Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot com, and of course,
Speaker 1: on the Bloomberg. Let's go first to Edward Alden, who
Speaker 1: joins us now from our Bloomberg nine nine one studios
Speaker 1: in Washington, d C. He's a Senior Fellow at the
Speaker 1: Council on Formulations, author of Failure to Adjust, How Americans
Speaker 1: got left behind in the global economy, and expert on
Speaker 1: trade policies. We approached the beginning of renegotiation talks on NAFTA,
Speaker 1: and Ted, let me ask you first of all about
Speaker 1: the use of trade as a weapon and offensive or
Speaker 1: a defensive weapon. Bloomberg News reporting yesterday that the the
Speaker 1: the administration is elected to wait awhile here on an
Speaker 1: investigation into intellectual property violations that may right occurred with
Speaker 1: with China because of China's willingness to vote with the
Speaker 1: U S and the U N Security Council. Over the
Speaker 1: weekend fIF zero was the vote there on new sanctions
Speaker 1: on North Korea. Have we seen this before, that being
Speaker 1: trade policy used as as advice of foreign policy, Oh, yeah,
Speaker 1: very much, David. And and in fact, it was one
Speaker 1: of the things that President Trump criticized as a candidate,
Speaker 1: which which is that the United States does have a
Speaker 1: long record of sometimes putting its trade in economic concerns
Speaker 1: on the back burner because it has bigger diplomatic fish
Speaker 1: to fry. If you look at our trade relations with
Speaker 1: Japan over many years, there's no question that that that
Speaker 1: Japan got advantages from the United States because it was
Speaker 1: such an important ally in Asia. So so this kind
Speaker 1: of thing happens all the time. What's a bit different
Speaker 1: is the President being quite so explicit about it, having
Speaker 1: said to China, look, if you help us out on
Speaker 1: North Korea, we might go easier with you on trade.
Speaker 1: You rarely hear presidents be be quite that forthright about
Speaker 1: what it is they're doing. Tetle and help us understand
Speaker 1: the importance of the trade relationship between China and North Korea.
Speaker 1: These sanctions amounted about a billion dollars in total. Uh,
Speaker 1: this is not a that's very sizeable for North Korea.
Speaker 1: Here explain the importance of that particular trade relationship and
Speaker 1: and the role that China is playing here. Well, I
Speaker 1: mean China and to a lesser extent, Russia. Those are
Speaker 1: North Korea's primary markets for UH, for the country's exports. UM.
Speaker 1: What was significant about the U N sanctions is that
Speaker 1: is that they're going to bite on major raw materials
Speaker 1: exports coming out of North Korea, and if fully implemented,
Speaker 1: will squeeze the North Korean economy to a degree we
Speaker 1: have not seen in the past. That said, there's a
Speaker 1: long history of China looking the other way and allowing
Speaker 1: a lot of this trade to continue despite formal sanctions
Speaker 1: being in play. So I think the real question here
Speaker 1: will be whether China is worried enough about the current
Speaker 1: situation and believes that sanctions might actually UH put North
Speaker 1: Korea on a on a slightly less volatile path. And
Speaker 1: we're just gonna have to to watch how that plays out.
Speaker 1: Tad Alton with the Council on formulations here with us
Speaker 1: on Bloomberg surveillance. Tad, I know you're looking ahead to
Speaker 1: August the sixteenth, that's when negotiations over and AFTA are
Speaker 1: set to begin. What do we know about what's on
Speaker 1: the table? We got this I think eighteen page report
Speaker 1: from the U S. Trade Representative outlining what the the
Speaker 1: the the the the ideal agenda items would be, what's
Speaker 1: the what's the administration said about what they hope to
Speaker 1: accomplish during these talks. Yeah, well, we know quite a
Speaker 1: lot now actually from all three countries. So I would
Speaker 1: put the U S asks into kind of three buckets. Um.
Speaker 1: One is things that we're already done in the Transpacific Partnership,
Speaker 1: which is the deal with Asia that President Trump walked
Speaker 1: away from. Uh Digital trade is a good example, new
Speaker 1: rules for digital trade which are very important, restricting state
Speaker 1: owned enterprises, looking at the issue of currency manipulation, labor,
Speaker 1: environmental standards. A lot of that was on the table
Speaker 1: at tpp UM. There's a kind of second bucket, which
Speaker 1: is hard issues within NAFT. A lot of those have
Speaker 1: to do with dispute settlement. The Trump administration believes that
Speaker 1: American sovereignty has been compromised in various ways by these
Speaker 1: arrangements government procurement. Trump administration wants to expand by America.
Speaker 1: And then there's a third basket, which I think nobody's
Speaker 1: kind of paying attention to, which is all the industries
Speaker 1: that didn't get as good a deal as they wanted
Speaker 1: out of NAFTA are now going to come out of
Speaker 1: the woodwork and say this is our opportunity to make
Speaker 1: it better. You mentioned the t p P. How much
Speaker 1: of that is is a framework for this administration's trade
Speaker 1: policy and going forward they electing not to to sign
Speaker 1: on to that deal. Um, but is it's still the
Speaker 1: framework for for word things you're heading? Yeah, if you,
Speaker 1: I mean, if you look at that the proposal from
Speaker 1: USTR and the negotiating objectives an awful lot of the
Speaker 1: languages straight out of TPP and and and does make
Speaker 1: the president's action on TPP look much more questionable. I mean,
Speaker 1: we were talking about China earlier as well. TPP would
Speaker 1: have been a great way to pressure China on on
Speaker 1: eight issues. So I think the reality is that there
Speaker 1: are things that the United States wants for its own
Speaker 1: economic interests, particularly helping our advanced industries of one sort
Speaker 1: or another in the technology and digital space, and a
Speaker 1: lot of that was done in TPP, and now the
Speaker 1: administration is going to have to redo it on a
Speaker 1: smaller scale and then after renegotiations. Good morning everyone, Bloomberg
Speaker 1: surveillance David Gurha and Tom Kane with Brooklyn Meyer of
Speaker 1: BNP Perry futures deteriorate negative eight down futures a negative
Speaker 1: twenty five, and the vicks, which oh was nine out
Speaker 1: to a ten, jumped up to eleven point five. Eleven
Speaker 1: point six is now out to twelve point one. Seven
Speaker 1: That vis moved through the morning is a big one
Speaker 1: point to one vix points. That's a big move given
Speaker 1: what we've seen through August and July and the quiet
Speaker 1: of the markets. I guess what else I'm looking at?
Speaker 1: David on on yen strong yen uh this morning? Point
Speaker 1: four seven figures on yen as well, Brooklyn. How open
Speaker 1: is the US economy? How much is our export and
Speaker 1: our import economy getting ahead of ourselves? You're ted Aldon first?
Speaker 1: His next next, That's what happens when I walk in
Speaker 1: lake David, continue, Please, I just let's let's let's before
Speaker 1: we before we get into that question, let me let
Speaker 1: me ask you just about the digital e commy. You've
Speaker 1: mentioned that here talking about NAFTA renegotiations, and it's something
Speaker 1: that I talked about with your now colleague, Ambassador Michael Frohman,
Speaker 1: at the Council on Foreign Relations. A lot has changed
Speaker 1: here in the twenty three years that have intervened here
Speaker 1: between when when NAFTA was ratified and where we are today.
Speaker 1: How how desperate is is the need to change trade
Speaker 1: policy because of innovations in the information space? Oh, I mean,
Speaker 1: I think it's pretty desperate, right, I mean NAFTA was
Speaker 1: was ratified, and you know, back in the mid nineteen nineties,
Speaker 1: that was before the Internet, you know, long before smartphones
Speaker 1: and all the other things we take for granted. If
Speaker 1: you look at at at the most successful dynamic companies
Speaker 1: in the United States, you know, the Google's, the Facebook's,
Speaker 1: the Amazon's, you know, these companies didn't exist when when
Speaker 1: NAFTA was negotiated. So I think even if it weren't
Speaker 1: in this this political context of Trump having won the
Speaker 1: election in part on promising to renegotiate NAFTA, I think
Speaker 1: there clearly is a need to update the NAFTA. Mexico
Speaker 1: and Canada are, you know, our our first and third
Speaker 1: largest trading partners. So there's a lot of work that
Speaker 1: that should have been done under any circumstances, to make
Speaker 1: this a better and more modern deal. Help us understand
Speaker 1: who the principles are here, who's going to be at
Speaker 1: the negotiating table. I read that the the chief negotiator
Speaker 1: here on NAFTA is somebody who's been with the US
Speaker 1: Trade Representative Office for for well over a decade. He's
Speaker 1: a he's a career member the US Trade Representative Office. Uh,
Speaker 1: what difference does that make and and what do you expect?
Speaker 1: How politically do you expect these negotiations to be ten Well,
Speaker 1: I think they will probably, at least at the outset,
Speaker 1: be less political than people think because these negotiations are
Speaker 1: extraordinarily complicated. You know, Canada, the United States, and Mexico
Speaker 1: have all appointed experienced expert negotiators who understand the ins
Speaker 1: and outs of everything from you know, digital trade to
Speaker 1: textiles to autos to agriculture. Um, a lot of these
Speaker 1: are are hard grinding sort of issues. That's that's why
Speaker 1: I think this notion that we're going to do a
Speaker 1: quicker negotiation is just a fantasy. This is going to
Speaker 1: be an extremely complex and difficult negotiation and I think
Speaker 1: it's gonna take a lot longer than than people think.
Speaker 1: And the fact that you've got professionals and in each
Speaker 1: of the three countries running it. Uh is evidence of
Speaker 1: of of how serious all three countries are taking it. Ted,
Speaker 1: thank you for stopping by today. Good to be with
Speaker 1: chill them. It's very importantly folks. His book Failure to
Speaker 1: Justice fabulous on the United States trade and with a
Speaker 1: paperback coming out here in a bit with an update.
Speaker 1: I'm President of the United States. His name is Ted Alden.
Speaker 1: David Gura got there right, I did not. That's what
Speaker 1: happens when you stay up late last night watch in
Speaker 1: Yankee baseball torture that I had to goes from anyway,
Speaker 1: Ted Alden with the Council and Foreign Relations. MafA Nathanson
Speaker 1: is a phrase and media of great respect. Michael Nathanson
Speaker 1: out of brandeis legendary at Sanford Bernstein. In a week
Speaker 1: moment decided to join Craig MafA or MafA joined naked
Speaker 1: and no one knows. But anyways, we are honored in
Speaker 1: our studios today. Michael Nathanson. I think we covered today
Speaker 1: a lot, Michael, the news on Disney and Netflix. I
Speaker 1: want to bring up the name Jeffrey Immelt, you Bill
Speaker 1: Ge and things happen and all of a sudden they're
Speaker 1: going Jeff, maybe we need a new pair of eyes.
Speaker 1: Is Iger getting out in front of margin reduction? Is
Speaker 1: Mr Iger getting out in front of a board that's
Speaker 1: gonna go Wait a minute, what's going on here? Yeah,
Speaker 1: that's a good question. I think he's getting out in
Speaker 1: front of the changes that you and I are observing
Speaker 1: in the marketplace, which you're gonna lead to more investment
Speaker 1: spending in the near term. So taking that question is yeah,
Speaker 1: Bob is saying we cannot stay in the path we're
Speaker 1: on now. It's gonna it's not going to the optimal solution,
Speaker 1: so we have to spend. He did this when he
Speaker 1: got there. He bought Picks Are his first his almost
Speaker 1: first month on the job. That was an admission that
Speaker 1: Disney needed to change the entire culture. So Bob has
Speaker 1: done this before, and I think this is the right
Speaker 1: path for Disney. It may not be pretty the near
Speaker 1: term verse what we expected, but it's the right thing
Speaker 1: to do for the long term healthful. They have the
Speaker 1: luxury of a timeline to eighteen nineteen when I see
Speaker 1: margin erosion and two of three businesses is the truth here.
Speaker 1: They really got to get this done faster. It's it's
Speaker 1: really It's funny you asked that. In eighteen and nineteen,
Speaker 1: Disney actually sets up well because of their content slate.
Speaker 1: In twenty you know, last one, there's a new NFL
Speaker 1: deal that comes in for the this new negotiation, and
Speaker 1: the question is what's going to happen to that NFL deal.
Speaker 1: So it's really about twenty one and beyond the next
Speaker 1: couple of years of Disney have has enough engine kicking
Speaker 1: at the parks and and the movie you know movies.
Speaker 1: I know the movies are the David Kurtt help us here,
Speaker 1: because you're the only one watching Disney movies exactly. I mean,
Speaker 1: I get the idea of the movies are predictable. I'm
Speaker 1: looking at margin erosion that at any other company in
Speaker 1: America would stop traffic. But Tom, this was a bad
Speaker 1: This was a bad year. Here's why this was a
Speaker 1: bad year. There was a new NBA contract. It cost
Speaker 1: six hundred million dollars more this year than last year.
Speaker 1: That's a one time hit to this year's numbers. Acting
Speaker 1: that hit. Disney's ESPN growth is modestly zero plus minus one.
Speaker 1: You know, it's so that's the outlook the next one
Speaker 1: or two years. The problem is when the step ups
Speaker 1: come again on the NFL. What is your base of revenues? Right?
Speaker 1: What are you gonna do to your base? And if
Speaker 1: he stays on the panthes on now, he's gonna have
Speaker 1: a much smaller base of revenues to bid for the contract. Right,
Speaker 1: that's his problem. Help us understand the timing here. Visit
Speaker 1: v Mr Igor. He just had his contract with Nude.
Speaker 1: Seems like everybody loves Bob Iger within the Disney world.
Speaker 1: Why do this now? Why why respond, as he said,
Speaker 1: to what's happening in the marketplace? Why didn't this happen earlier?
Speaker 1: Why not wait to see how how another company fair
Speaker 1: is trying to do what he's trying to do, because
Speaker 1: it's the Walt Disney Company, and Bob feels like, you
Speaker 1: know that that company is going to be a survivor,
Speaker 1: and you could do one or two things. You could
Speaker 1: sell the way that scripts are sold, Time Warner sold,
Speaker 1: You could stay in fight. And so Walt Disney Company,
Speaker 1: they look at this is We've got a hundred of
Speaker 1: year history, We've got brands, we have consumer connections. Why
Speaker 1: can't we do this? And Bob has never been a
Speaker 1: short term quarter to quarter guy, and he has to
Speaker 1: do this now. It's the right thing to do for
Speaker 1: the company and probably gonna be tested by it's a
Speaker 1: three or four year question whether or not it's gonna work,
Speaker 1: But it's the right thing to do. What's going to
Speaker 1: happen with with sports rights? I look at the ever
Speaker 1: escalating cost of getting the NBA contract, of the NFL contract,
Speaker 1: you look at what's been happening with the ESPN. There's uh,
Speaker 1: you know, I guess not not a whole lot of
Speaker 1: grounds for optimism. There are the price of all that
Speaker 1: is going to continue to go up, and how is Disney,
Speaker 1: how are the companies going to deal with that? Now,
Speaker 1: that's something that we always talked about the value of
Speaker 1: sports and how the companies and owned sports right now
Speaker 1: or the place you want to invest in the Achilles
Speaker 1: hell that that thesis is well in one beyond, there's
Speaker 1: another cycle that's gonna be a problem. Right, what's gonna
Speaker 1: stop on Amazon, maybe Netflix one day, YouTube from bidding
Speaker 1: on the next set of rights? Right, that is going
Speaker 1: to be a problem. Um, it's really the NFL and
Speaker 1: the NFL. It's interesting that Disney pays a billion nine
Speaker 1: for seventeen Monday night football games that I would say
Speaker 1: to you should not be reextended at that price. Those
Speaker 1: games are lower rated than they ever have been. Well,
Speaker 1: Disney walk away from the NFL, will the move to
Speaker 1: a Sunday and night package, right, so that is going
Speaker 1: to be in two three years. The biggest questions of
Speaker 1: the sector is like, what's going to be the next
Speaker 1: cycle of cost? And it's the glue we have on
Speaker 1: our sector. And I think you're gonna have massive inflation
Speaker 1: the next time you go around, which will lead to
Speaker 1: more margin pressure and more need to find other ways
Speaker 1: to grow revenues. It's just there's there's only around it.
Speaker 1: How does Cable TV respond to this? How does Mr
Speaker 1: Roberts over his morning cup of coffee looking at the
Speaker 1: collapse of the Philadelphia Phillies. How does Mr Roberts at
Speaker 1: depth and adjust to what I grew up? Okay, so
Speaker 1: that's that's Craig's world. But I think he lam an
Speaker 1: answer exactly exactly exactly Okay, So basically I think what
Speaker 1: Brian Roberts and Contact Cable do will say, Look, we
Speaker 1: own the broadband pipe to the home, the best broadband pipe.
Speaker 1: As more content goes over the internet, we've got broadband pricing,
Speaker 1: we have a unique offering on the video front. They
Speaker 1: may start becoming indifferent as to how you and David
Speaker 1: and I get our content right. They may let these
Speaker 1: companies go over the top and get integrated at your
Speaker 1: TV set, so they may trade the property making TV
Speaker 1: for property making broadband and allow the media companies to
Speaker 1: work their way around what's been a set top box,
Speaker 1: closed end system for many years. Do you have confidence
Speaker 1: that cable TVs we know it will exist in ten
Speaker 1: years thirty second adds? Maybe we go to fifteen second adds.
Speaker 1: How will we get the CBS News? How will we
Speaker 1: get PBS and c Span. Well, it's gonna look a
Speaker 1: lot like the paper business, where we have some people
Speaker 1: who prefer the printed copy like you have in your
Speaker 1: desk right now, and the majority of people may not.
Speaker 1: So I think you're gonna have to have two models, right,
Speaker 1: One milet's direct consumer and one that's going to be
Speaker 1: the big bundle deliver the old fashioned way. Where is
Speaker 1: the creativity and content today? You look at what's successful
Speaker 1: for Disney, Uh, it's the Marvel franchise. It's these these
Speaker 1: big sequels and beyond sequels, triquels. What do you know, right,
Speaker 1: right right, where do you see creativity in content today?
Speaker 1: Where's that coming from as a company like Disney equipped
Speaker 1: to do things that are capital creative. Well, let's divide
Speaker 1: that question into television and film. It's clear that television
Speaker 1: has never had a better cycle of content creation, and
Speaker 1: that TV has replaced movies for play for develop helpers
Speaker 1: of great content. On a film side, we are really worried.
Speaker 1: Disney is the exclusion to the rule, but we're very
Speaker 1: worried about the health of the film business because it's
Speaker 1: all been about sequels and global ten poles and just
Speaker 1: redundant copies of of kind the same script. So I
Speaker 1: think on the film side, everyone but Disney has real
Speaker 1: challenges to find unique content. TV has replaced film, right,
Speaker 1: So in HBO, Showtime, Netflix, they've got those developers, but
Speaker 1: films are a big problem. What's TV gonna look like?
Speaker 1: I mean, you must be thinking about this day in
Speaker 1: a day appen light of the news that we got
Speaker 1: yesterday from Disney the way they intend to do this.
Speaker 1: If you get every other h film studio, entertainment company
Speaker 1: pursuing this kind of approach, what is the device? What
Speaker 1: is our engagement with that device. Look like in five
Speaker 1: ten years, Okay, so we see the device being there'll
Speaker 1: be a connected boxing your house for lives live content,
Speaker 1: and we're not gonna trust the internet to deliver ninety
Speaker 1: million homes streaming Eagles games. Right, We're gonna get we
Speaker 1: We're gonna need to pay for live TV, and the
Speaker 1: companies that have live assets will benefit live. But for
Speaker 1: the vast majority of the rest of the networks out there,
Speaker 1: we're living on kind of channel surfing. They're gonna have
Speaker 1: a problem because we're gonna also go to on demand. Right,
Speaker 1: You're gonna basically bifrect into an on demand world, live world,
Speaker 1: and that middle will just drop away, right, And that's
Speaker 1: what's gonna happens. Free cash flow drop away for some
Speaker 1: of these companies out For the people in the middle,
Speaker 1: it's gonna drop away. Well, look, we we have cells
Speaker 1: and AMC networks, we have cells on Discovery and up
Speaker 1: until that deal last week, we have silent scripts. So
Speaker 1: we thought the cable network universe are pure play, the
Speaker 1: CBS world, the BUCAS world, Well, CBS CBS will be
Speaker 1: fine because CBS is going to collect a higher toll
Speaker 1: from the distributors. Right, they're gonna say the value of
Speaker 1: our content is underpriced. Right, But it's time. It's the middle,
Speaker 1: you know, on the dial that basically was was just
Speaker 1: filling time as we channel. This has been wonderful Michael
Speaker 1: Nathans and making a huge effort really off of this
Speaker 1: seismic announcement by Dizzie. Mr Nathanson is with Moffatt Nathanson
Speaker 1: again we protect copyright of all of I guess no,
Speaker 1: I'm not going to send out the Black Book from
Speaker 1: Michael Nathan Sinny how much to talk about this one, David,
Speaker 1: what are your thoughts as we're looking at taking the
Speaker 1: official surveillance nap that we both every afternoon for you
Speaker 1: maybe two Mondays ago, and that was when the Anthony
Speaker 1: Scaramucci news broke. So I had a taste of what
Speaker 1: you must experience every day you're getting up so early
Speaker 1: and trying to sleep as you can. But you know,
Speaker 1: I obviously continuing to watch what's happening in the Asia
Speaker 1: Pacific region light of the tweets we've seen this morning
Speaker 1: and the hot rhetoric conveyed the official statements from the
Speaker 1: president here and from the leader of North Korea as well,
Speaker 1: it's making a diplomatic option returned to the negotiating table.
Speaker 1: Looked like a farther off and farther off thing. David,
Speaker 1: you do the politics here. But I want to say
Speaker 1: that we have made every effort to speak to our mility, Harry,
Speaker 1: including the great services of James Travitis, A Fletcher School
Speaker 1: Tufts for Admiral Navy. Uh, and much can be saved
Speaker 1: with Wesley Clark has been much more visible. But what
Speaker 1: I think is so important in introduction is General Clark,
Speaker 1: you were first in your class at West Point. How
Speaker 1: did you do that? How did you go into the
Speaker 1: Lincoln Building overlooking the Hudson and defeat the rest of
Speaker 1: the troops or was it really defeat? I mean I was.
Speaker 1: I really enjoyed. I love being there. I love the
Speaker 1: officers that mentored me and helped me. And Uh, it
Speaker 1: was privileged to be my class. It was been had
Speaker 1: a great inundication school of arts on its being stare
Speaker 1: General Clark, let me ask you how much this situation
Speaker 1: has changed the situation with regard to to North Korea
Speaker 1: since you were serving General. Of course, we've had to
Speaker 1: test these two tests at these Intercontinental Ballistic missiles UH
Speaker 1: and a new round of sanctions, I think the eighth
Speaker 1: round of sanctions from the U N. Security Council. How
Speaker 1: much has this story changed as you've watched it unfold?
Speaker 1: So In I was in the Joint Staff and I
Speaker 1: was part of the team that helped do the response
Speaker 1: to the North Korean nuclear crisis at that time, and
Speaker 1: we came out of it with negotiated settlement to provide
Speaker 1: two nuclear reactors. At that time, North Korea didn't have
Speaker 1: nuclear weapons, but they did have a very very powerful
Speaker 1: conventional artillery system that at rockets that could have devastated
Speaker 1: South Korea and could have struck Japan. And they did
Speaker 1: have biological and chemical weapons. So we wanted to hint
Speaker 1: off their nuclear challenge. We did it by promising them
Speaker 1: two nuclear reactors for electric power, that's what they said
Speaker 1: they really wanted, and fuel oil to sustain their electricity
Speaker 1: grid until the reactors came online. Um, there was a
Speaker 1: lot of fumbling around. One agree it was shaded. People
Speaker 1: had money at the South LANs Japanese. We had to
Speaker 1: put some money up and had to go through Congress.
Speaker 1: Congress had to appropriate money for the fuel oil. People
Speaker 1: didn't like the North Koreans. They didn't like USA blah blah,
Speaker 1: and they probably didn't trust it, and then we didn't
Speaker 1: trust them and art and we knew about two thousand
Speaker 1: two that North Korea was the highest risk for nuclear proliferation,
Speaker 1: but instead we invaded Iraq on the theory that what
Speaker 1: if we woke up and they had a nuclear weapon,
Speaker 1: but we knew Korea was high risk for developing it.
Speaker 1: So we've lived for decades with the problem that there's
Speaker 1: no good military option for Korea. Even in the early
Speaker 1: nine nineties, if you'd attacked North Korea, they would have
Speaker 1: had ten thousand pieces of artillery. They could have brained
Speaker 1: thousands of rounds of chemical web warheads and other things
Speaker 1: into South Korea. Million man army, a hundred thousand special
Speaker 1: courses troops, insurted by many subs and uh and and
Speaker 1: and small aircraft, guerrilla operations all over the country. And
Speaker 1: it's still the same, all the worse because they have
Speaker 1: nuclear warriage. General Clark, we we've had a couple of
Speaker 1: moments here in recent history. In the present has tweeted
Speaker 1: something that could have potentially huge ramifications. I think just
Speaker 1: a couple of weeks ago when he tweeted about whether
Speaker 1: or not to allow transgender individuals to serve in the
Speaker 1: in the U. S. Military. Uh, there was a lot
Speaker 1: of questioning about the nuance or the lack thereof in
Speaker 1: those tweets. Today there are some more tweets about North
Speaker 1: Korea and our nuclear arsenal. Go back to when you
Speaker 1: were serving, when you were a general, how would you
Speaker 1: have reacted to to the tweets like the ones you've
Speaker 1: seen today. You've got to imagine that Secretary Mattis, that
Speaker 1: John Kelly, others in that upperrational and of the administration
Speaker 1: can't be happy with with what's being communicated via social
Speaker 1: media today. We'll probably not, but you're not going to
Speaker 1: react to tweets. The America public might react on guts
Speaker 1: might react, but the military chain fan bax or orders
Speaker 1: that come down the chain command, so they're coming through
Speaker 1: General or through Secretary demanding, so they're not tying directly
Speaker 1: for the tweets. General, you have been balanced in your
Speaker 1: support of the legacy of and also of Harry Truman.
Speaker 1: You are identified, I would believe my most Americans as
Speaker 1: a Democrat, what is the Wesley cart Clark prescription for
Speaker 1: the Democratic Party forward? Well, you're asking something that's beyond
Speaker 1: North Korea. But we've got to focus on The Democratic
Speaker 1: Party had to focus on economic growth. We've got to
Speaker 1: have infrastructure. We've got to use our oil industry and
Speaker 1: maximize our production of energy now and then transition through
Speaker 1: a some form of incentive. It could be a carbon
Speaker 1: tax and move us into a non hypercarbon economy in
Speaker 1: the thirty year time frame, among like the renewable fuel standard,
Speaker 1: and it would be a tremendous job creating exercise to
Speaker 1: do that. So it's it's pulled us economic strength. That's
Speaker 1: the biggest thing we could do to strength in American
Speaker 1: General Clark thought about our military forces. General Clark right
Speaker 1: to speak to you this morning, to speak to you
Speaker 1: the hope we can talk again soon. That's at General
Speaker 1: Wesley Clark, retire. General Wesley Clark from a NATO Supremalli
Speaker 1: commander joining us on our phone lines. He's from the
Speaker 1: fourth District of Oklahoma. The Congressman for Oklahoma, Tom Cole.
Speaker 1: I think it's fair to say anybody that listens to
Speaker 1: the show knows how what a joy it is to
Speaker 1: have the historian in the academic Congressman Cole on the
Speaker 1: phone Uh, Tom, I'm gonna go to you as a
Speaker 1: card carryman publican of what I see today and the
Speaker 1: cover of the New York Times, the headline is they
Speaker 1: will be met with fire and fury. I paid a
Speaker 1: lot more attention to the follow on statement like the
Speaker 1: world has never seen. How can you in Republican leadership
Speaker 1: give a history lesson to the President of the United States.
Speaker 1: What do we need to do to get scope and
Speaker 1: scales so we don't see a phrase like the world
Speaker 1: has never seen? Well, I think, look, I think the
Speaker 1: President is trying to be very direct in his communication
Speaker 1: to North Korea. Uh it's a you know, impenetrable regime,
Speaker 1: and uh, I think he just wanted to be crystal clear.
Speaker 1: But I don't find the phrase that's disturbing as some
Speaker 1: because I look at the people that are around the president.
Speaker 1: I look at a pievous staff like John Kelly, I
Speaker 1: look at Secretary Maddis, I look at uh, you know,
Speaker 1: Ceptry Tillerson. I look at him and the Master and
Speaker 1: I think he's got probably the best foreign policy uh
Speaker 1: slash defense team of any more president. And so I think,
Speaker 1: I think, you know, he's not going to take precipitous
Speaker 1: or rash action James Travitas in Bloomerview Today. The admiral
Speaker 1: from tough school, Fletcher Fletcher School, a tough university, makes
Speaker 1: it very clear that we need a military presence, but
Speaker 1: bluster won't do it. What will matters? What will Kelly?
Speaker 1: What will McMaster message to the president? I think very
Speaker 1: much the same thing. I mean, frankly, Uh, Admiral Stravais
Speaker 1: I met when he was actually commander in NATO. He's
Speaker 1: a he's a brilliant soldier, but he's also a contemporary
Speaker 1: of Maddis, McMaster and Kelly. So these are people that
Speaker 1: have served together that no one another to think highly
Speaker 1: of one another. And I think, you know, the Admiral's
Speaker 1: expressing and perfectly appropriate points at Uh. Look, we're gonna,
Speaker 1: you know, back up what we say, but we're not
Speaker 1: trying to be provocative. But we do want the North
Speaker 1: Koreans to understand that we're serious, and frankly, we want
Speaker 1: the Chinese to understand we're serious. And I think that's
Speaker 1: something lost in all this. Uh. This may be as
Speaker 1: much about pressuring the Chinese and reminding them to keep
Speaker 1: the commitments that they made when they voted for you
Speaker 1: in sanctions as anything else. We know we need them
Speaker 1: as a pressure point on North Korea. And frankly, they've
Speaker 1: responded to President Trump more than they have to any
Speaker 1: previous American president on this doesn't make a difference to
Speaker 1: you being outside of Washington and all as all this
Speaker 1: is happening, of course, Congress on recess to send it
Speaker 1: on recess as well. It seems like things are are
Speaker 1: heating up here. The Secretary State and disputing that today
Speaker 1: on his plane as he arrived in Guam, Uh, he
Speaker 1: said that Americans just sleep soundly at night. He said,
Speaker 1: things that have have not measurably changed to him. Is
Speaker 1: it harder to keep track of this for you and
Speaker 1: your colleagues when you're not all in Washington? Is there
Speaker 1: a disadvantage to not being there at this point? Well, obviously,
Speaker 1: if you're there, you've got immediate access to briefing from
Speaker 1: the Pentagon, of the State Department, whoever you need to
Speaker 1: talk to. But actually, I said on Defense Appropriation Subcommittee,
Speaker 1: and so this none of this really has come as
Speaker 1: a surprise, uh, including the quote updated intelligence you know,
Speaker 1: estimate of North Korea's nuclear capability. Frankly, We've been being
Speaker 1: told for over a year in Congress that the North
Speaker 1: Koreans would develop this kind of capability within President Trump's
Speaker 1: first term. So I think our Defense Department, State Department
Speaker 1: been thinking about this for quite a long time, and
Speaker 1: to be fair to them, they've kept Congress well informed.
Speaker 1: So I see no particular disadvantage other than you get
Speaker 1: much more immediate information. But throughouty is we've been warned
Speaker 1: this was coming for quite a while. You're on the
Speaker 1: Budget Committee as well. I think a lot of our
Speaker 1: listeners care a great deal about whether or not we
Speaker 1: meet our funding obligations. What's going to happen with the
Speaker 1: with the debt ceiling. What's your sense of how all
Speaker 1: of that is going to perceive when you get back
Speaker 1: to Washington in early September. Do you have a clear
Speaker 1: path forward from the White House? Uh? Do you have
Speaker 1: a sense here that we're gonna we're gonna avoid a
Speaker 1: government shutdown. I think we're going to see that debt
Speaker 1: limit raised. I think we will avoid a government shutdown.
Speaker 1: I think we'll probably past the budget pretty quickly after
Speaker 1: we get back in. It's out of the Budget Committee.
Speaker 1: It came out with the unanimous Republican vote. So that's
Speaker 1: a sign that things won't be too rough on the floor.
Speaker 1: All the appropriations committees are out of our appropriations bills
Speaker 1: are out of the Appropriations committee for um across the floor,
Speaker 1: I expect the other eight, the death sits, will be trickier.
Speaker 1: It always is, uh, simply because every administration, including this one,
Speaker 1: wants a clean debt ceiling. Every Republican Congress it says, right,
Speaker 1: we'll give it you a debt ceiling, but we want
Speaker 1: some sort of uh uh, you know, change on the
Speaker 1: trajectory of the debt. We don't expect you to solve
Speaker 1: it a single pleasure, but we don't want to be
Speaker 1: in a situation where, effectively, you know, it's like having
Speaker 1: a credit card and you hit the limit and you
Speaker 1: just raise the limit, but you keep spending at the
Speaker 1: same rate. So I think that will be a point
Speaker 1: of some negotiation. But you'll have plenty of Democratic votes. Uh,
Speaker 1: they always are for a clean debt ceiling increase. So
Speaker 1: I always say, this is a little bit like the
Speaker 1: Perils of Pauline. You know, always, look, the train has
Speaker 1: gonna run over Pauline. But sooner or later, Pauline somehow
Speaker 1: magic who slips out of it? And I think that's
Speaker 1: what will happen again in September. Does he realize that
Speaker 1: of the audience doesn't know the perils of Pauline is?
Speaker 1: We got the allusion, we got the illusion. Uh, taxi
Speaker 1: form is also going to be on your agenda. We've
Speaker 1: we've heard from the Big Six. I wonder if you
Speaker 1: think the process has been inclusive enough thus far. I'm
Speaker 1: gonna be talking to your colleague, congress Been Brady tomorrow
Speaker 1: on Bloomberg Television about where things stand when it comes
Speaker 1: to taxi form. What's the what's the lesson that you've
Speaker 1: learned on the heels of the conversation about healthcare that
Speaker 1: you can apply to the conversation about tax reform. Well,
Speaker 1: I think the first lesson is that recofciliation is a
Speaker 1: very difficult process, and running the House by Senate rules,
Speaker 1: tribute in the Senate couldn't follow through on his own,
Speaker 1: which it didn't on healthcare as a little tricky. On
Speaker 1: the other hand, I do think this has been a
Speaker 1: much more transparent process. Chairman Brady's kept us all inform
Speaker 1: that we've had a lease of common principles by the administration.
Speaker 1: Of the House and the Senate. So my instinct is, again,
Speaker 1: we've got to see the bill. I mean uh, and
Speaker 1: we don't have some of the pay for us we
Speaker 1: thought we would have in healthcare reform. Obviously the moorderjustment
Speaker 1: tax is no longer an option here. So the real
Speaker 1: question is if they're going to proceed under reconciliation, which
Speaker 1: has to be budget neutral, you know, what are the
Speaker 1: pay for is going to be. I think we were
Speaker 1: pretty much a pretty clear understanding where they're going to
Speaker 1: go in terms of lowering rates and you know, consolidating
Speaker 1: brackets and lower corporate income tax and territory reality. But
Speaker 1: tell me how you're gonna pay for it all. That's
Speaker 1: the piece that we need to know. But again, they're
Speaker 1: working it, they've been transparent, so I think we have
Speaker 1: a good chance of getting there before the end of
Speaker 1: the year. And practically having failed on healthcare, it's absolutely
Speaker 1: essential that we succeed on tax reform, and I think
Speaker 1: that will focus a lot of Republican minds and maybe
Speaker 1: make the conference a little more compliant than it was
Speaker 1: over the healthcare issue. Jackson, thank you so much. Thomas
Speaker 1: Cole is with the fourth District of Oklahoma, and we
Speaker 1: look forward to speaking to them again in our studios
Speaker 1: in Washington. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene,
Speaker 1: David Gura is at David Gura. Before the podcast, you
Speaker 1: could always catch us worldwide. I'm Bloomberg Radio