaker 4>will be there for them. Because what Zelensky needs is

0:04:44.320 --> 0:04:46.359
<v Speaker 4>he needs to have his country back. He needs to

0:04:46.440 --> 0:04:49.200
<v Speaker 4>feel safe enough, and companies need to feel safe enough

0:04:49.240 --> 0:04:52.479
<v Speaker 4>to go there and invest and attract his refugees back.

0:04:52.520 --> 0:04:55.840
<v Speaker 4>And if it feels like a cheap ceasefire, neither of

0:04:55.839 --> 0:04:56.960
<v Speaker 4>those things will happen.

0:04:57.000 --> 0:04:59.760
<v Speaker 2>And if Putin's goal is to reconstitute the Soviet Union,

0:04:59.800 --> 0:05:03.320
<v Speaker 2>were just spending a lot of time talking for nothing here, Yeah,

0:05:03.520 --> 0:05:05.640
<v Speaker 2>spending time with Michael Allen on balance of power. I

0:05:05.680 --> 0:05:07.920
<v Speaker 2>want to move to Israel and what might take place tomorrow.

0:05:08.680 --> 0:05:11.120
<v Speaker 2>We've seen a lot of cross currents here between Hamas

0:05:11.760 --> 0:05:15.680
<v Speaker 2>and Israel when it comes to hostages in Gaza approaching

0:05:15.720 --> 0:05:19.920
<v Speaker 2>a potential phase two under the ceasefire, Donald Trump this

0:05:20.000 --> 0:05:21.920
<v Speaker 2>week decides to say if they're not all out by

0:05:21.920 --> 0:05:25.520
<v Speaker 2>noontime Saturday, hell breaks out. That threat seemed to work

0:05:25.600 --> 0:05:27.400
<v Speaker 2>pretty well last time. Will it tomorrow?

0:05:27.640 --> 0:05:30.600
<v Speaker 4>I think so. A few hours ago, Hamas, through an

0:05:30.640 --> 0:05:33.680
<v Speaker 4>intermediary said here are the three hostages that we planned

0:05:33.720 --> 0:05:36.560
<v Speaker 4>to release. So I think things are still on track.

0:05:36.920 --> 0:05:41.280
<v Speaker 4>It's never great to feel super about until it actually happens.

0:05:41.400 --> 0:05:44.400
<v Speaker 4>There's definitely a lot of stress in the relationship. I

0:05:44.440 --> 0:05:48.000
<v Speaker 4>think the President constantly talking about Gaza and maybe the

0:05:48.040 --> 0:05:51.480
<v Speaker 4>Palestinians not being able to come back might be sort

0:05:51.520 --> 0:05:53.920
<v Speaker 4>of just stabilizing for this in the future. I think

0:05:53.920 --> 0:05:57.560
<v Speaker 4>they need to try and get Israel's commitments to roll

0:05:57.720 --> 0:06:00.360
<v Speaker 4>back their troops out of populated areas. That needs to

0:06:00.400 --> 0:06:03.960
<v Speaker 4>continue to happen so that the conditions that for us

0:06:03.960 --> 0:06:06.680
<v Speaker 4>to proceed down into phase two will obtain.

0:06:06.920 --> 0:06:11.039
<v Speaker 2>Boy, he said a lot the other day and indicated

0:06:11.080 --> 0:06:13.400
<v Speaker 2>that he needed to see more than three hostages. Did

0:06:13.400 --> 0:06:16.520
<v Speaker 2>you read his words to suggest the scheduled release much

0:06:16.640 --> 0:06:19.559
<v Speaker 2>must go forward, or that every hostage must be released tomorrow.

0:06:19.640 --> 0:06:23.280
<v Speaker 4>The latter I saw him say very clearly that I

0:06:23.320 --> 0:06:24.360
<v Speaker 4>want them all back now.

0:06:24.520 --> 0:06:25.039
<v Speaker 2>I don't know that.

0:06:25.080 --> 0:06:29.240
<v Speaker 4>I don't know that if he attached though all hell

0:06:29.279 --> 0:06:31.799
<v Speaker 4>break loose to all of them coming back on Saturday,

0:06:31.920 --> 0:06:33.640
<v Speaker 4>he definitely said I want them all back. I'm tired

0:06:33.680 --> 0:06:36.240
<v Speaker 4>of this process. But it may be enough that they're

0:06:36.279 --> 0:06:39.240
<v Speaker 4>back in train and that maybe that'll satisfy Trump.

0:06:39.320 --> 0:06:40.839
<v Speaker 2>This is what happens when you're trying to parse the

0:06:40.839 --> 0:06:43.360
<v Speaker 2>words here. I want to remind everybody that you were

0:06:43.360 --> 0:06:44.920
<v Speaker 2>the first person on this broadcast. I think it was

0:06:44.920 --> 0:06:47.000
<v Speaker 2>about two weeks ago, around the time Donald Trump met

0:06:47.000 --> 0:06:49.359
<v Speaker 2>with Benjamin dett Yahoo to say that they were in

0:06:49.400 --> 0:06:52.080
<v Speaker 2>fact talking about a lot more than Gaza. They were

0:06:52.080 --> 0:06:55.040
<v Speaker 2>talking about a preemptive strike against Iran and that this

0:06:55.120 --> 0:06:58.240
<v Speaker 2>is in fact something that is in the works. Reporting

0:06:58.600 --> 0:07:01.960
<v Speaker 2>in the days following our inner suggested that this is

0:07:02.000 --> 0:07:04.320
<v Speaker 2>in fact underway. Are we going to see and Israeli

0:07:04.320 --> 0:07:05.240
<v Speaker 2>strike against Iran?

0:07:05.560 --> 0:07:09.000
<v Speaker 4>I think it's honestly, it's getting more and more likely

0:07:09.120 --> 0:07:12.880
<v Speaker 4>because the conditions for Israel to be able to do

0:07:12.960 --> 0:07:16.280
<v Speaker 4>this are in good shape. It's because there is no

0:07:16.480 --> 0:07:21.280
<v Speaker 4>real air defense system radars in Syria. Even in Tehran,

0:07:21.840 --> 0:07:24.920
<v Speaker 4>there is a sense that because there's no Hezbola, they

0:07:24.960 --> 0:07:28.480
<v Speaker 4>have a freer shot in order to go hit Iran

0:07:28.640 --> 0:07:31.840
<v Speaker 4>inside Iran proper. I think what people are digesting now

0:07:31.960 --> 0:07:34.400
<v Speaker 4>is that will it be a complete destruction of their

0:07:34.480 --> 0:07:36.840
<v Speaker 4>nuclear program or just degrading. And it's going to be

0:07:36.920 --> 0:07:39.280
<v Speaker 4>just degrading. It's too spread out, It's been going on

0:07:39.360 --> 0:07:42.440
<v Speaker 4>for too long. I think what they're really down to

0:07:43.080 --> 0:07:46.360
<v Speaker 4>is do they have the precise weaponry to be able

0:07:46.400 --> 0:07:52.040
<v Speaker 4>to penetrate into the mountain complex that houses the main

0:07:52.200 --> 0:07:55.600
<v Speaker 4>centrifuge hub called ford Ou. That's I think what they're

0:07:55.600 --> 0:08:00.240
<v Speaker 4>looking for. They're rumors that the Israelis are getting the

0:08:00.360 --> 0:08:02.600
<v Speaker 4>right weaponry from US, but I don't know that I've

0:08:02.600 --> 0:08:03.880
<v Speaker 4>seen nick confirmed yet.

0:08:03.960 --> 0:08:08.400
<v Speaker 2>So they use American made bunker busting bombs. Exactly does

0:08:08.520 --> 0:08:12.840
<v Speaker 2>America help execute the operation by intelligence or any other meal?

0:08:13.000 --> 0:08:17.080
<v Speaker 4>I think by intelligence certainly. I don't know that. However,

0:08:17.240 --> 0:08:20.160
<v Speaker 4>Trump will allow one of our cargo planes or a

0:08:20.240 --> 0:08:22.600
<v Speaker 4>B two in order to do it. I mean, the Israelis,

0:08:22.680 --> 0:08:25.040
<v Speaker 4>I think, could do it through their own cargo plane.

0:08:25.120 --> 0:08:26.640
<v Speaker 4>But there are a lot of people trying to study

0:08:26.680 --> 0:08:27.280
<v Speaker 4>this right now.

0:08:27.840 --> 0:08:30.080
<v Speaker 2>What does Saudi Arabia think of this idea.

0:08:30.200 --> 0:08:32.679
<v Speaker 4>I think they're not excited about it. When you think

0:08:32.720 --> 0:08:35.719
<v Speaker 4>about Mohammed ben Salman, what he wants and what he's

0:08:35.720 --> 0:08:38.720
<v Speaker 4>been talking about forever is Vision twenty thirty. He wants

0:08:38.720 --> 0:08:41.680
<v Speaker 4>to be able to develop his economy diversified away from oil.

0:08:41.760 --> 0:08:44.960
<v Speaker 4>And I don't think even though he doesn't like the Iranians,

0:08:45.280 --> 0:08:47.200
<v Speaker 4>I don't think he really wants to see a war

0:08:47.320 --> 0:08:50.600
<v Speaker 4>breakout between the two. I think he, over time wants

0:08:50.679 --> 0:08:53.240
<v Speaker 4>to see some sort of progress with the Palestinians so

0:08:53.400 --> 0:08:56.560
<v Speaker 4>that he can normalize with Israel, because ultimately that's what's

0:08:56.600 --> 0:08:59.000
<v Speaker 4>good for his economy. That's like the Silicon Valley in

0:08:59.040 --> 0:09:01.640
<v Speaker 4>the Middle East, and he needs to have good relations there.

0:09:01.679 --> 0:09:05.440
<v Speaker 2>Fascinating. I'm guessing that King Abdullah of Jordan is not

0:09:05.520 --> 0:09:08.240
<v Speaker 2>sleeping well at night. He met with Donald Trump here

0:09:08.240 --> 0:09:11.280
<v Speaker 2>earlier in the week. Pretty awkward meeting. I mean, he's

0:09:11.400 --> 0:09:15.000
<v Speaker 2>being asked to essentially do the impossible in housing one

0:09:15.040 --> 0:09:18.280
<v Speaker 2>thousands more of Palestinians, which he's clearly not prepared to do.

0:09:18.400 --> 0:09:20.760
<v Speaker 2>But he needs the United States to exist, doesn't he.

0:09:21.000 --> 0:09:25.040
<v Speaker 4>We have supported them lockstock and barrel for many generations

0:09:25.120 --> 0:09:28.439
<v Speaker 4>and I don't see us stopping this anytime soon. I

0:09:28.520 --> 0:09:31.640
<v Speaker 4>hope that Trump was satisfied with the King of Jordan

0:09:31.760 --> 0:09:35.680
<v Speaker 4>saying I'll take two thousand sick and injured children. Maybe

0:09:35.720 --> 0:09:39.600
<v Speaker 4>he can do humanitarian things to assuage President Trump. But

0:09:39.679 --> 0:09:42.280
<v Speaker 4>I think the pressure goes back onto Egypt now they

0:09:42.320 --> 0:09:44.880
<v Speaker 4>canceled their trip over here. I think you'll hear Trump

0:09:44.920 --> 0:09:48.120
<v Speaker 4>will comment on that at some point in particular. And

0:09:48.200 --> 0:09:51.000
<v Speaker 4>don't forget about the UAE in Saudi. It seems like

0:09:51.360 --> 0:09:53.920
<v Speaker 4>the vice presidents I'm sorry, Rubio is going to go

0:09:53.960 --> 0:09:55.920
<v Speaker 4>over there soon. Mike Waltz might go over there soon.

0:09:56.000 --> 0:09:57.679
<v Speaker 4>So there's a lot of activity in the works.

0:09:57.760 --> 0:10:01.679
<v Speaker 2>Well, you know, the long game was normalized relations between

0:10:01.720 --> 0:10:04.280
<v Speaker 2>Israel and Saudi Arabia. We talk about this a lot,

0:10:05.280 --> 0:10:08.760
<v Speaker 2>that this cease fire might help to unlock negotiations. Again,

0:10:08.800 --> 0:10:11.559
<v Speaker 2>you start bombing Iran, we're walking away from that, right.

0:10:11.440 --> 0:10:14.040
<v Speaker 4>It could be yeah, because sometimes Iran says, well, you

0:10:14.080 --> 0:10:17.040
<v Speaker 4>know what, I'm going to hit your regional allies America.

0:10:17.120 --> 0:10:19.680
<v Speaker 4>If this happens here, I don't know that they would

0:10:19.679 --> 0:10:21.200
<v Speaker 4>do it. We would be over there in some sort

0:10:21.200 --> 0:10:23.760
<v Speaker 4>of presence to try and shoot down the missiles that

0:10:23.800 --> 0:10:25.160
<v Speaker 4>we're headed towards our allies.

0:10:25.520 --> 0:10:26.439
<v Speaker 2>But it would be an.

0:10:26.400 --> 0:10:28.760
<v Speaker 4>Iffy proposition and I don't think they're ready for it.

0:10:29.320 --> 0:10:31.680
<v Speaker 2>Benjamin NETANYAHUO does not want to see a phase two,

0:10:32.120 --> 0:10:33.280
<v Speaker 2>is the conventional wisdom.

0:10:33.440 --> 0:10:33.680
<v Speaker 3>Yeah.

0:10:33.800 --> 0:10:37.840
<v Speaker 2>Will he find a way to reignite this fight in Gaza.

0:10:37.880 --> 0:10:41.640
<v Speaker 2>He's promising intense fighting if hostages are not released tomorrow.

0:10:41.920 --> 0:10:45.320
<v Speaker 4>I think that he's under real pressure from President Trump.

0:10:45.360 --> 0:10:48.480
<v Speaker 4>It's so early in the Trump term. I know Rondhmer

0:10:48.520 --> 0:10:50.200
<v Speaker 4>and people that are close to him are saying, you

0:10:50.280 --> 0:10:53.080
<v Speaker 4>just can't defy the president right now when he's saying

0:10:53.080 --> 0:10:55.280
<v Speaker 4>he wants all the hostages done and he wants that

0:10:55.360 --> 0:10:59.480
<v Speaker 4>distraction over with. That's the real new factor that Netanyahu

0:10:59.559 --> 0:11:02.680
<v Speaker 4>has to deal with. It's no longer just Biden anymore

0:11:02.720 --> 0:11:05.160
<v Speaker 4>pushing for things. It's Trump. He's going to be here

0:11:05.200 --> 0:11:07.120
<v Speaker 4>for a long time, and Trump loves to use the

0:11:07.160 --> 0:11:09.360
<v Speaker 4>leverage and he doesn't want that relationship to go in

0:11:09.360 --> 0:11:09.800
<v Speaker 4>the ditch.

0:11:10.120 --> 0:11:12.600
<v Speaker 2>How long is the window for Iran by the time

0:11:12.640 --> 0:11:16.640
<v Speaker 2>they build up their defenses once again to make that impossible.

0:11:16.120 --> 0:11:19.560
<v Speaker 4>It's hard to say. It's probably a matter of six

0:11:19.679 --> 0:11:23.000
<v Speaker 4>months or more. They need new stuff back from Russia,

0:11:23.080 --> 0:11:25.520
<v Speaker 4>which obviously has a lot of other designs on their

0:11:25.559 --> 0:11:27.960
<v Speaker 4>own equipment, but it's not going to be there forever.

0:11:28.080 --> 0:11:30.680
<v Speaker 4>I mean, has Bela and Iran are already trying to rebuild,

0:11:30.800 --> 0:11:33.000
<v Speaker 4>so they need to think about doing it sooner rather

0:11:33.040 --> 0:11:35.080
<v Speaker 4>than later, and they need to figure out how many

0:11:35.080 --> 0:11:35.880
<v Speaker 4>sites they can hit.

0:11:36.120 --> 0:11:38.280
<v Speaker 2>Someday We're going to have a lighthearted conversation. I just

0:11:38.320 --> 0:11:40.680
<v Speaker 2>know it. Michael Allen, beaking Global Strategies. Thank you for

0:11:40.720 --> 0:11:43.559
<v Speaker 2>bringing your experience and expertise to the table as always

0:11:43.800 --> 0:11:46.040
<v Speaker 2>here on Balance of Power, I'm Joe, Matthew and Washington.

0:11:46.040 --> 0:11:48.320
<v Speaker 2>Glad you're with us. We'll assemble our panel next. Rick

0:11:48.400 --> 0:11:50.439
<v Speaker 2>Davis and Gdi Shanzano on the way in here on

0:11:50.520 --> 0:11:53.520
<v Speaker 2>Balance of Power. On Bloomberg TV and Radio.

0:11:55.480 --> 0:11:58.960
<v Speaker 1>You're listening to the Bloomberg Balance of Power Podcast. Catch

0:11:59.040 --> 0:12:01.839
<v Speaker 1>us live weekdays at noon and five pm. E's durn

0:12:02.000 --> 0:12:05.440
<v Speaker 1>on Apple, Cocklay and Android Auto with the Blueberg Business App.

0:12:05.480 --> 0:12:08.480
<v Speaker 1>You can also listen live on Amazon Alexa from our

0:12:08.520 --> 0:12:13.720
<v Speaker 1>flagship New York station. Just Say Alexa played Bloomberg eleven thirty.

0:12:14.559 --> 0:12:20.400
<v Speaker 2>They're been fired by email? How about voicemail? This does

0:12:20.480 --> 0:12:23.520
<v Speaker 2>happen from time to time and our little business, maybe yours,

0:12:23.559 --> 0:12:25.800
<v Speaker 2>and if you work for the federal government, it's part

0:12:25.840 --> 0:12:30.400
<v Speaker 2>of your new reality. As the purge begins, thousands of

0:12:30.440 --> 0:12:34.280
<v Speaker 2>workers laid off in messages delivered through pre recorded videos

0:12:34.880 --> 0:12:39.199
<v Speaker 2>that's cute, and on group calls. Some ordered to leave

0:12:39.240 --> 0:12:44.320
<v Speaker 2>the building within thirty minutes, not even enough time to

0:12:44.360 --> 0:12:48.400
<v Speaker 2>pack up the desk. Washington Post says the purge begins

0:12:48.440 --> 0:12:52.480
<v Speaker 2>now as the Trump administration moves swiftly to fire thousands,

0:12:53.080 --> 0:12:57.160
<v Speaker 2>directing to begin with agency heads to terminate trial and

0:12:57.280 --> 0:13:01.480
<v Speaker 2>probationary staff. If you've just gotten the bill, don't get comfortable.

0:13:02.160 --> 0:13:07.720
<v Speaker 2>That'll affect as many as two hundred thousand employees. Reaction

0:13:07.840 --> 0:13:11.040
<v Speaker 2>from the American Federation of Government Employees, the biggest union

0:13:11.120 --> 0:13:16.079
<v Speaker 2>representing federal workers. Employees were given no notice, no due process,

0:13:16.120 --> 0:13:19.439
<v Speaker 2>no opportunity to defend themselves in a playton violation of

0:13:19.480 --> 0:13:23.120
<v Speaker 2>the principles of fairness and merit that are supposed to

0:13:23.200 --> 0:13:26.480
<v Speaker 2>govern federal employment. But this is just the beginning, right

0:13:27.960 --> 0:13:30.200
<v Speaker 2>Not that many took out the buyout offer, and so

0:13:30.400 --> 0:13:33.360
<v Speaker 2>they are now being fired, not just here in Washington,

0:13:33.440 --> 0:13:35.520
<v Speaker 2>but all over the country, where most of the federal

0:13:35.559 --> 0:13:40.480
<v Speaker 2>workforce lives and works. This is of course, all going

0:13:40.559 --> 0:13:43.360
<v Speaker 2>back to the DOGE and the efforts of Elon Musk

0:13:43.360 --> 0:13:46.280
<v Speaker 2>and his team digging through various agencies trying to find

0:13:46.280 --> 0:13:49.200
<v Speaker 2>the cuts. If you ask Elon Musk, and to the

0:13:49.240 --> 0:13:52.839
<v Speaker 2>extent that he spoke to the World Government's summit in Dubai,

0:13:53.200 --> 0:13:56.120
<v Speaker 2>you just lop off the whole agency with nothing left.

0:13:56.160 --> 0:13:58.199
<v Speaker 2>Here's what he said, We.

0:13:58.240 --> 0:14:03.880
<v Speaker 5>Have to really delete entire agencies, many of them. And

0:14:04.000 --> 0:14:06.080
<v Speaker 5>that's not to say there won't be an increase over

0:14:06.160 --> 0:14:09.920
<v Speaker 5>time of bureaucracy in some new administration, but it will.

0:14:10.320 --> 0:14:15.800
<v Speaker 5>It'll be from a much lower baseline. So it's a

0:14:15.800 --> 0:14:16.680
<v Speaker 5>step in the right direction.

0:14:16.760 --> 0:14:17.000
<v Speaker 6>I think.

0:14:17.040 --> 0:14:19.800
<v Speaker 5>Well, the overwatching goal here is like, it's to lay

0:14:19.840 --> 0:14:24.520
<v Speaker 5>the foundation for prosperity that will last many decades, you know,

0:14:24.600 --> 0:14:25.760
<v Speaker 5>maybe centuries.

0:14:27.280 --> 0:14:29.920
<v Speaker 2>See what the panel thinks. We're joined now by Rick Davis,

0:14:29.920 --> 0:14:34.520
<v Speaker 2>partner at Stone Core Capital, republican strategist Genie Shanzino, democratic analyst,

0:14:34.800 --> 0:14:37.680
<v Speaker 2>political science professor at Iona University. They are both our

0:14:37.680 --> 0:14:41.120
<v Speaker 2>Bloomberg Politics contributors. What do you think about this idea

0:14:41.240 --> 0:14:45.480
<v Speaker 2>genie of deleting entire agencies. Elon Musk went on to say,

0:14:45.560 --> 0:14:48.840
<v Speaker 2>quote it's kind of like a weed. If we don't

0:14:48.880 --> 0:14:51.560
<v Speaker 2>remove the roots of the weed, then it's easy for

0:14:51.640 --> 0:14:53.680
<v Speaker 2>the weed to grow back. Is he right?

0:14:55.600 --> 0:14:59.440
<v Speaker 7>That is quite an analogy to describe people in our government.

0:15:00.560 --> 0:15:00.800
<v Speaker 8>You know.

0:15:00.960 --> 0:15:06.160
<v Speaker 7>The reality is we fought a revolutionary war to fight

0:15:06.320 --> 0:15:09.560
<v Speaker 7>back against a tyrant in the form of the King

0:15:09.720 --> 0:15:15.000
<v Speaker 7>of Great Britain, and we have clung to that importantly

0:15:15.240 --> 0:15:18.080
<v Speaker 7>throughout our almost two hundred and fifty year history, that

0:15:18.240 --> 0:15:24.480
<v Speaker 7>no one person should accumulate power in that way. And

0:15:24.560 --> 0:15:29.680
<v Speaker 7>now here we have an unelected person who is responsible

0:15:29.880 --> 0:15:33.160
<v Speaker 7>to no one, is not transparent in what he is

0:15:33.240 --> 0:15:36.760
<v Speaker 7>doing up there talking about making these kinds of cuts.

0:15:37.240 --> 0:15:41.080
<v Speaker 7>That is deeply concerning, and of course that's why we're

0:15:41.080 --> 0:15:44.120
<v Speaker 7>seeing all these lawsuits come out against this kind of

0:15:44.160 --> 0:15:49.120
<v Speaker 7>exercise of power. And already public opinion shows, public opinion

0:15:49.120 --> 0:15:53.040
<v Speaker 7>polls rather show how unpopular this is. Elon Musk's approval

0:15:53.120 --> 0:15:57.600
<v Speaker 7>rating is underwater. Yes, we can trim cut, we can

0:15:57.800 --> 0:16:01.000
<v Speaker 7>be more efficient, but that's not what they are doing,

0:16:01.120 --> 0:16:03.840
<v Speaker 7>and not what they are interested in, and not a

0:16:03.880 --> 0:16:07.120
<v Speaker 7>process that they are following that is legal or that

0:16:07.280 --> 0:16:09.800
<v Speaker 7>is something that we've ever seen in the United States.

0:16:09.880 --> 0:16:12.280
<v Speaker 7>And so all of those things are deeply concerning.

0:16:13.840 --> 0:16:16.960
<v Speaker 2>Rick. You've worked with your share of bureaucrats in your

0:16:17.000 --> 0:16:20.280
<v Speaker 2>time here in Washington, in the Senate and in the

0:16:20.280 --> 0:16:22.920
<v Speaker 2>White House. Elon Musk says, I think we do need

0:16:22.960 --> 0:16:25.640
<v Speaker 2>to delete entire agencies as opposed to leave a lot

0:16:25.680 --> 0:16:30.520
<v Speaker 2>of them behind. Will he accomplish it, Yeah, I think

0:16:30.520 --> 0:16:31.600
<v Speaker 2>he will be able to do that.

0:16:32.200 --> 0:16:35.320
<v Speaker 9>Look, there's nothing in the Constitution that specifies which agencies

0:16:35.320 --> 0:16:38.280
<v Speaker 9>a government should be existing, and many of these are

0:16:38.440 --> 0:16:44.520
<v Speaker 9>relatively modern affectations of expansion of the government role. You know,

0:16:44.640 --> 0:16:47.880
<v Speaker 9>Department of Education is a classic example. Since Ronald Reagan,

0:16:48.320 --> 0:16:50.960
<v Speaker 9>it's been orthodoxy in the Republican Party to say that

0:16:51.000 --> 0:16:52.880
<v Speaker 9>we're going to get rid of the Department of Education.

0:16:54.160 --> 0:16:56.680
<v Speaker 9>Lenna McMahon is just in a process of getting confirmed.

0:16:56.680 --> 0:16:59.360
<v Speaker 9>Maybe you know, she can just stay at home and

0:16:59.520 --> 0:17:01.520
<v Speaker 9>not have to worry about coming into the office. But

0:17:02.040 --> 0:17:06.000
<v Speaker 9>you know, this is a state function, not a federal function.

0:17:06.080 --> 0:17:08.879
<v Speaker 9>There's there's a lot of argument to be made that

0:17:09.560 --> 0:17:12.600
<v Speaker 9>those closest to the education and we have a you know,

0:17:13.160 --> 0:17:17.560
<v Speaker 9>quilt of different rules and regulations that govern education as well.

0:17:17.560 --> 0:17:20.000
<v Speaker 9>It should be the last thing we want is federal

0:17:20.040 --> 0:17:23.480
<v Speaker 9>intervention in the teaching of our children. And so you know,

0:17:23.920 --> 0:17:26.720
<v Speaker 9>nobody's making that argument, but that's been the argument for

0:17:26.720 --> 0:17:30.800
<v Speaker 9>fifty years. In the Republican Party Commerce department. Howard Lutnik

0:17:31.080 --> 0:17:32.879
<v Speaker 9>put him out of a job. You know, we have

0:17:33.000 --> 0:17:37.879
<v Speaker 9>duplicate trade roles, and and you know, you scratch your

0:17:37.920 --> 0:17:39.560
<v Speaker 9>head and you wonder, what do we really need a

0:17:39.560 --> 0:17:42.560
<v Speaker 9>commerce department for? If we have if we believe in

0:17:42.640 --> 0:17:46.639
<v Speaker 9>market economies and the free trade system. So at the

0:17:46.760 --> 0:17:48.760
<v Speaker 9>end of the day, I think, you know, we have

0:17:48.840 --> 0:17:51.320
<v Speaker 9>to understand there is only two elected officials in the

0:17:51.320 --> 0:17:54.199
<v Speaker 9>executive branch. Never has been more than that. President and

0:17:54.280 --> 0:17:58.240
<v Speaker 9>Vice president. They tell their staff and a cabinet secretary

0:17:58.760 --> 0:18:02.200
<v Speaker 9>is a staff member what to do every day. And

0:18:02.240 --> 0:18:05.240
<v Speaker 9>that's all that Elon Musk is doing. He's just a

0:18:05.280 --> 0:18:07.000
<v Speaker 9>little bit better at it than most have been in

0:18:07.040 --> 0:18:10.520
<v Speaker 9>the past. And so I'm not condoning all his tactics.

0:18:10.720 --> 0:18:13.280
<v Speaker 9>But at the end of the day, much like in

0:18:13.320 --> 0:18:17.160
<v Speaker 9>his first term, Donald Trump said, hey, you know, every

0:18:17.240 --> 0:18:21.639
<v Speaker 9>Republican president says they want to make Jerusalem the you know,

0:18:21.760 --> 0:18:24.639
<v Speaker 9>the location for our embassy, and he's the only one

0:18:24.640 --> 0:18:26.840
<v Speaker 9>who's done it. So and look at that's worked out

0:18:26.960 --> 0:18:28.840
<v Speaker 9>just fine, So at the end of the day, I

0:18:28.840 --> 0:18:30.000
<v Speaker 9>think we got to give them a little bit of

0:18:30.000 --> 0:18:33.800
<v Speaker 9>space here. And and Genie's right, you know, there is

0:18:33.840 --> 0:18:38.240
<v Speaker 9>a recourse go to the courts and and and let

0:18:38.240 --> 0:18:42.360
<v Speaker 9>them decide, you know, what is legal within our system.

0:18:43.640 --> 0:18:46.640
<v Speaker 2>How about that, Genie, your thoughts on the way Rick

0:18:46.800 --> 0:18:50.159
<v Speaker 2>just framed that having just heard Elon Musk say that

0:18:50.200 --> 0:18:53.720
<v Speaker 2>we're talking about laying the foundation for prosperity that may

0:18:53.800 --> 0:18:58.320
<v Speaker 2>last many decades, maybe centuries. So is the temporary pain

0:18:58.440 --> 0:18:58.840
<v Speaker 2>worth it?

0:19:00.720 --> 0:19:04.920
<v Speaker 7>You know? I don't think anybody said that the bureaucracy

0:19:05.040 --> 0:19:08.320
<v Speaker 7>is in the constitution. But when we reference the Constitution,

0:19:09.040 --> 0:19:12.240
<v Speaker 7>it is the fact that we live in a democratic

0:19:12.320 --> 0:19:17.200
<v Speaker 7>state and that the president not directly elected but indirectly elected,

0:19:17.680 --> 0:19:20.840
<v Speaker 7>and you do have members of the cabinet. They are

0:19:20.920 --> 0:19:25.760
<v Speaker 7>responsible and responsive to the Senate. Elon Musk is not

0:19:26.119 --> 0:19:29.840
<v Speaker 7>in that trect. Sure, presidents appoint all kinds of people,

0:19:29.880 --> 0:19:34.600
<v Speaker 7>including family members, but they do not wield this kind

0:19:34.720 --> 0:19:37.639
<v Speaker 7>of power, nor are they on the dole for the

0:19:37.640 --> 0:19:41.679
<v Speaker 7>federal government. Let's not forget Elon Musk and his companies

0:19:41.960 --> 0:19:45.359
<v Speaker 7>get huge amounts of money from the federal government and

0:19:45.359 --> 0:19:49.440
<v Speaker 7>we're not seeing any cuts there. So there is absolutely

0:19:49.520 --> 0:19:52.720
<v Speaker 7>a case to be made that what is being done

0:19:52.800 --> 0:19:54.080
<v Speaker 7>here is improper.

0:19:54.400 --> 0:19:55.200
<v Speaker 6>And we will see.

0:19:55.240 --> 0:19:58.800
<v Speaker 7>The courts have upheld certain things like the retirements the

0:19:58.840 --> 0:20:02.080
<v Speaker 7>buyouts at least at this point, but most of the

0:20:02.119 --> 0:20:05.840
<v Speaker 7>other things that this unelected efficient person has talked about,

0:20:06.160 --> 0:20:09.480
<v Speaker 7>they have not upheld at least so far, and they

0:20:09.520 --> 0:20:12.199
<v Speaker 7>have said, we have to take time to look at it.

0:20:12.520 --> 0:20:13.399
<v Speaker 6>And let's not forget.

0:20:13.400 --> 0:20:16.320
<v Speaker 7>This is all being done against a backdrop of a

0:20:16.720 --> 0:20:20.600
<v Speaker 7>Republican Congress that is talking about four point five billion

0:20:20.840 --> 0:20:24.800
<v Speaker 7>dollars trillion rather dollars in cuts so that they can

0:20:24.840 --> 0:20:29.600
<v Speaker 7>extend tax cuts for the wealthy. So this is the

0:20:29.760 --> 0:20:33.080
<v Speaker 7>environment in which this is being had, and so this

0:20:33.280 --> 0:20:36.199
<v Speaker 7>is the impropriety that people are feeling, and this is

0:20:36.240 --> 0:20:39.320
<v Speaker 7>the frustration that they are feeling, and people are starting

0:20:39.320 --> 0:20:42.439
<v Speaker 7>to voice concern about that. Yes, you can cut the

0:20:42.440 --> 0:20:46.199
<v Speaker 7>federal bureaucracy, but don't forget when they tried to do it,

0:20:46.720 --> 0:20:48.800
<v Speaker 7>what did George Bush end up coming in to do

0:20:48.880 --> 0:20:52.280
<v Speaker 7>in two thousand to take back education to the federal

0:20:52.359 --> 0:20:56.479
<v Speaker 7>level because it was that unpopular with the American public.

0:20:56.640 --> 0:21:01.000
<v Speaker 7>And we are still the sovereign people in the United States,

0:21:01.200 --> 0:21:03.920
<v Speaker 7>not people who are appointed by the president and beholden

0:21:04.000 --> 0:21:07.280
<v Speaker 7>to no one, especially not the wealthiest person in the world.

0:21:07.520 --> 0:21:10.240
<v Speaker 7>So there is so much wrong with how that was

0:21:10.320 --> 0:21:10.920
<v Speaker 7>just laid out.

0:21:12.119 --> 0:21:14.919
<v Speaker 2>Well, I'm glad you mentioned the budget resolution that was

0:21:14.960 --> 0:21:18.880
<v Speaker 2>passed out of committee last night. This followed twelve hours

0:21:18.880 --> 0:21:23.280
<v Speaker 2>of debate, the defeat of dozens of Democratic amendments. As

0:21:23.320 --> 0:21:26.400
<v Speaker 2>I said, we had a lot of noise in Washington yesterday,

0:21:26.800 --> 0:21:29.399
<v Speaker 2>a lot of talk about Donald Trump, no fewer than

0:21:29.560 --> 0:21:34.119
<v Speaker 2>four encounters in the last forty eight hours with the media,

0:21:34.160 --> 0:21:37.600
<v Speaker 2>a lot of threatening of tariffs. Nothing was actually implemented.

0:21:38.160 --> 0:21:40.800
<v Speaker 2>We did set the timeline on some to be the

0:21:40.840 --> 0:21:45.000
<v Speaker 2>real news yesterday, Rick. Was this a budget resolution approved

0:21:45.080 --> 0:21:48.200
<v Speaker 2>by the House Budget Committee, as Genie mentioned, four and

0:21:48.200 --> 0:21:51.840
<v Speaker 2>a half trillion dollars in tax cuts, at least one

0:21:51.880 --> 0:21:55.280
<v Speaker 2>and a half trillion in spending cuts. Is this something

0:21:55.359 --> 0:21:58.119
<v Speaker 2>the Freedom Caucus can endorse that could actually be passed

0:21:58.160 --> 0:21:58.719
<v Speaker 2>on the floor.

0:22:00.280 --> 0:22:02.639
<v Speaker 9>Well, I think you know, we heard from the chairman

0:22:02.680 --> 0:22:05.840
<v Speaker 9>of the Freedom Caucus that he got a deal cut.

0:22:06.520 --> 0:22:09.560
<v Speaker 9>His deal was that they would the Freedom Caucus would

0:22:09.600 --> 0:22:13.600
<v Speaker 9>be for this bill as long as you know, they

0:22:13.640 --> 0:22:18.280
<v Speaker 9>would be able to explore another five hundred billion in

0:22:18.400 --> 0:22:21.320
<v Speaker 9>cuts to get it to two trillion, you know, by

0:22:21.359 --> 0:22:24.639
<v Speaker 9>the time the tax cuts are approved. So so they

0:22:24.680 --> 0:22:29.080
<v Speaker 9>got bought in, and I see no opposition to this

0:22:29.160 --> 0:22:32.800
<v Speaker 9>bill at this stage, so you know, conceptually they could

0:22:32.840 --> 0:22:35.960
<v Speaker 9>win by one vote on the floor of the House

0:22:36.000 --> 0:22:40.920
<v Speaker 9>of Representatives and have one big, beautiful bill. So that'll

0:22:40.960 --> 0:22:43.439
<v Speaker 9>put actually a little pressure on the Senate now to

0:22:43.720 --> 0:22:47.040
<v Speaker 9>finalize their budget resolution that does not include the tax cuts.

0:22:47.359 --> 0:22:49.960
<v Speaker 9>What I'm hoping is that we get a step back,

0:22:50.080 --> 0:22:53.560
<v Speaker 9>and has been discussed on this program today, not just

0:22:53.600 --> 0:22:56.560
<v Speaker 9>look at taxes, but tax reform, because there's a lot

0:22:56.600 --> 0:22:59.200
<v Speaker 9>in the tax code that can save Americans a lot

0:22:59.240 --> 0:23:03.920
<v Speaker 9>of money that generates revenue without stifling our growth, and

0:23:04.640 --> 0:23:07.280
<v Speaker 9>be a better tax code gone in the days of

0:23:07.320 --> 0:23:10.199
<v Speaker 9>the debates about flat tax and things like that. But

0:23:10.320 --> 0:23:12.680
<v Speaker 9>the idea that we are going to spend this amount

0:23:12.720 --> 0:23:15.959
<v Speaker 9>of political capital in re upping these tax cuts and

0:23:16.000 --> 0:23:19.720
<v Speaker 9>not actually revised the tax code just seems to be

0:23:19.720 --> 0:23:20.879
<v Speaker 9>a missed opportunity to me.

0:23:22.600 --> 0:23:26.840
<v Speaker 2>Gene the democrat on that panel, ranking Democrat Brendan Boyle

0:23:27.040 --> 0:23:33.720
<v Speaker 2>Pennsylvania called the proposal cruel, heartless, and toxic, harmful to

0:23:33.720 --> 0:23:37.280
<v Speaker 2>low income families by slashing medicaid. We've only got about

0:23:37.280 --> 0:23:38.320
<v Speaker 2>thirty seconds, is he right?

0:23:39.680 --> 0:23:42.280
<v Speaker 7>Well, it's not only Brendan Boyle, He's absolutely right. It's

0:23:42.320 --> 0:23:46.560
<v Speaker 7>also Steve Bannon, who warned everybody last night that a

0:23:46.600 --> 0:23:49.960
<v Speaker 7>lot of MAGA supporters in Red States really, really like

0:23:50.080 --> 0:23:53.320
<v Speaker 7>medicaid and are on it, and these cuts are draconian.

0:23:53.680 --> 0:23:57.240
<v Speaker 7>The President has said privately he agrees this is the

0:23:57.359 --> 0:24:00.640
<v Speaker 7>challenge they have with eight hundred billion cuts Medicaid.

0:24:02.040 --> 0:24:05.199
<v Speaker 2>Great conversation with our signature panel, GENI thank you and

0:24:05.280 --> 0:24:08.840
<v Speaker 2>Rick as well, Genie Shanzano and Rick Davis, Bloomberg Politics contributors.

0:24:09.040 --> 0:24:12.400
<v Speaker 2>I'm Joe Matthew in Washington on the fastest show in politics.

0:24:12.440 --> 0:24:14.920
<v Speaker 2>We're going to turn our attention back to Ukraine talks

0:24:15.000 --> 0:24:17.560
<v Speaker 2>under way today in Munich. Blenda Herring from the Atlantic

0:24:17.600 --> 0:24:19.440
<v Speaker 2>councils up next on Bloomberg.

0:24:22.960 --> 0:24:26.440
<v Speaker 1>You're listening to the Bloomberg Balance of Power podcast. Catch

0:24:26.480 --> 0:24:29.480
<v Speaker 1>us live weekdays at noon and five pm Eastern on

0:24:29.640 --> 0:24:32.880
<v Speaker 1>Alma Coarckley and Android Auto with the Bloomberg Business App.

0:24:33.040 --> 0:24:36.280
<v Speaker 1>Listen on demand wherever you get your podcasts, or watch

0:24:36.400 --> 0:24:39.159
<v Speaker 1>us live on YouTube.

0:24:39.359 --> 0:24:43.040
<v Speaker 2>President Trump is set to sign more executive actions. There

0:24:43.040 --> 0:24:45.480
<v Speaker 2>has been some reporting that it will be directed at

0:24:45.520 --> 0:24:48.560
<v Speaker 2>the Department of Education, but we have not seen the

0:24:48.560 --> 0:24:50.639
<v Speaker 2>president yet. He's going to be soon making tracks for

0:24:50.760 --> 0:24:53.480
<v Speaker 2>mar Alago, where he'll be spending the weekend.

0:24:53.520 --> 0:24:53.760
<v Speaker 3>Here.

0:24:53.880 --> 0:24:57.600
<v Speaker 2>Jd Vance, the Vice President, carrying the message of the

0:24:57.640 --> 0:25:02.560
<v Speaker 2>administration today at the Munich Secure Conference, where Ukraine is

0:25:02.840 --> 0:25:06.399
<v Speaker 2>story and issue number one. In fact, it's not just

0:25:06.520 --> 0:25:08.679
<v Speaker 2>jd Vance he was meeting a short time ago. They

0:25:08.720 --> 0:25:12.119
<v Speaker 2>could still be underway with Voladimir Zelenski, the President of

0:25:12.240 --> 0:25:15.880
<v Speaker 2>Ukraine there as well. Following a speech by jd Vance

0:25:15.960 --> 0:25:19.439
<v Speaker 2>that really raised a lot of eyebrows directed towards Europe,

0:25:19.440 --> 0:25:24.479
<v Speaker 2>but also in an interview with Politico suggesting the troops

0:25:24.480 --> 0:25:30.320
<v Speaker 2>are very much on the table, suggesting as well that

0:25:30.440 --> 0:25:34.480
<v Speaker 2>sanctions against Russia may also be employed if no deal

0:25:34.520 --> 0:25:37.679
<v Speaker 2>can be reached. The gears are starting to turn. We

0:25:37.720 --> 0:25:40.320
<v Speaker 2>did hear from Vladimirer Zelensky in Munich earlier today.

0:25:40.359 --> 0:25:44.840
<v Speaker 3>Here he is I will meet with Russians with only

0:25:44.920 --> 0:25:49.439
<v Speaker 3>one Russian guy, with Putin only after we will have

0:25:49.560 --> 0:25:53.080
<v Speaker 3>common plan with Trump Europe and we will sit it

0:25:53.119 --> 0:25:56.280
<v Speaker 3>with Putin and stop the war. Only in this case

0:25:56.480 --> 0:26:01.280
<v Speaker 3>I'm ready to meet, not in other compromus platorms.

0:26:02.960 --> 0:26:05.840
<v Speaker 2>That's where we start our conversation with the true expert.

0:26:05.880 --> 0:26:07.960
<v Speaker 2>We wanted to reach out to Melinda Harring because she's

0:26:07.960 --> 0:26:10.840
<v Speaker 2>been with us every step of the way since Russia's

0:26:10.840 --> 0:26:14.640
<v Speaker 2>invasion of Ukraine, and as we seek peace, we want

0:26:14.680 --> 0:26:16.800
<v Speaker 2>to talk with the senior fellow at the Atlantic count

0:26:17.200 --> 0:26:21.479
<v Speaker 2>Council's Eurasia Center. She's senior advisor rasm for Ukraine. Melinda,

0:26:21.520 --> 0:26:24.919
<v Speaker 2>great to have you back here on Bloomberg TV in radio.

0:26:25.000 --> 0:26:29.800
<v Speaker 2>How seriously are you taking the opening salvo in these negotiations?

0:26:29.840 --> 0:26:31.760
<v Speaker 2>It was an interview with the Wall Street Journal in fact,

0:26:31.760 --> 0:26:34.400
<v Speaker 2>where Jade Vance said, everything is on the table. How

0:26:34.480 --> 0:26:38.359
<v Speaker 2>is the Trump administration posturing itself ahead of talks?

0:26:39.600 --> 0:26:41.600
<v Speaker 6>Hey, Joe, thanks for having me back. So it's been

0:26:41.640 --> 0:26:45.199
<v Speaker 6>a big week for the war in Ukraine and we

0:26:45.240 --> 0:26:49.160
<v Speaker 6>saw the actual opening salvo was Donald Trump's tweet this week,

0:26:49.760 --> 0:26:52.240
<v Speaker 6>and he said a lot of things, but it opened

0:26:52.480 --> 0:26:55.040
<v Speaker 6>the question of territory, It opened the question of NATO,

0:26:55.400 --> 0:26:58.240
<v Speaker 6>It opened the question of long term security guarantees, and

0:26:58.280 --> 0:27:01.320
<v Speaker 6>also the question of American boots on the ground. And

0:27:01.400 --> 0:27:04.840
<v Speaker 6>we've seen the administration pull back and where they are

0:27:04.840 --> 0:27:08.600
<v Speaker 6>today and the way that it looks could obviously change tomorrow.

0:27:08.760 --> 0:27:12.160
<v Speaker 6>But the administration is currently saying that the nineteen ninety

0:27:12.200 --> 0:27:14.840
<v Speaker 6>one borders, so a much larger Ukraine than what we

0:27:14.880 --> 0:27:19.000
<v Speaker 6>see right now is possible, NATO membership is possible. They

0:27:19.160 --> 0:27:22.080
<v Speaker 6>ruled out American boots on the ground, so that was

0:27:22.160 --> 0:27:22.760
<v Speaker 6>one no go.

0:27:23.200 --> 0:27:23.640
<v Speaker 3>But in the.

0:27:23.600 --> 0:27:26.800
<v Speaker 6>Original statement, it doesn't mean that American troops couldn't be

0:27:27.000 --> 0:27:31.159
<v Speaker 6>in Poland or in nearby NATO territory. But really the

0:27:31.240 --> 0:27:34.800
<v Speaker 6>issue is about long term security guarantees, and jd Vance

0:27:34.840 --> 0:27:37.800
<v Speaker 6>said today that we're going to put a plan together

0:27:37.840 --> 0:27:43.159
<v Speaker 6>that gives Ukraine real security guarantees and we're all waiting

0:27:43.400 --> 0:27:45.280
<v Speaker 6>for what those details are. Joe.

0:27:46.359 --> 0:27:50.480
<v Speaker 2>This follows what we heard from the Defense Secretary yesterday, Melinda,

0:27:50.520 --> 0:27:52.960
<v Speaker 2>and I'm sure you were listening when Pete Hegseth ruled

0:27:52.960 --> 0:27:56.680
<v Speaker 2>out US troops for Ukraine, suggested that a return to

0:27:56.800 --> 0:28:01.399
<v Speaker 2>Ukraine's pre twenty fourteen borders was an un realistic objective

0:28:01.960 --> 0:28:04.639
<v Speaker 2>and suggested that the country would never be able to

0:28:04.760 --> 0:28:07.439
<v Speaker 2>join NATO, which do you believe?

0:28:08.840 --> 0:28:11.639
<v Speaker 6>So I believe today's version. So you have to remember

0:28:11.680 --> 0:28:15.120
<v Speaker 6>that the Defense Secretary has waffled, his positions have been

0:28:15.240 --> 0:28:18.239
<v Speaker 6>all over the place. He's not the decider, as George W.

0:28:18.280 --> 0:28:20.199
<v Speaker 6>Bush would like to say, So I'm going to go

0:28:20.240 --> 0:28:22.879
<v Speaker 6>with today's version, and if I have to go with

0:28:22.960 --> 0:28:25.440
<v Speaker 6>yesterday'st version, Joe, I want to parse it a little bit.

0:28:25.680 --> 0:28:28.280
<v Speaker 6>The headlines were not as bad as they were made

0:28:28.280 --> 0:28:32.200
<v Speaker 6>out to be. So even if it even if Pete

0:28:32.240 --> 0:28:36.600
<v Speaker 6>Heegsath's version wins, the US is not recognizing the twenty

0:28:36.600 --> 0:28:40.720
<v Speaker 6>percent of Ukraine that Russia currently occupies as Russian. So

0:28:40.760 --> 0:28:44.760
<v Speaker 6>that's one they're not Washington is not saying NATO membership

0:28:44.800 --> 0:28:47.480
<v Speaker 6>is never going to happen. They're saying it won't happen now.

0:28:47.840 --> 0:28:50.720
<v Speaker 6>And there's a possibility of putting US troops in NATO

0:28:50.840 --> 0:28:54.040
<v Speaker 6>territory to back up European troops. So even if the

0:28:54.080 --> 0:28:57.160
<v Speaker 6>worst case scenario, what heg Seth said is true that

0:28:57.400 --> 0:28:59.800
<v Speaker 6>if that turns out to be policy, it's not terrible.

0:28:59.840 --> 0:29:02.200
<v Speaker 6>It's not great, but it's not terrible and we can

0:29:02.200 --> 0:29:02.680
<v Speaker 6>work with it.

0:29:02.760 --> 0:29:05.600
<v Speaker 2>Okay, Well, that's good perspective when it comes to pre

0:29:05.680 --> 0:29:09.160
<v Speaker 2>twenty fourteen borders, though, Melinda, how realistic is it? In

0:29:09.200 --> 0:29:12.080
<v Speaker 2>any conversation to have Crimea return to Ukraine.

0:29:13.280 --> 0:29:16.720
<v Speaker 6>So joe Crimea is the tricky question. You'll remember that

0:29:16.760 --> 0:29:19.800
<v Speaker 6>the Russians illegally annexed Crimea. This is the boot of

0:29:19.880 --> 0:29:23.680
<v Speaker 6>Ukraine the peninsula in twenty fourteen in a sham referendum,

0:29:24.000 --> 0:29:27.960
<v Speaker 6>and the status of Crimea is still disputed. The Russians

0:29:28.160 --> 0:29:30.920
<v Speaker 6>occupy it and they have a military operation there, but

0:29:31.040 --> 0:29:34.840
<v Speaker 6>Ukraine says it's ours. And the best historical example that

0:29:34.920 --> 0:29:37.960
<v Speaker 6>the international community looks to are the Baltic States. So

0:29:38.120 --> 0:29:41.200
<v Speaker 6>even when the Soviets occupy the Baltic States, they refuse

0:29:41.280 --> 0:29:44.440
<v Speaker 6>to recognize them as Soviet and the international community has

0:29:44.480 --> 0:29:47.600
<v Speaker 6>done the same thing for Crimea. So in these negotiations,

0:29:47.960 --> 0:29:51.320
<v Speaker 6>I don't expect to see Crimea formally change hands. I

0:29:51.320 --> 0:29:53.080
<v Speaker 6>don't think that Ukraine is going to be able to

0:29:53.120 --> 0:29:56.320
<v Speaker 6>get it back legally right now. But the international community

0:29:56.400 --> 0:29:59.720
<v Speaker 6>and Ukraine will continue to recognize that it was illegally

0:29:59.720 --> 0:30:03.120
<v Speaker 6>taken and they have the hope and aspiration that Crimea

0:30:03.200 --> 0:30:04.800
<v Speaker 6>will be returned to Ukraine someday.

0:30:06.000 --> 0:30:10.640
<v Speaker 2>Yeah. We talked a little earlier with Michael Allen this hour, Melinda,

0:30:10.680 --> 0:30:15.680
<v Speaker 2>and he was very skeptical of Vladimir Putin's objectives here.

0:30:15.760 --> 0:30:19.160
<v Speaker 2>Some see a Russian president seeking an off ramp. Michael

0:30:19.160 --> 0:30:21.680
<v Speaker 2>Allen said he's only looking for a short term ceasefire

0:30:21.760 --> 0:30:23.920
<v Speaker 2>so he can regroup in Ukraine. What do you think.

0:30:24.920 --> 0:30:26.760
<v Speaker 6>I think that's right. I think Michael Allen has put

0:30:26.760 --> 0:30:29.280
<v Speaker 6>his finger on it. I don't see a lot of

0:30:29.640 --> 0:30:33.200
<v Speaker 6>momentum on Putin's part or desire on his part to

0:30:33.800 --> 0:30:37.480
<v Speaker 6>seek a ceasefire. He thinks he's winning. He's still taking territory.

0:30:37.680 --> 0:30:41.320
<v Speaker 6>It's slow going, but he has momentum, particularly in the

0:30:41.400 --> 0:30:45.240
<v Speaker 6>Dawn Boss, and there's no reason for him to jump ship.

0:30:45.440 --> 0:30:48.959
<v Speaker 6>He wants to destroy Ukraine, Joe. That's his goal, and

0:30:49.000 --> 0:30:52.680
<v Speaker 6>he's doing it slowly but surely. And he's betting that

0:30:52.840 --> 0:30:56.480
<v Speaker 6>he cares more about Ukraine than the United States or

0:30:56.520 --> 0:30:59.440
<v Speaker 6>Europe does. And that's still That was the decision and

0:30:59.480 --> 0:31:02.320
<v Speaker 6>the calculate he made in twenty two and that's his calculus.

0:31:02.360 --> 0:31:02.640
<v Speaker 9>Now.

0:31:03.680 --> 0:31:07.480
<v Speaker 2>Well, surely Donald Trump knows this right. How can you

0:31:07.640 --> 0:31:11.200
<v Speaker 2>negotiate with an actor who does not have a motivation

0:31:11.400 --> 0:31:12.080
<v Speaker 2>to seek peace?

0:31:13.800 --> 0:31:17.360
<v Speaker 6>So that's a really good question. It's unclear what Donald

0:31:17.400 --> 0:31:21.120
<v Speaker 6>Trump thinks about Putin and his motivations. I think are

0:31:21.160 --> 0:31:24.880
<v Speaker 6>opaque to be generous. So I think Donald Trump wants

0:31:24.960 --> 0:31:28.600
<v Speaker 6>to be a peacemaker, which is a great impulse. You know,

0:31:28.760 --> 0:31:31.719
<v Speaker 6>the New Testament says, blessed are the peacemakers, for they

0:31:31.720 --> 0:31:34.280
<v Speaker 6>should be children of God. We all want to be peacemakers.

0:31:34.640 --> 0:31:37.880
<v Speaker 6>But the conflict in Russia and Ukraine, the war in

0:31:38.000 --> 0:31:41.160
<v Speaker 6>Russia and Ukraine is very difficult, and I think Donald

0:31:41.200 --> 0:31:45.080
<v Speaker 6>Trump is learning the hard way that the devil is

0:31:45.080 --> 0:31:47.400
<v Speaker 6>in the details, and it's going to be difficult for

0:31:47.520 --> 0:31:52.560
<v Speaker 6>him to broker a real, lasting and just peace in Ukraine.

0:31:52.720 --> 0:31:55.920
<v Speaker 6>So I think we're going to have to wait and see.

0:31:56.280 --> 0:32:01.160
<v Speaker 2>The headlines from Ukraine today are not terribly incouraging. As

0:32:01.440 --> 0:32:06.040
<v Speaker 2>Zelenski continues his trip to Munich, Ukraine says a Russian

0:32:06.120 --> 0:32:11.400
<v Speaker 2>drone hit Chernobyl. The nuclear plan actually targeted Chernobyl on purpose, Melinda,

0:32:11.440 --> 0:32:17.400
<v Speaker 2>causing significant damage to the containment shelter that surrounds the reactor.

0:32:18.120 --> 0:32:22.000
<v Speaker 2>Russia says Ukraine staged the attack, which is straight out

0:32:22.000 --> 0:32:25.120
<v Speaker 2>of the playbook that we've seen over the past couple

0:32:25.120 --> 0:32:27.959
<v Speaker 2>of years. Are we about to see a fit of

0:32:28.200 --> 0:32:31.640
<v Speaker 2>additional violence in Ukraine ahead of any kind of a deal?

0:32:33.960 --> 0:32:36.880
<v Speaker 6>Joe, we don't know exactly what we're gonna see, but

0:32:36.920 --> 0:32:40.560
<v Speaker 6>the drone attack on Chernobyl is part of a larger

0:32:40.600 --> 0:32:43.000
<v Speaker 6>pattern every day. I just got back from Ukraine. I

0:32:43.040 --> 0:32:45.800
<v Speaker 6>was in Denipro, in Harky ven Kiev for ten days,

0:32:46.120 --> 0:32:48.640
<v Speaker 6>and every day is uncertain. You don't know if you're

0:32:48.680 --> 0:32:50.480
<v Speaker 6>going to wake up the next day. You don't know

0:32:50.520 --> 0:32:52.800
<v Speaker 6>if you'll if you'll hear drones in the morning. You

0:32:52.840 --> 0:32:54.840
<v Speaker 6>don't know if your apartment building will be hit with

0:32:54.880 --> 0:32:58.000
<v Speaker 6>a ballistic missile. You don't know if your train will

0:32:58.040 --> 0:33:00.640
<v Speaker 6>be struck. This is the uncertainty that people live with

0:33:00.760 --> 0:33:04.520
<v Speaker 6>every day. But I expect Putin to continue what he's doing.

0:33:04.840 --> 0:33:09.440
<v Speaker 6>He's trying to destroy Ukraine as a sovereign, independent country. Joe,

0:33:09.440 --> 0:33:11.959
<v Speaker 6>I went out to one of the old villages, one

0:33:11.960 --> 0:33:15.760
<v Speaker 6>of the small villages in Harkiv Oblast, near Izoom, and

0:33:15.800 --> 0:33:18.480
<v Speaker 6>this is a city that you'll remember that the Russians occupied.

0:33:18.680 --> 0:33:21.200
<v Speaker 6>Went out to a village and in the gymnasium there

0:33:21.200 --> 0:33:23.240
<v Speaker 6>were books tied up, and I said, what are these books?

0:33:23.480 --> 0:33:25.560
<v Speaker 6>And there were books that the Russians had taken in

0:33:25.600 --> 0:33:27.960
<v Speaker 6>this Ukrainian school. They tied them up in rope and

0:33:27.960 --> 0:33:30.320
<v Speaker 6>they were planning to burn the books because they want

0:33:30.360 --> 0:33:33.400
<v Speaker 6>to destroy Ukraine's educational system. The books were in Russian

0:33:33.680 --> 0:33:37.800
<v Speaker 6>and Ukrainian. That's Russia's vision for Ukraine. They want to

0:33:37.800 --> 0:33:40.320
<v Speaker 6>destroy the educational system and they don't want the country

0:33:40.360 --> 0:33:40.960
<v Speaker 6>to exist.

0:33:42.120 --> 0:33:42.479
<v Speaker 3>Wow.

0:33:43.120 --> 0:33:45.480
<v Speaker 2>These are the first hand stories that Melinda brings us

0:33:46.080 --> 0:33:48.680
<v Speaker 2>that you won't hear anywhere else. I want to bring

0:33:48.720 --> 0:33:51.600
<v Speaker 2>you back to that speech from jd Vance Melinda, the

0:33:51.680 --> 0:33:55.600
<v Speaker 2>Vice President, speaking earlier today in Munich, with a focus

0:33:55.680 --> 0:33:58.240
<v Speaker 2>directly on our European allies. Here's what he said.

0:33:58.800 --> 0:34:01.600
<v Speaker 10>The threat that I worry the most about visa e

0:34:01.600 --> 0:34:05.080
<v Speaker 10>Europe is not Russia, it's not China, it's not any

0:34:05.120 --> 0:34:08.719
<v Speaker 10>other external actor. And what I worry about is the

0:34:08.760 --> 0:34:13.880
<v Speaker 10>threat from within, the retreat of Europe from some of

0:34:13.920 --> 0:34:17.400
<v Speaker 10>its most fundamental values, values shared with the United States

0:34:17.440 --> 0:34:18.000
<v Speaker 10>of America.

0:34:19.480 --> 0:34:21.520
<v Speaker 2>Not of a lot of applause in the room, there,

0:34:21.920 --> 0:34:24.440
<v Speaker 2>not a shocker, Melinda. I'm not sure what you thought

0:34:24.920 --> 0:34:29.480
<v Speaker 2>he was referring to there. But is he strengthening America's hands?

0:34:29.520 --> 0:34:33.720
<v Speaker 2>Is he strengthening Ukraine's hand by turning criticism on Europe

0:34:33.800 --> 0:34:34.200
<v Speaker 2>right now?

0:34:35.680 --> 0:34:38.080
<v Speaker 6>So, Joe, I want to take the most generous assessment

0:34:38.120 --> 0:34:41.160
<v Speaker 6>of JD Vance's speech, and I think the most generous

0:34:41.160 --> 0:34:43.560
<v Speaker 6>assessment I can give you is that he is trying

0:34:43.560 --> 0:34:46.759
<v Speaker 6>to provoke the Europeans into action, and he's right to

0:34:46.800 --> 0:34:49.640
<v Speaker 6>do it. The Europeans have been lazy and they have

0:34:49.880 --> 0:34:52.560
<v Speaker 6>talked a big game. And here I'm pointing my finger

0:34:52.880 --> 0:34:55.440
<v Speaker 6>at Germany in France in particular. You know, there's a

0:34:55.480 --> 0:34:58.560
<v Speaker 6>lot of good countries like Poland and the Lithuanians and

0:34:58.680 --> 0:35:01.320
<v Speaker 6>also the Nordic countries that have done a huge amount

0:35:01.320 --> 0:35:05.040
<v Speaker 6>for Ukraine, but Germany and France in particular, they like

0:35:05.080 --> 0:35:07.560
<v Speaker 6>to talk and they don't do. So I think he's

0:35:07.680 --> 0:35:11.360
<v Speaker 6>right to point out that Ukraine is in Europe's backyard

0:35:11.680 --> 0:35:14.480
<v Speaker 6>and it's time to actually do to make good on

0:35:14.560 --> 0:35:18.640
<v Speaker 6>all the promises and and secure Europe.

0:35:19.840 --> 0:35:24.200
<v Speaker 2>What promises are we talking beyond paying dues to NATO

0:35:24.280 --> 0:35:26.960
<v Speaker 2>and beyond investing in each country's own military? Is that

0:35:27.000 --> 0:35:28.400
<v Speaker 2>what we're talking about? Is there more than that?

0:35:29.520 --> 0:35:31.160
<v Speaker 6>No, there's more than that. So if you go to

0:35:31.160 --> 0:35:34.080
<v Speaker 6>the Keel Institute's website, it's a great think tank in Germany.

0:35:34.239 --> 0:35:37.360
<v Speaker 6>It looks at the commitments that country donor governments have

0:35:37.440 --> 0:35:40.160
<v Speaker 6>made and then the actual amount of military kit that

0:35:40.160 --> 0:35:42.440
<v Speaker 6>they've delivered, and in many of these cases there's a

0:35:42.520 --> 0:35:46.239
<v Speaker 6>huge gap between the promise and the delivery. So I'm

0:35:46.280 --> 0:35:49.719
<v Speaker 6>saying Germany and France in particular need to make good

0:35:49.840 --> 0:35:52.160
<v Speaker 6>on the promises that they've made and deliver.

0:35:53.360 --> 0:35:57.800
<v Speaker 2>We've rarely heard your commentary hit Europe so hard, Melinda.

0:35:57.880 --> 0:36:00.640
<v Speaker 2>What's the big picture here? If talks are starting now,

0:36:00.719 --> 0:36:03.120
<v Speaker 2>Donald Trump Vladimir Putin apparently are going to get together.

0:36:03.480 --> 0:36:06.560
<v Speaker 2>At one point floated to get together in Saudi Arabia.

0:36:06.560 --> 0:36:09.640
<v Speaker 2>Apparently that's not going to happen. What's the window for negotiations?

0:36:09.680 --> 0:36:11.600
<v Speaker 2>When does this war end?

0:36:12.239 --> 0:36:16.600
<v Speaker 6>So this war ends when Vladimir Putin decides that it ends.

0:36:16.680 --> 0:36:20.799
<v Speaker 6>That's the hard truth. If Donald Trump pulls out and

0:36:20.840 --> 0:36:24.440
<v Speaker 6>sends no more military assistance, Ukraine will keep fighting and

0:36:24.480 --> 0:36:27.400
<v Speaker 6>the Ukrainians have six to eight months more where they

0:36:27.400 --> 0:36:30.359
<v Speaker 6>can continue at about the same pace. So even if

0:36:30.400 --> 0:36:32.960
<v Speaker 6>the United States says no more, it's over, that doesn't

0:36:32.960 --> 0:36:36.080
<v Speaker 6>mean it's over. And you hear you heard Vladimir Zelensky

0:36:36.160 --> 0:36:40.760
<v Speaker 6>saying any negotiations have to involve Ukraine. So don't try

0:36:40.880 --> 0:36:44.640
<v Speaker 6>this y Alta like format where you exclude Ukraine. We're

0:36:44.640 --> 0:36:47.160
<v Speaker 6>not going to agree to it. So I think we

0:36:47.200 --> 0:36:50.560
<v Speaker 6>are getting closer and closer. We see Trump wants, he

0:36:50.640 --> 0:36:53.279
<v Speaker 6>wants peace, he wants the rumor is Joe that he

0:36:53.280 --> 0:36:56.080
<v Speaker 6>wants the Nobel Prize and he thinks that bringing peace

0:36:56.120 --> 0:36:58.799
<v Speaker 6>to Ukraine might give him that. And let's hope, you know,

0:36:58.840 --> 0:37:01.719
<v Speaker 6>if he can do it sutely. But it's really a

0:37:01.840 --> 0:37:05.320
<v Speaker 6>question of when Putin has decided that the costs exceed

0:37:05.360 --> 0:37:10.200
<v Speaker 6>the benefits, and they don't at this point. For Moscow, does.

0:37:10.000 --> 0:37:11.920
<v Speaker 2>A peace plan need to be permanent to win the

0:37:11.920 --> 0:37:13.720
<v Speaker 2>Nobel Prize?

0:37:14.200 --> 0:37:17.440
<v Speaker 6>You'd have to ask the committee that one. I would

0:37:17.560 --> 0:37:20.400
<v Speaker 6>urge them though, to only issue a peace plan that

0:37:20.520 --> 0:37:23.320
<v Speaker 6>involves a just and lasting piece. And that's going to

0:37:23.520 --> 0:37:27.840
<v Speaker 6>mean some kind of security arrangement with permanent presence of

0:37:27.920 --> 0:37:32.040
<v Speaker 6>troops in Ukraine, and it means Article five guarantees. And

0:37:32.120 --> 0:37:35.200
<v Speaker 6>unfortunately NATO membership is not on the cards right now.

0:37:35.600 --> 0:37:38.520
<v Speaker 6>As Pete haig Seth mentioned yesterday.

0:37:39.239 --> 0:37:41.560
<v Speaker 2>Wellind I'm really glad you could join us today. Welnda Herring,

0:37:42.000 --> 0:37:45.840
<v Speaker 2>Senior Fellow for the Atlantic Council's Eurasia Center, Senior Advisor

0:37:45.960 --> 0:37:49.680
<v Speaker 2>RASM for Ukraine and just back from Kiev, as Melinda mentioned,

0:37:49.719 --> 0:37:53.160
<v Speaker 2>thank you for the insights. As always, Melinda, fascinating conversation

0:37:53.239 --> 0:37:56.240
<v Speaker 2>as we try to track the ball here on negotiations

0:37:56.360 --> 0:37:59.080
<v Speaker 2>surrounding Europe. We've got another day in Munich tomorrow as

0:37:59.120 --> 0:38:00.120
<v Speaker 2>talks will continue.

0:38:02.280 --> 0:38:05.759
<v Speaker 1>You're listening to the Bloomberg Balance of Power podcast. Catch

0:38:05.840 --> 0:38:08.880
<v Speaker 1>us live weekdays at noon and five pm Eastern on

0:38:09.000 --> 0:38:12.239
<v Speaker 1>Apple Cockley and Android Auto with the Bloomberg Business app.

0:38:12.280 --> 0:38:15.319
<v Speaker 1>You can also listen live on Amazon Alexa from our

0:38:15.360 --> 0:38:20.520
<v Speaker 1>flagship New York station Just Say Alexa played Bloomberg eleven thirty.

0:38:21.320 --> 0:38:22.680
<v Speaker 2>Yeah, you made it to the end of the week,

0:38:22.719 --> 0:38:27.279
<v Speaker 2>and boy, I haven't even mentioned Valentine's Day. Happy Valentine's Day.

0:38:27.280 --> 0:38:30.280
<v Speaker 2>It's not just the Friday edition, it's the Cupid edition.

0:38:30.560 --> 0:38:32.480
<v Speaker 2>And the White House knows this too. If you check

0:38:32.480 --> 0:38:36.080
<v Speaker 2>out the Twitter page at the White House, Producer James

0:38:36.120 --> 0:38:39.480
<v Speaker 2>pointed me to this. Roses are red, violets are blue.

0:38:39.520 --> 0:38:45.320
<v Speaker 2>It says, come here illegally and we'll deport you. Donald Trump,

0:38:45.360 --> 0:38:48.759
<v Speaker 2>the last of the Romantics. It's a big day at

0:38:48.800 --> 0:38:53.800
<v Speaker 2>sixteen hundred Pennsylvania Avenue, so we have to talk about

0:38:54.120 --> 0:38:57.560
<v Speaker 2>some hard decisions. An important thing happened last night. By

0:38:57.560 --> 0:38:59.239
<v Speaker 2>the way, we talk about all the noise that comes

0:38:59.239 --> 0:39:01.200
<v Speaker 2>out of the West Wing every day, and there are

0:39:01.239 --> 0:39:03.560
<v Speaker 2>going to be more executive orders, we're told being signed

0:39:03.600 --> 0:39:07.880
<v Speaker 2>around one pm Eastern time. Sometimes you forget what to

0:39:07.920 --> 0:39:09.640
<v Speaker 2>pay attention to, and I got into that a little

0:39:09.680 --> 0:39:11.560
<v Speaker 2>bit yesterday. We're going to be the flashlight in the

0:39:11.640 --> 0:39:14.840
<v Speaker 2>dark for you where there's actual news, because well, Donald

0:39:14.840 --> 0:39:17.640
<v Speaker 2>Trump was threatening reciprocal tariffs all day long, none of

0:39:17.640 --> 0:39:20.560
<v Speaker 2>them implemented. Maybe they will be someday, maybe they won't.

0:39:21.320 --> 0:39:25.400
<v Speaker 2>Something actually happened last night. A budget got out of

0:39:25.480 --> 0:39:28.680
<v Speaker 2>committee in the House. This is a big deal. If

0:39:28.680 --> 0:39:30.719
<v Speaker 2>you listen to this broadcast. We had Ralph Norman on

0:39:30.800 --> 0:39:33.560
<v Speaker 2>yesterday talking about some of the tough decisions that they

0:39:33.560 --> 0:39:35.880
<v Speaker 2>need to make here when it comes to spending cuts

0:39:35.880 --> 0:39:39.200
<v Speaker 2>to make the freedom COCKUS happy, tax cuts to make

0:39:39.360 --> 0:39:42.839
<v Speaker 2>Donald Trump happy. There are a lot of moving parts here,

0:39:43.200 --> 0:39:45.279
<v Speaker 2>so they get it out of committee even as the

0:39:45.280 --> 0:39:48.920
<v Speaker 2>Senate is marking up its own bill. The big questions, though, remain,

0:39:50.080 --> 0:39:52.480
<v Speaker 2>beginning with how you pay for it, And this is

0:39:52.480 --> 0:39:55.120
<v Speaker 2>where things got complicated. When you add salt, no tax

0:39:55.160 --> 0:39:57.720
<v Speaker 2>on tips, no tax on overtime, no tax on anything.

0:39:57.760 --> 0:40:00.880
<v Speaker 2>I guess anymore, and so decisions are going to have

0:40:00.920 --> 0:40:04.040
<v Speaker 2>to be made. I dared you to stay with us

0:40:04.160 --> 0:40:07.399
<v Speaker 2>for this conversation. You hear about the sausage being made.

0:40:07.440 --> 0:40:09.319
<v Speaker 2>We're going to do this right now and figure this

0:40:09.360 --> 0:40:11.360
<v Speaker 2>out a little bit together and try on some ideas.

0:40:11.400 --> 0:40:15.320
<v Speaker 2>Because a group called Arnold Ventures just produced a report

0:40:15.360 --> 0:40:18.520
<v Speaker 2>on wasteful spending and proposed ways to cut and save.

0:40:19.200 --> 0:40:22.760
<v Speaker 2>The face of that study is George Callis, who served

0:40:22.760 --> 0:40:26.040
<v Speaker 2>for fifteen years on Capitol Hill, a senior tax council

0:40:26.080 --> 0:40:28.400
<v Speaker 2>in the US House of Representatives, was on ways and means.

0:40:28.400 --> 0:40:32.080
<v Speaker 2>Former Speaker Paul Ryan also served as counsel for the

0:40:32.120 --> 0:40:35.840
<v Speaker 2>House Budget Committee. So we have the perfect voice for

0:40:35.920 --> 0:40:39.439
<v Speaker 2>this right now. The report offers twenty reforms, okay, ten

0:40:39.520 --> 0:40:43.440
<v Speaker 2>spending cuts, ten tax loopholes to close. You will not

0:40:43.480 --> 0:40:46.400
<v Speaker 2>agree with them all, but according to this research, if

0:40:46.440 --> 0:40:49.520
<v Speaker 2>they all ended up in the legislation, Trump tax cuts

0:40:49.520 --> 0:40:52.120
<v Speaker 2>are paid for. What a concept. George Callis is with

0:40:52.200 --> 0:40:53.759
<v Speaker 2>us right now in the studio. It's great to see you,

0:40:53.760 --> 0:40:56.680
<v Speaker 2>Thanks for coming in. I hope I framed that close

0:40:56.719 --> 0:41:00.520
<v Speaker 2>to being what we have here. You've got cuts, you've

0:41:00.520 --> 0:41:02.520
<v Speaker 2>got loopholes. I want to walk through some of these

0:41:02.560 --> 0:41:04.440
<v Speaker 2>specifically year. But as you sit in front of me

0:41:04.520 --> 0:41:07.640
<v Speaker 2>right now, having been through this process before, do you

0:41:07.680 --> 0:41:10.160
<v Speaker 2>actually believe that all of these proposals that Donald Trump

0:41:10.280 --> 0:41:12.920
<v Speaker 2>rolled out during the campaign, on top of the twenty

0:41:12.960 --> 0:41:15.279
<v Speaker 2>seventeen tax cuts, we'll end up in a final piece

0:41:15.320 --> 0:41:15.960
<v Speaker 2>of legislation.

0:41:16.960 --> 0:41:19.040
<v Speaker 8>Well, first of all, Joe, it's great to be here.

0:41:19.080 --> 0:41:22.520
<v Speaker 8>Appreciate you having me on. It is hard for me

0:41:22.680 --> 0:41:27.239
<v Speaker 8>to prognosticate. You know, you watch Congress just like I do,

0:41:27.400 --> 0:41:29.759
<v Speaker 8>and it's hard to know what's going to happen in

0:41:29.760 --> 0:41:32.200
<v Speaker 8>twenty four hours, much less as we get to the endgame.

0:41:32.239 --> 0:41:35.480
<v Speaker 8>I think yesterday's markup at the House Budget Committee was

0:41:35.640 --> 0:41:38.719
<v Speaker 8>the first step in a long and winding road to

0:41:38.920 --> 0:41:42.400
<v Speaker 8>quote a Beatles song, and there'll be a lot of

0:41:42.400 --> 0:41:45.480
<v Speaker 8>twists and turns before this thing, you know, gets to

0:41:45.520 --> 0:41:49.640
<v Speaker 8>an endgame. I think I don't know about the President's

0:41:49.680 --> 0:41:54.600
<v Speaker 8>proposals my senses. Some of them are maybe higher priorities

0:41:54.600 --> 0:41:58.359
<v Speaker 8>than others. They certainly add a lot to the four

0:41:58.360 --> 0:42:01.920
<v Speaker 8>point five trillion dollar cost of simply making permanent the

0:42:02.040 --> 0:42:06.279
<v Speaker 8>expiring tax provisions from twenty seventeen, and digs are whole

0:42:06.320 --> 0:42:09.279
<v Speaker 8>even deeper you know, we put out this report and

0:42:09.640 --> 0:42:12.040
<v Speaker 8>it wasn't it wasn't just me, it was you know,

0:42:12.040 --> 0:42:15.480
<v Speaker 8>at Arnold Ventures, we have experts. I'm a tax expert,

0:42:15.520 --> 0:42:18.360
<v Speaker 8>we have healthcare experts, higher education experts, and this was

0:42:18.400 --> 0:42:21.359
<v Speaker 8>a collaborative effort to come up with what was what

0:42:21.400 --> 0:42:24.600
<v Speaker 8>we thought of as a balanced proposal. You know, twenty

0:42:24.719 --> 0:42:28.760
<v Speaker 8>spending cuts or sorry, ten spending cuts, ten tax loophole

0:42:28.800 --> 0:42:32.560
<v Speaker 8>closers that we that are we think are politically viable,

0:42:33.280 --> 0:42:36.040
<v Speaker 8>and therefore we really want to put them on the

0:42:36.040 --> 0:42:38.800
<v Speaker 8>table and have Congress take a close look at them.

0:42:38.840 --> 0:42:43.879
<v Speaker 8>You know, our view is that Congress can do both

0:42:43.920 --> 0:42:45.600
<v Speaker 8>and should do both. And what I mean by that

0:42:45.760 --> 0:42:50.680
<v Speaker 8>is both make permanent and extend pro growth tax policy,

0:42:51.000 --> 0:42:55.680
<v Speaker 8>tax policies that simplify tax filing for American families, make

0:42:55.719 --> 0:42:58.960
<v Speaker 8>the tax code fairer, but also do it without increasing

0:42:59.000 --> 0:43:01.360
<v Speaker 8>are already unsustained able dead burden.

0:43:01.480 --> 0:43:03.480
<v Speaker 2>Well, that would be a feat based on what we've

0:43:03.520 --> 0:43:05.760
<v Speaker 2>been hearing. So just to be clear before I start

0:43:05.760 --> 0:43:09.480
<v Speaker 2>getting specific, you're looking at TCJA without all of the

0:43:09.520 --> 0:43:13.640
<v Speaker 2>other additives, without tips, without overtime, without moving salt. Is

0:43:13.640 --> 0:43:15.920
<v Speaker 2>that fair to say? We're looking at this in the

0:43:15.960 --> 0:43:17.200
<v Speaker 2>twenty seventeen structure.

0:43:17.960 --> 0:43:20.239
<v Speaker 11>That that's how this project started. I mean that was

0:43:20.280 --> 0:43:21.759
<v Speaker 11>the yes, that was the basis.

0:43:21.400 --> 0:43:23.959
<v Speaker 2>Just to set the baseline here. So number one, let's

0:43:24.000 --> 0:43:27.680
<v Speaker 2>start with spending cuts. You find up to a trillion

0:43:27.800 --> 0:43:33.799
<v Speaker 2>dollars by modifying risk adjustment payments to Medicare advantage insurers.

0:43:34.160 --> 0:43:37.080
<v Speaker 2>This is heady stuff, it's complicated, but as you write,

0:43:37.080 --> 0:43:40.800
<v Speaker 2>insurers receive higher payments for enrollees with higher risk scores.

0:43:41.160 --> 0:43:43.759
<v Speaker 2>You make the argument that creates strong financial incentives for

0:43:43.800 --> 0:43:47.279
<v Speaker 2>insurers to make their patients appear sicker than they actually are.

0:43:48.120 --> 0:43:48.960
<v Speaker 2>So what do you do with it?

0:43:49.560 --> 0:43:49.759
<v Speaker 11>Right?

0:43:49.840 --> 0:43:51.960
<v Speaker 8>And so this you know, this is a policy that

0:43:52.040 --> 0:43:54.680
<v Speaker 8>can save up to one trillion dollars. There's a lot

0:43:54.760 --> 0:43:58.160
<v Speaker 8>of money there's you can, as we say in kind

0:43:58.200 --> 0:44:01.840
<v Speaker 8>of DC parlance, you can dial you can do less

0:44:02.400 --> 0:44:05.560
<v Speaker 8>than the whole. It's not everything or nothing kind of policy,

0:44:06.160 --> 0:44:09.680
<v Speaker 8>but it's a good representation of the kinds of policies

0:44:10.000 --> 0:44:13.759
<v Speaker 8>that we proposed in that we think, not only can

0:44:13.800 --> 0:44:17.120
<v Speaker 8>Congress save trillions of dollars, but they can save trillions

0:44:17.160 --> 0:44:19.440
<v Speaker 8>of dollars before they have to go straight to things

0:44:19.520 --> 0:44:22.040
<v Speaker 8>like cutting benefits or raising.

0:44:21.719 --> 0:44:24.239
<v Speaker 11>People's tax right, This would not cut benefit, that's right.

0:44:24.280 --> 0:44:27.360
<v Speaker 8>This is about ringing inefficiencies and waste out of the system.

0:44:27.400 --> 0:44:31.560
<v Speaker 2>Yep, got it. Simplifying student loan repayment, you find over

0:44:31.640 --> 0:44:36.320
<v Speaker 2>two hundred billion dollars there by simply streamlining seven plans

0:44:36.320 --> 0:44:37.719
<v Speaker 2>into two. How easy would that be?

0:44:37.920 --> 0:44:38.359
<v Speaker 11>That's right?

0:44:38.440 --> 0:44:42.840
<v Speaker 8>Well, I think from a technical perspective it's pretty easy.

0:44:42.880 --> 0:44:45.799
<v Speaker 8>In fact, legislation to that effect has already been introduced.

0:44:46.000 --> 0:44:49.680
<v Speaker 8>So there was clearly congressional Republican support on the Hill

0:44:49.719 --> 0:44:53.279
<v Speaker 8>for it. You know, politically, of course, as we know,

0:44:53.480 --> 0:44:55.720
<v Speaker 8>one or two votes in the House on a partisan

0:44:55.760 --> 0:44:59.480
<v Speaker 8>bill can stop anything, so but there is clearly interest

0:44:59.520 --> 0:45:02.440
<v Speaker 8>in doing the We think the policy case is strong.

0:45:02.800 --> 0:45:04.680
<v Speaker 8>You know, a lot of this money is going to

0:45:04.920 --> 0:45:08.960
<v Speaker 8>law students and medical students who earn a lot of money.

0:45:09.200 --> 0:45:12.680
<v Speaker 11>A lot of it goes to professional students.

0:45:12.360 --> 0:45:15.319
<v Speaker 8>Who just get degree after degree after degree that may

0:45:15.360 --> 0:45:17.120
<v Speaker 8>not be worth a whole lot and then get their

0:45:17.160 --> 0:45:21.400
<v Speaker 8>loans forgiven. So there's a lot of you know, poorly

0:45:21.560 --> 0:45:24.759
<v Speaker 8>targeted money there that could be targeted better at the

0:45:24.760 --> 0:45:27.160
<v Speaker 8>students who are really using it appropriately.

0:45:27.920 --> 0:45:32.480
<v Speaker 2>You call for repealing the IRA expansion of the EV

0:45:32.840 --> 0:45:36.160
<v Speaker 2>tax credit, Electric vehicles. That is, the savings of one

0:45:36.200 --> 0:45:38.880
<v Speaker 2>hundred you find another one hundred billion dollars there alone.

0:45:39.000 --> 0:45:40.399
<v Speaker 2>Elon Muskin to let you do that.

0:45:42.239 --> 0:45:43.319
<v Speaker 11>We'll have to see.

0:45:43.520 --> 0:45:45.840
<v Speaker 8>I don't think he's from what I've seen, he hasn't

0:45:45.880 --> 0:45:50.880
<v Speaker 8>been to shown much concern about reducing the EV subsidies.

0:45:50.920 --> 0:45:54.560
<v Speaker 8>I think there's a view that of the IRA Green

0:45:54.719 --> 0:45:57.520
<v Speaker 8>Energy Package of the Democrats enacted in twenty twenty two,

0:45:58.040 --> 0:46:00.719
<v Speaker 8>the EV subsidies have, like the Lead East bang for

0:46:00.800 --> 0:46:04.080
<v Speaker 8>the buck. They cost the most relative to the climate

0:46:04.120 --> 0:46:06.800
<v Speaker 8>impact they have. And so if there's any low hanging

0:46:06.880 --> 0:46:09.319
<v Speaker 8>fruit in the green energy space, I think it's the

0:46:09.360 --> 0:46:10.520
<v Speaker 8>electric vehicle area.

0:46:10.600 --> 0:46:13.040
<v Speaker 2>All right, So we're flying along pretty smooth flights so far,

0:46:13.120 --> 0:46:17.760
<v Speaker 2>we're about to hit massive turbulence. Ready, apply the salt

0:46:17.840 --> 0:46:22.279
<v Speaker 2>cap to businesses. Brace yourself. Eight hundred and twenty three

0:46:22.320 --> 0:46:25.279
<v Speaker 2>billion dollars. I thought we were going to raise the

0:46:25.360 --> 0:46:28.200
<v Speaker 2>cap on salt for individuals. I'm assuming you don't want

0:46:28.200 --> 0:46:29.799
<v Speaker 2>to see that happen, and you want to add it

0:46:29.840 --> 0:46:30.400
<v Speaker 2>to business.

0:46:30.440 --> 0:46:31.560
<v Speaker 3>Is that right? Well?

0:46:31.640 --> 0:46:32.040
<v Speaker 11>Right, right?

0:46:32.080 --> 0:46:34.360
<v Speaker 8>So there's a currently a ten thousand dollars PA on

0:46:34.400 --> 0:46:35.200
<v Speaker 8>the salt deduction.

0:46:35.440 --> 0:46:38.120
<v Speaker 11>If you if you simply extend everything. It stays there.

0:46:38.960 --> 0:46:41.720
<v Speaker 8>You know, I think from a policy perspective, the ideal

0:46:41.800 --> 0:46:43.160
<v Speaker 8>salt cap is zero dollars.

0:46:44.320 --> 0:46:46.720
<v Speaker 2>Someone's screaming right now in New York. I could hear it.

0:46:46.760 --> 0:46:48.640
<v Speaker 11>Well, I like, I like to say I would double

0:46:48.680 --> 0:46:51.280
<v Speaker 11>that amount for married couples, double the zero.

0:46:53.120 --> 0:46:54.080
<v Speaker 2>Mike Lawler's calling.

0:46:54.160 --> 0:46:56.560
<v Speaker 8>He wants to I suspect, yes, I suspect they'll have

0:46:56.600 --> 0:46:59.200
<v Speaker 8>a note from his office when I get back later

0:46:59.239 --> 0:47:02.799
<v Speaker 8>this afternoon. But you know, the policy rationale is that

0:47:03.920 --> 0:47:06.920
<v Speaker 8>if somebody's in the thirty seven percent federal tax bracket

0:47:06.960 --> 0:47:11.080
<v Speaker 8>and their state raises their taxes by one hundred dollars,

0:47:11.680 --> 0:47:14.839
<v Speaker 8>if there's an unlimited salt deduction, it only cost them

0:47:14.880 --> 0:47:18.480
<v Speaker 8>sixty seven dollars or sixty three dollars. They just right,

0:47:18.480 --> 0:47:20.680
<v Speaker 8>and the other thirty seven dollars is basically paid for

0:47:20.800 --> 0:47:22.920
<v Speaker 8>by the rest of the country. And so you know,

0:47:23.400 --> 0:47:28.960
<v Speaker 8>that rationale applies to both individual taxes and to business taxes. Now,

0:47:29.000 --> 0:47:32.760
<v Speaker 8>I would say the revenue from extending it to business

0:47:32.800 --> 0:47:36.440
<v Speaker 8>taxes is pretty substantial, and there are a lot of

0:47:36.480 --> 0:47:40.480
<v Speaker 8>good pro growth business and corporate tax relief provisions on

0:47:40.600 --> 0:47:43.320
<v Speaker 8>the table as well, provisions that I think we would

0:47:43.360 --> 0:47:47.279
<v Speaker 8>say are good policy, and so maybe the corporate salt

0:47:47.320 --> 0:47:52.080
<v Speaker 8>deduction revenues should be allocated mostly to those provisions. Whether

0:47:52.120 --> 0:47:56.279
<v Speaker 8>it's Trump wants to reduce the corporate rate further, sure depreciation,

0:47:56.520 --> 0:47:57.759
<v Speaker 8>R and D, things like that.

0:47:58.200 --> 0:48:01.080
<v Speaker 2>My terminal is exploding right now on this. All right,

0:48:01.320 --> 0:48:03.920
<v Speaker 2>if I had time to mention one more this loophole,

0:48:04.360 --> 0:48:07.000
<v Speaker 2>this is right down the middle for the Bloomberg audience,

0:48:07.520 --> 0:48:12.399
<v Speaker 2>reduce tax preference for stock buybacks over dividends. A lot

0:48:12.440 --> 0:48:14.279
<v Speaker 2>of people watching and listening right now are going to

0:48:14.320 --> 0:48:16.000
<v Speaker 2>bristle at this idea. Why would it work?

0:48:17.000 --> 0:48:20.759
<v Speaker 8>So that's a good example of another principle we had

0:48:20.800 --> 0:48:23.759
<v Speaker 8>with a lot of these proposals, which is we're not

0:48:24.280 --> 0:48:27.719
<v Speaker 8>trying to punish people. We're trying to find areas where

0:48:27.760 --> 0:48:32.160
<v Speaker 8>there's non neutrality, where there's economic distortions, and move closer

0:48:32.200 --> 0:48:35.000
<v Speaker 8>to economic neutrality because in the long run that leads

0:48:35.040 --> 0:48:38.600
<v Speaker 8>to more economic efficiency, more economic growth, a stronger economy.

0:48:38.760 --> 0:48:42.920
<v Speaker 8>There is a tax distortion that from a tax perspective,

0:48:43.760 --> 0:48:47.920
<v Speaker 8>Using stock buybacks to return cash to shareholders is favored

0:48:47.920 --> 0:48:51.040
<v Speaker 8>from a tax perspective compared to just paying out dividends.

0:48:51.120 --> 0:48:52.200
<v Speaker 2>Why they just keep buying stock.

0:48:52.239 --> 0:48:53.240
<v Speaker 11>That's why they keep buying.

0:48:53.120 --> 0:48:55.800
<v Speaker 8>Right, right, And like we're not against stock buybacks, but

0:48:55.840 --> 0:48:58.839
<v Speaker 8>there shouldn't be a tax subsidy for stock buybacks, right.

0:48:59.160 --> 0:49:01.320
<v Speaker 11>Penwharton budget Model did an estimate.

0:49:01.560 --> 0:49:06.280
<v Speaker 8>There's currently a one percent tax on stock buybacks. Penwharton

0:49:06.320 --> 0:49:09.200
<v Speaker 8>Budget Model did an estimate that said the economically neutral

0:49:09.280 --> 0:49:12.360
<v Speaker 8>tax would be about four point six percent. That would

0:49:12.400 --> 0:49:15.400
<v Speaker 8>that would eliminate the tax advantage and make them money.

0:49:15.200 --> 0:49:16.200
<v Speaker 11>Equal with dividends.

0:49:16.600 --> 0:49:20.000
<v Speaker 8>So we've proposed, you know, not going over four point

0:49:20.120 --> 0:49:23.320
<v Speaker 8>six if anything, undershooting to reduce that distortion.

0:49:24.480 --> 0:49:25.760
<v Speaker 11>Let's set the market decide.

0:49:25.800 --> 0:49:29.319
<v Speaker 8>Have you sent this research to the dough We've we

0:49:29.360 --> 0:49:32.680
<v Speaker 8>have distributed it widely to yes, the policymakers in both

0:49:32.719 --> 0:49:36.719
<v Speaker 8>the executive and legislative reaction. Again, I haven't heard from

0:49:36.719 --> 0:49:40.680
<v Speaker 8>Elon yet, Okay, but we've gotten a lot of interest.

0:49:41.120 --> 0:49:42.759
<v Speaker 8>We've got a lot of interest from Capitol Hill.

0:49:42.800 --> 0:49:45.040
<v Speaker 2>I'm sure each office finds a different component that they

0:49:45.160 --> 0:49:45.440
<v Speaker 2>like here.

0:49:45.680 --> 0:49:47.520
<v Speaker 11>They right, So then they.

0:49:47.400 --> 0:49:49.760
<v Speaker 2>All go on the room, they bang their heads against

0:49:49.760 --> 0:49:51.480
<v Speaker 2>the wall and try to come up with something. When

0:49:51.560 --> 0:49:55.239
<v Speaker 2>you add politics to this document, how realistic is any

0:49:55.280 --> 0:49:55.400
<v Speaker 2>of this?

0:49:56.080 --> 0:49:57.320
<v Speaker 11>That's a that's a great question.

0:49:57.440 --> 0:50:00.560
<v Speaker 8>So again, if you're assuming that this is a part

0:50:00.640 --> 0:50:02.880
<v Speaker 8>is an exercise, and yes, every Democrat is going to

0:50:02.960 --> 0:50:05.520
<v Speaker 8>vote no, you know better. We know that everything is

0:50:05.640 --> 0:50:07.560
<v Speaker 8>difficult in the House because they have a one or

0:50:07.560 --> 0:50:10.160
<v Speaker 8>two vote margin. Senate has a little more of a cushion,

0:50:10.640 --> 0:50:12.360
<v Speaker 8>so everything is politically difficult.

0:50:12.360 --> 0:50:14.760
<v Speaker 11>It's sort of a baseline matter. Now.

0:50:14.880 --> 0:50:18.320
<v Speaker 8>We did apply kind of a political viability test to

0:50:18.680 --> 0:50:22.240
<v Speaker 8>identify our top twenty, and we think there's enough interest

0:50:22.239 --> 0:50:23.560
<v Speaker 8>in these proposals to make them.

0:50:23.520 --> 0:50:27.600
<v Speaker 2>Viable achieving fiscally responsible tax reform. I've got the hard

0:50:27.640 --> 0:50:30.680
<v Speaker 2>copy here, you can find it online. It's pretty remarkable,

0:50:30.719 --> 0:50:32.440
<v Speaker 2>arnold ventures you want to agree with it all, but

0:50:32.480 --> 0:50:35.000
<v Speaker 2>at least somebody has taken a crack at this great

0:50:35.120 --> 0:50:37.880
<v Speaker 2>conversation and many thanks for being with us, George Kallis,

0:50:38.280 --> 0:50:45.319
<v Speaker 2>pleasure to have you with us here on Bloomberg. Thanks

0:50:45.360 --> 0:50:48.480
<v Speaker 2>for listening to the Balance of Power podcast. Make sure

0:50:48.520 --> 0:50:51.400
<v Speaker 2>to subscribe if you haven't already, at Apple, Spotify, or

0:50:51.440 --> 0:50:54.120
<v Speaker 2>wherever you get your podcasts, and you can find us

0:50:54.160 --> 0:50:57.719
<v Speaker 2>live every weekday from Washington, DC at noontime Eastern at

0:50:57.719 --> 0:50:58.960
<v Speaker 2>Bloomberg dot com.