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

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

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Speaker 1: noon and five pm E's durn on Apple Cockley and

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 2: Just sleepier day than usual on Wall Street on this

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Speaker 2: summer Friday, but not necessarily a sleepy day when it

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Speaker 2: comes to politics here in Washington, certainly when it comes

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Speaker 2: to a story that has been dominating the headlines over

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Speaker 2: the course of the last week and change. President Trump

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Speaker 2: under increasing pressure from his base around the case of

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Speaker 2: disgraced and convicted sex offender Jeffrey Epstein, who of course

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Speaker 2: died in prison years ago. A sequence of events happened yesterday. First,

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Speaker 2: of course, a Wall Street Journal report was published alleging

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Speaker 2: that President Trump, before he was president, sent a suggestive

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Speaker 2: letter to Jeffrey Epstein for his fiftieth birthday. The President

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Speaker 2: calls that letter fake and is threatening to sue the

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Speaker 2: Wall Street Journal over that story. But after that story

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Speaker 2: was published, Tyler, he has now authorized the Justice Department

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Speaker 2: to ask for courts to release the grand jury testimony

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Speaker 2: from the prosecution of Epstein seemingly acquiescing a bit to

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Speaker 2: some of this mounting pressure.

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Speaker 3: Right, it's probably worth pointing out that the Justice Department

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Speaker 3: and the FBI last week said that Epstein Epstein did

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Speaker 3: not keep a client list and that no more files

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Speaker 3: related to the case would be made public. And that's

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Speaker 3: where we want to start today's segment, bringing in some

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Speaker 3: of our Bloomberg News reporters and editors, Wendy Benjaminson Bloomberg

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Speaker 3: Senior editor who's live with us here in our DC studio,

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Speaker 3: and Ava Benni Morrison, Bloomberg News Illegal reporter.

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Speaker 4: Ava.

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Speaker 3: I want to start with you because there have been

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Speaker 3: various efforts in the past to get Epstein related documents unsealed.

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Speaker 3: Is this time going to be any different? What are

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Speaker 3: we actually expecting to get out of this authorization that

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Speaker 3: the President has appeared to grant.

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Speaker 5: It's certainly not going to be easy. There will be

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Speaker 5: a number of legal maneuvers that the Justice Department or

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Speaker 5: Bonder Bondie's office have to jump through. What happens in

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Speaker 5: the grand jury room is traditionally sacrossing. It's not as

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Speaker 5: easy as asking a judge to unseal troughs and troves

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Speaker 5: of testimony that was given during those secret proceedings. We're

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Speaker 5: talking about potential victims, witnesses making claims that may have

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Speaker 5: been unsubstantiated. So even if the Justice Department makes a

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Speaker 5: move to have some of these materials unsealed, I expect

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Speaker 5: it's going to be a very lengthy, lengthy process.

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Speaker 2: Well, so if the process takes a long time and

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Speaker 2: make nine to have the end result that some of

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Speaker 2: the president's supporters who are pushing for more transparency around

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Speaker 2: Epstein will would want to get Wendy, is this just

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Speaker 2: giving the president cover essentially to say, well, at least

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Speaker 2: I tried.

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Speaker 6: It is and it is a fig leaf, and it's

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Speaker 6: about the size of a fig leaf. Because the other files,

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Speaker 6: the ones that Pambondi said, we now believe this not

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Speaker 6: to be true, the client list that was on her

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Speaker 6: desk that now she says, no, it was just the

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Speaker 6: files that were on my desk. In those files, not

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Speaker 6: only is grand jury testimony, but it's witness interviews. It's

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Speaker 6: Ghislain Maxwell, his partner's phone records, and she wore a

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Speaker 6: wire at a time, So there are those transcripts. So

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Speaker 6: there's for the people who really really want this to

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Speaker 6: come out, This is just the tip of the iceberg

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Speaker 6: and probably will only when it's released, only create appetite

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Speaker 6: for more.

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Speaker 3: Right so Eve, it's actually build off that when Pambonni

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Speaker 3: did release some of these files earlier this year, was

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Speaker 3: considered to be a letdown for many conservative is that

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Speaker 3: we're seeking more information here. Can you just put into

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Speaker 3: context just how much information these opponents that want to

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Speaker 3: get more how much are they looking for? Like what's

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Speaker 3: ultimately only some of the end goals here From the

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Speaker 3: people that want to see additional files.

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Speaker 5: Released, There's certainly been feverish interest in anything to do

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Speaker 5: with Jeffrey Epstein, and a feeling, particularly among Trump's conservative base,

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Speaker 5: that there is information the public doesn't know about and

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Speaker 5: they do deserve to know about it. But over the years,

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Speaker 5: through various criminal cases, as when he had mentioned involving

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Speaker 5: Gallaine Maxwell, Jeffrey Epstein himself, and civil litigation involving the

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Speaker 5: victims of Jeffrey Epstein, we have seen dribs and drabs

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Speaker 5: of information come out that have given us a bit

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Speaker 5: of an insight into the breadth of Jeffrey Epstein's network.

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Speaker 5: Who he spoke to, who he associated with, and even

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Speaker 5: people who have been accused of participating in some of

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Speaker 5: his crimes. So I think you know the recent cause.

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Speaker 5: What people are really after here is this so called

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Speaker 5: client list. And as you mentioned, the statements coming out

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Speaker 5: of the Justice Department and Bondie's office that this client

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Speaker 5: list doesn't exist, and it seems to be a little

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Speaker 5: bit of a red herring, and certainly from the people

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Speaker 5: that I've spoken to who have been involved in these

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Speaker 5: cases for many, many years, there is no client list,

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Speaker 5: So I don't know exactly what they're hoping to get

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Speaker 5: out of this grand Jewelry testimony. I would also note

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Speaker 5: that there will probably be a number of objections from

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Speaker 5: people who participated in these proceedings and went in thinking

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Speaker 5: that their testimony was going to be kept secret.

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Speaker 2: That's a good point, Wendy. I want to return to

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Speaker 2: the point you were making about what could be done

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Speaker 2: to appetite. If they're given a taste of something more,

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Speaker 2: they may just want even more information, and this is

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Speaker 2: a story that could keep feeding into itself. President Trump,

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Speaker 2: as we know, is a master of cultivating the narrative.

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Speaker 2: He wants to talk about making sure we're not talking

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Speaker 2: about things he doesn't want to talk about. That is

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Speaker 2: not true this time. I wonder what you think that

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Speaker 2: tells us.

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Speaker 6: Well, you're absolutely right, Carey. He can always adjust the

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Speaker 6: flow of news to sort to suit his agenda.

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Speaker 2: The problem in.

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Speaker 6: This case, though, is that is that there are things

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Speaker 6: that are helping him now shape that narrative. So it

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Speaker 6: may not be the you know, the horror that he

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Speaker 6: is it seems to be for him right now, or

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Speaker 6: that he would lose his base because right now he

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Speaker 6: has rallied a lot of MAGA supporters against the Wall

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Speaker 6: Street Journal for the story last night, saying it was

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Speaker 6: fake news, as you pointed out. And then also, it's

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Speaker 6: the Democrats trying to seize upon this. And if I

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Speaker 6: think if I were a Democratic consultant, I would say,

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Speaker 6: don't help. There is there is a longstanding political dash

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Speaker 6: that if your opponent is drowning, let him like, don't

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Speaker 6: jump into help. Because now MAGA world can say, oh,

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Speaker 6: it's the Democrats who want it. I don't want to

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Speaker 6: be aligned with the Democrats doing that problem.

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Speaker 2: Why didn't they release the files during the Biden administry exactly?

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Speaker 6: So they're feeding into helping him sort of take the

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Speaker 6: narror back, but it won't be solved by the grand

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Speaker 6: jury testimony, but they it may solve itself in the end.

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Speaker 3: Well, I'm wondering how you also think Congress is now

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Speaker 3: potentially playing a role in this as they're trying to

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Speaker 3: get lommengers on the record to vote for the full

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Speaker 3: files to be released, and you have that sort of

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Speaker 3: becoming a bipartisan movement right Rocana teaming up with Thomas

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Speaker 3: Masthew yesterday told reporters that they don't want to let

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Speaker 3: the pressure up.

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Speaker 6: That's true, they don't and I don't know, however, if

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Speaker 6: you can get two hundred and sixteen Republicans or two

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Speaker 6: hundred and nineteen Republicans to agree to it, Mike Johnson

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Speaker 6: and JD. Vance of course will put a big, full

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Speaker 6: cord press on them to back off that effort. But

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Speaker 6: we'll see what happens.

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Speaker 2: Well and legally speaking, EVA, how much can Congress actually

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Speaker 2: control the conduct of the Department of Justice from here

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Speaker 2: and what information actually will ultimately be released. How do

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Speaker 2: we think about the power dynamics between these two branches

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Speaker 2: of government.

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Speaker 5: I think it really comes down to what is allowable

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Speaker 5: on the Sage Law and it will be the ultimate

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Speaker 5: decision of a federal judge whether he or she decides

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Speaker 5: to unseal this material. This is certainly a rare occurrence.

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Speaker 5: You don't often see the Justice Department going to a

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Speaker 5: federal judge and saying, can you please unseal what is

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Speaker 5: meant to be secret grand jury testimony? So I think

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Speaker 5: that I don't know how much weight Congress will play

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Speaker 5: here because the judicial branch is completely separate, and it

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Speaker 5: will come down to what is allowable under federal law

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Speaker 5: and the decision of a federal judge.

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Speaker 3: Well, even just to put a bow on this in

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Speaker 3: our final minute, I know that you have noted that

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Speaker 3: some evidence was successfully unsealed in a Florida state case.

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Speaker 3: Can you just give us a little bit more background

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Speaker 3: to here on what we actually what successfully has come

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Speaker 3: forward already when it comes to this case.

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Speaker 4: Sure.

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Speaker 5: So this was a little bit different because it was

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Speaker 5: a county case in Florida, allegations that Jeffrey Epstein had

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Speaker 5: even engaged with child prostitution, and there were some records

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Speaker 5: that were unsealed successfully there last year and involving grand

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Speaker 5: jury testimony of people that worked in Epstein's palm beach

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Speaker 5: house down there. So that is an example of where

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Speaker 5: it has been successful. But I don't think we can

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Speaker 5: apply the same model here because they are different jurisdictions.

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Speaker 2: All right, Ava Banni Morrison, Bloomberg Legal reporter and Bloomberg

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Speaker 2: Senior Editor Wendy Benjaminson joining us on what is an

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Speaker 2: incredible story dominating the narrative here in Washington.

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

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

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Speaker 2: Republican Congressman Bella Zanger, representing Michigan's fourth Strict Welcome back

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Speaker 2: to Bloomberg TV and Radio. Congressman.

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Speaker 4: Nice to see you in person, to be with you.

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Speaker 2: Yeah as well, it's been a big week in your chamber.

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Speaker 2: It's going to be a big.

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Speaker 7: Day, yeah, this week, I tell you.

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Speaker 5: Yeah.

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Speaker 2: Maybe it should have been reframed as a crypto marathon

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Speaker 2: rather than crypto.

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Speaker 7: It was something else, But you know, look, a lot

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Speaker 7: of us have been involved in this for a very

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Speaker 7: long time, and I understand that this might be hitting

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Speaker 7: some of our colleagues a little fresher than certainly what

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Speaker 7: those of us who have been diving into this for

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Speaker 7: a number of years have been having to wrestle with.

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Speaker 4: But you know this, this is.

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Speaker 7: An important, I think an important statement for us with

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Speaker 7: the Genius Act, was it my first choice? No, the

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Speaker 7: house was my first choice, a house version of that.

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Speaker 7: But very satisfied with where we ended up on Genius.

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Speaker 7: And you know, my family's involved in construction back in Michigan,

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Speaker 7: and we build houses and the first thing you do

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Speaker 7: is you pour the walls in the footings. You know,

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Speaker 7: that's that's the foundation, literally, and then you go from there.

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Speaker 7: And I think that's that's what we're going to be

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Speaker 7: working on next well.

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Speaker 3: To build off of this. We're talking about the Genius.

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Speaker 7: Act pretended on the build up, Well.

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Speaker 3: You're talking about the Genius Act and perhaps some of

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Speaker 3: the changes that you didn't want to see made. But

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Speaker 3: let's talk also about the Clarity Act because now that

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Speaker 3: heads to the Senate. What's your message to colleagues in

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Speaker 3: that chamber when it comes to keeping that legislation perhaps

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Speaker 3: as it is.

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Speaker 7: Yeah, well, we think it's a good product. We certainly

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Speaker 7: wouldn't have put it forward if we didn't. And again,

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Speaker 7: a lot of a lot of time and effort has

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Speaker 7: been been put into this, uh, And I get it.

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Speaker 7: There's a lot of folks that are getting educated at

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Speaker 7: a level that they necessarily, maybe necessarily hadn't been at previously.

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Speaker 7: And I'm not saying that about about Senate banking or

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Speaker 7: anything like that. I'm talking about a general colleagues. I

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Speaker 7: have to then go out and vote for these things.

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Speaker 7: But we think it's a very good, solid product that

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Speaker 7: that Chairman Hill and Style and a number of us

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Speaker 7: and others bar that have been working on this, Warren

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Speaker 7: David and these are folks that have been really doing

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Speaker 7: the heavy lifting over a number of years. And then

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Speaker 7: obviously over on the Senate side, we have colleagues that

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Speaker 7: had done that as well, and so hopefully we're going

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Speaker 7: to be able to come together. I hope that they

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Speaker 7: lightly edit the House version of that. But yeah, it

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Speaker 7: is essential though that we not stop and it is

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Speaker 7: its key that we keep moving forward with this because

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Speaker 7: we have to add the infrastructure, the plumbing on all.

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Speaker 2: Of this well, and of course the Clarity Act is

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Speaker 2: supposed to divvy up authority between the SEC and the CFTC,

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Speaker 2: and the new SEC chair Paul Atkins actually joined our

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Speaker 2: colleagues on Bloomberg Surveillance earlier today talking about how he's

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Speaker 2: viewing this specifically.

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Speaker 6: This is what he said.

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Speaker 8: We are out obviously change direction at the SEC, and

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Speaker 8: I think we've already done that.

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Speaker 4: We're moving away from.

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Speaker 8: Regulation through enforcement and uncertainty in the markets, especially with

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Speaker 8: respect cryptocurrencies and digital assets in general, and the set

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Speaker 8: firm clear rules of the road for people who are

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Speaker 8: operating in that environment.

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Speaker 2: I wonder about the sense of urgency here, knowing that

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Speaker 2: the SEC now is for less adversarials, shall we say

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Speaker 2: to this industry, is there as much urgency in trying

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Speaker 2: to make sure that the CFTC gets more authority over

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Speaker 2: these assets?

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Speaker 7: Well, look, you got to go back and look at

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Speaker 7: what had happened previously with under Gary Gensler, right, And

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Speaker 7: of course, when he was head of the CFTC, everything

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Speaker 7: was a commodity, and when he became head of the SEC,

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Speaker 7: everything magically became a security. And the simple truth is

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Speaker 7: is that these things are not either fish or foul.

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Speaker 7: I always say it's a platypus. It's got characteristics of

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Speaker 7: both in many ways. And it's up to Paul Atkins

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Speaker 7: as well as the legislation that we're passing to compel

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Speaker 7: them to come up with what those rules of the

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Speaker 7: road are. And what we saw in the last administration

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Speaker 7: was basically chir Gensler just making it up as he

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Speaker 7: was going along. And that's not acceptable because it doesn't givedictability,

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Speaker 7: it doesn't give surety of a direction. And I've got

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Speaker 7: great confidence in Paul Atkins and what he's going to

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Speaker 7: be doing on that. But again, we can't just sit

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Speaker 7: back and say, Okay, we declare victory. We don't have

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Speaker 7: to do anything more. This is really just that first step.

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Speaker 3: I want to drill down a little bit on the

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Speaker 3: bill that we're signed into alaw today. When it comes

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Speaker 3: to the Genus Act stable coins. We have this great

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Speaker 3: story out on the terminal today from actually our colleagues

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Speaker 3: at Bloomberg Government that says that everyone's going to rush

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Speaker 3: to register. But the thing is, when it comes to

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Speaker 3: the occ the Comptroller of the Currency where everyone's going

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Speaker 3: to be going, they're facing actually a shrinking workforce. There

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Speaker 3: are DOGE cuts that have hit the agency. Do you

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Speaker 3: think that there is bandwidth among our regulators to meet

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Speaker 3: what is expected to be this surgeon demand?

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Speaker 7: Yeah, in general, I do. I think that the regulators

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Speaker 7: have to make sure they are prioritizing what their actions

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Speaker 7: are as well. That that would be the argument many of

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Speaker 7: us have had. Over the last four years. We wandered

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Speaker 7: far afield from where those regulators should be, and they

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Speaker 7: were into whether it was ESG and other all kinds

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Speaker 7: of other things that were not necessarily about materiality. They

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Speaker 7: weren't necessarily about safety and soundness and consumer protection. And

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Speaker 7: so again I think if we if they focus in,

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Speaker 7: we're going to be fine on them being able to

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Speaker 7: do that. Is there going to be this bump coming in?

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Speaker 7: Of course, I mean there's a lot of pent up demand.

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Speaker 7: And frankly, not many people bought the idea of just

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Speaker 7: come in and register over the last four years and

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Speaker 7: all will be fine. I mean that they didn't buy that.

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Speaker 7: So there's a lot of people that were holding back,

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Speaker 7: waiting for this moment so that we could get that clarity.

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Speaker 7: And this is Look, this is good for the US dollar,

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Speaker 7: it's good for our pre eminence in the world. It

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Speaker 7: adds to the safety and soundness of not just our

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Speaker 7: currency and our money, but for those that are doing

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Speaker 7: the investing. It makes it, you know, not friction less,

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Speaker 7: but less friction and transactions. So I think this is

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Speaker 7: going to be good good for the economy as well well.

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Speaker 2: When we consider the safety and soundness and the credibility

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Speaker 2: of the US economy, Monetary policy and its credibility also

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Speaker 2: plays a role there. And I ask you this as

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Speaker 2: the vice chair of the House Financial Services Committee. It's

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Speaker 2: one thing for President Trump to suggest he'd like to

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Speaker 2: see lower interest rates. It's another for administration officials to

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Speaker 2: actively be pushing for the chair of the Federal Reserve

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Speaker 2: to resign, suggesting he should be investigated for fraud. Do

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Speaker 2: you see risk here of doing what could be permanent

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Speaker 2: damage to the Fed's independence and therefore credibility by extension.

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Speaker 7: I believe in an independent FED. That is important now.

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Speaker 7: As Chair Hill yesterday when he was asked about this

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Speaker 7: in a press conference, starting to go avoid a.

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Speaker 4: Canda, well it started, but he.

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Speaker 7: Started going through the litany of what was what was

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Speaker 7: going on with LBJ and with Richard Nixon and Ronald

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Speaker 7: Reagan and others, you know, Jimmy Carter. I mean, there's

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Speaker 7: been plenty of pressure that has been applied to the

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Speaker 7: FED and FED chairs and Feds over the decades.

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Speaker 4: And because they are.

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Speaker 7: Independent doesn't mean that they are somehow absent of any

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Speaker 7: criticism or absent of any critique. And you know, I

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Speaker 7: think as we've seen a few folks sort of breathlessly say,

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Speaker 7: you know, the FED chair is going to get fired.

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Speaker 7: The President's going to do this. He himself addressed that,

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Speaker 7: walked that back to add clarity, to make sure that

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Speaker 7: that wasn't happening. And look, his term is going to

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Speaker 7: be up soon. That that's going to be the opportunity,

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Speaker 7: in my mind, where the President's going to be able

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Speaker 7: to really assert himself. Now, does it mean that he

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Speaker 7: needs to do better job?

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Speaker 2: Yes, all right, we'll leave it there. Congressman, thank you

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Speaker 2: so much for joining us. The Vice chair of the

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Speaker 2: House Financial Services Committee, Congressman representing Michigan's fourth District, Bill

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Speaker 2: Jizenga here with us in studio on Balance of Power

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Speaker 2: live from Washington.

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Speaker 5: D C.

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Speaker 2: I'm Kaylee Lines alongside Tyler Kendall, and we'll have more

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Speaker 2: straight ahead.

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Speaker 1: Here you're listening to the Bloomberg Balance of Power podcast

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Speaker 1: Kettys live weekdays at noon and five on Apple Cockley

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Speaker 1: and Android Otto with the Bloomberg Business App. Listen on

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Speaker 1: demand wherever you get your podcasts, or watch us live

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Speaker 1: on YouTube.

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Speaker 2: There's really only one story that everyone is talking about

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Speaker 2: on this Friday, and it's perhaps not the story President

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Speaker 2: Trump would prefer we'd be discussing, but it, of course

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Speaker 2: is the push within his base for the release of

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Speaker 2: more information related to the late convicted sex offender Jeffrey Epstein,

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Speaker 2: with questions not just about the case itself and whether

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Speaker 2: or not there is a client list that officials within

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Speaker 2: the Trump administration had previously suggested did exist, but also

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Speaker 2: into the President's relationship with Epstein, as The Wall Street

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Speaker 2: Journal published a report alleging that President Trump sent a

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Speaker 2: suggestive letter to Epstein for his fiftieth birthday, report that

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Speaker 2: the President denies as called afamatory and is threatened to

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Speaker 2: sue the Wall Street Journal over. But he's also pointing

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Speaker 2: a finger today Tyler at Democrats or I guess yeah,

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Speaker 2: this is today earlier this morning on True Social saying

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Speaker 2: if there was a smoking gun on Epstein, why didn't

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Speaker 2: the Dems, who controlled the files for four years and

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Speaker 2: had Garland and Comy in charge use it? He ends

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Speaker 2: it all caps, because they had nothing right. This is

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Speaker 2: part of the White House's defense here. Since this story

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Speaker 2: really does seem to have that sticking power. We're now

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Speaker 2: seeing a movement in Congress even to force a formal

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Speaker 2: vote on releasing these files, as it really does appear

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Speaker 2: to have this grip on really both sides of the

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Speaker 2: party here, and that's perhaps becoming a political liability for

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Speaker 2: the president. And that's where we want to start today

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Speaker 2: by bringing in our political panel and includes Rick Davis,

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Speaker 2: partner at Stone Court Capital, Andy Bloomberg, politics contributor, and

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Speaker 2: Christina Greer, Associate chair at the Department of Political Science

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Speaker 2: at Fordham. Rick, I want to start with you, because

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Speaker 2: where do we go from here. We have President Trump

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Speaker 2: granting this authorization, but it's unclear if a federal court

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Speaker 2: would even grant the administration's request. Could that potentially throw

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Speaker 2: a wrench in the administration's plan since they appear to

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Speaker 2: be wanting to give those that are seeking more information

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Speaker 2: something to chew on.

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Speaker 9: Yeah, I almost think that that's what the White House

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Speaker 9: wants right, so that they can wake up and then

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Speaker 9: start attacking the judiciary again, saying, oh, well, I wanted

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Speaker 9: you to have this information, but the courts won't let

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Speaker 9: you have it. Of course, I don't think it was

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Speaker 9: a coincidence that they went after the most sensitive information

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Speaker 9: you can have, which is grand jury testimony, which is

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Speaker 9: supposed to remain secret. Forget, forget the files you already

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Speaker 9: have at the FBI and the Justice Department that can

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Speaker 9: be released tomorrow. So look, Biden didn't release this stuff

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Speaker 9: for some reason, and Trump doesn't want to release this

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Speaker 9: stuff for some reason. My guess is there may be

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Speaker 9: not much to it all, and that the only reason

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Speaker 9: the President has actually bowed to this effort is by

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Speaker 9: his own claim, is because the publicity was bad for him,

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Speaker 9: and so all he's done is kept the publicity going

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Speaker 9: into this weekend. So we'll have a nice thorough Sunday

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Speaker 9: show spectacular with more Jeffrey Epstein, you know, and who knows,

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Speaker 9: Now everybody's got an investigative journalist looking for more Epstein material,

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Speaker 9: like the Wall Street Journal came up with. I mean,

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Speaker 9: it is a classic summer scandal.

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Speaker 2: Indeed, and we are in mid July as we consider, though, Christina,

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Speaker 2: the sentiment around this. Obviously, there are loud voices that

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Speaker 2: have always been loud voices within the MAGA base who

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Speaker 2: have made a very big deal about this, thinking of

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Speaker 2: the likes of Laura Lumer. But there's another question of

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Speaker 2: the broader Republican electorate. We've gotten a few polls this week,

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Speaker 2: one from Quinnipiac that shows there is some division among

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Speaker 2: Republicans on this issue. Forty percent say they approve of

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Speaker 2: the way the administration is handling the Epstein files, thirty

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Speaker 2: six percent disapproved, twenty four percent did not give an opinion.

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Speaker 2: There are similar divisions in a Reuter's IPSOS poll thirty

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Speaker 2: five percent approve of the handling, twenty nine percent disapprove.

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Speaker 2: Is the fracturing of the Republican or more specifically, the

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Speaker 2: president's base, a real tangible thing here.

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Speaker 10: Well, it appears that this is the first time we've

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Speaker 10: seen real fissures within the base. I mean, this is

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Speaker 10: also a base that's been fed a consistent diet of

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Speaker 10: conspiracy theories that the president has sort of promoted and

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Speaker 10: then walked away from. We can start with the Birther

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Speaker 10: conspiracy theory. Uh, and then when Obama acquiesces and shows

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Speaker 10: his birth certificate where he is indeed American.

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Speaker 5: Uh.

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Speaker 10: The president says, well, that must be a hoax and

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Speaker 10: it must be fake. Right. The Pizzagate scandal with the

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Speaker 10: Clintons and Hillary Clinton and the basement and the pedophilia,

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Speaker 10: He's also fed them a consistent diet of you know,

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Speaker 10: Democrats are somehow attached to pedophiles. The difference is Jeffrey

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Speaker 10: Epstein is isn't a conspiracy theory. He was convicted for

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Speaker 10: being uh inappropriate with minors. And so now that he

438
00:22:39,720 --> 00:22:43,200
Speaker 10: has fed this base for many, many years, uh certain narratives,

439
00:22:43,359 --> 00:22:45,280
Speaker 10: he wants to walk away, and they're not willing to

440
00:22:45,280 --> 00:22:48,240
Speaker 10: walk away. And so I think what's what's been interesting

441
00:22:48,240 --> 00:22:50,880
Speaker 10: about this particular story for a lot of journalists, uh

442
00:22:50,880 --> 00:22:52,840
Speaker 10: on both sides of the aisle, is that we have

443
00:22:52,920 --> 00:22:56,560
Speaker 10: not seen the base sort of disavow something that the

444
00:22:56,560 --> 00:22:59,000
Speaker 10: president has said. They have moved and shifted and twisted

445
00:22:59,000 --> 00:23:02,879
Speaker 10: themselves into repsols on a dime as the President changes

446
00:23:02,920 --> 00:23:05,960
Speaker 10: his whims and this particular instance, we have a significant

447
00:23:05,960 --> 00:23:09,040
Speaker 10: portion of his base who're saying, actually, I don't agree

448
00:23:09,080 --> 00:23:11,000
Speaker 10: with you. I want to get to the bottom of

449
00:23:11,000 --> 00:23:13,879
Speaker 10: this whatever it is, and so it seems as though

450
00:23:13,920 --> 00:23:16,879
Speaker 10: the president can't shake it. We know, obviously the administration

451
00:23:16,920 --> 00:23:19,600
Speaker 10: would like to shake it, considering they're releasing health information

452
00:23:19,640 --> 00:23:22,560
Speaker 10: which they never do about the president as a distraction,

453
00:23:22,840 --> 00:23:25,360
Speaker 10: and it hasn't distracted his base. And so we will

454
00:23:25,400 --> 00:23:27,199
Speaker 10: see whether or not it's the courts, whether or not

455
00:23:27,240 --> 00:23:29,200
Speaker 10: it's Congress, whether or not he can sort of keep

456
00:23:29,200 --> 00:23:31,560
Speaker 10: pushing this off on Biden and Obama and the Democrats.

457
00:23:31,760 --> 00:23:34,840
Speaker 10: But at some point in time his base, a significant

458
00:23:34,840 --> 00:23:38,439
Speaker 10: portion wants some information, and you'll have to give them something.

459
00:23:40,080 --> 00:23:43,040
Speaker 3: Well, this really has become a top issue here in Washington,

460
00:23:43,040 --> 00:23:46,040
Speaker 3: but also nationwide. In fact, over here in Bloomberg, we

461
00:23:46,080 --> 00:23:48,080
Speaker 3: had New York City Mayor Eric Adams on the Odd

462
00:23:48,119 --> 00:23:50,680
Speaker 3: Lots podcast earlier. We want to play you both a

463
00:23:50,680 --> 00:23:53,120
Speaker 3: little bit of what he said about what he's looking for,

464
00:23:53,200 --> 00:23:57,080
Speaker 3: what Attorney General Pam BONDI might soon be releasing or not.

465
00:23:58,520 --> 00:24:00,000
Speaker 4: I would love to see what hit and those FSCs.

466
00:24:00,960 --> 00:24:01,879
Speaker 11: You know, I think we all do.

467
00:24:02,240 --> 00:24:02,439
Speaker 4: You know.

468
00:24:02,760 --> 00:24:05,720
Speaker 11: I'm eager to look at UFOs. You know, there's so

469
00:24:05,800 --> 00:24:07,920
Speaker 11: many history. I'm still trying to figure out who kid

470
00:24:07,920 --> 00:24:10,800
Speaker 11: to kill Kennedy. I look forward to seeing. There's so

471
00:24:10,880 --> 00:24:14,000
Speaker 11: many deep secrets in America that I think we all

472
00:24:14,040 --> 00:24:17,040
Speaker 11: want to know, and it's imperative that as much as

473
00:24:17,080 --> 00:24:18,280
Speaker 11: we can find it as possible.

474
00:24:20,560 --> 00:24:23,840
Speaker 3: Rick, perhaps, can you say shed some of your insight here?

475
00:24:23,880 --> 00:24:26,160
Speaker 3: Does this have anything to do with perhaps the sticking

476
00:24:26,200 --> 00:24:29,560
Speaker 3: power that we're seeing this story really have a grip

477
00:24:29,600 --> 00:24:32,720
Speaker 3: on members in both parties as they try to seek

478
00:24:32,760 --> 00:24:35,560
Speaker 3: more answers. Just Eric Adams argument there have some credibility,

479
00:24:37,200 --> 00:24:37,760
Speaker 3: Not really.

480
00:24:37,880 --> 00:24:40,440
Speaker 9: I mean, I too would like to see the UFOs.

481
00:24:40,480 --> 00:24:42,840
Speaker 9: Whenever I'm in New York, I feel like walking around

482
00:24:42,840 --> 00:24:45,520
Speaker 9: the street, I see one UFO after another. But that's,

483
00:24:45,760 --> 00:24:49,879
Speaker 9: you know, a more comment on the residents of New York.

484
00:24:50,520 --> 00:24:52,040
Speaker 4: The reality is that.

485
00:24:54,320 --> 00:24:57,880
Speaker 9: This was really sort of a Trump instigated problem, right,

486
00:24:57,960 --> 00:25:02,840
Speaker 9: and sure there's a lot here that is disturbing to people.

487
00:25:04,040 --> 00:25:08,200
Speaker 9: Court cases were tried, people were convicted, Jeffrey Epstein killed himself,

488
00:25:08,840 --> 00:25:11,159
Speaker 9: and the only people who continued to talk about this

489
00:25:11,400 --> 00:25:15,280
Speaker 9: wasn't necessarily the Democratic Party. It was the Republicans who said,

490
00:25:15,320 --> 00:25:18,000
Speaker 9: oh my god, they're keeping these file secret for a reason.

491
00:25:18,560 --> 00:25:21,560
Speaker 9: You know, they're all kinds of people. They implied Bill

492
00:25:21,600 --> 00:25:25,560
Speaker 9: Clinton and others had exposure to this, and it was

493
00:25:25,600 --> 00:25:32,200
Speaker 9: one of the classic MAGA kind of influenced, you know messages,

494
00:25:32,359 --> 00:25:34,359
Speaker 9: and we went through a lot of those over the

495
00:25:34,440 --> 00:25:38,440
Speaker 9: last you know, ten years, and virtually every single one

496
00:25:38,440 --> 00:25:40,600
Speaker 9: of them has sort of fallen on deaf ears, and

497
00:25:40,800 --> 00:25:44,440
Speaker 9: this one has gotten some new attraction because the President

498
00:25:45,280 --> 00:25:49,879
Speaker 9: himself has indicated a willingness to show people something that

499
00:25:49,920 --> 00:25:51,159
Speaker 9: they hadn't seen before.

500
00:25:51,200 --> 00:25:51,560
Speaker 4: On it.

501
00:25:51,560 --> 00:25:54,199
Speaker 9: It wasn't really that big an issue until, you know,

502
00:25:54,280 --> 00:25:58,960
Speaker 9: Pam Bondi said I'm going to release these these records

503
00:25:59,000 --> 00:26:00,879
Speaker 9: and then didn't release any thing that wasn't already in

504
00:26:00,920 --> 00:26:04,640
Speaker 9: the public domain. So they are tripping over themselves on

505
00:26:04,680 --> 00:26:07,600
Speaker 9: this issue. And the reality is, I think when you

506
00:26:07,600 --> 00:26:11,119
Speaker 9: look at sort of good crisis management, you tell everybody,

507
00:26:11,200 --> 00:26:14,840
Speaker 9: everyone be quiet. We're going to speak with one single voice.

508
00:26:14,880 --> 00:26:17,280
Speaker 9: It will be someone who is not the President of

509
00:26:17,280 --> 00:26:20,159
Speaker 9: the United States, and will draw attention to only that

510
00:26:20,359 --> 00:26:23,200
Speaker 9: person and only the messages that they give and tell

511
00:26:23,240 --> 00:26:26,120
Speaker 9: everyone else to be quiet. I mean, we still don't

512
00:26:26,160 --> 00:26:30,600
Speaker 9: know Dan Bongini's Bongino's future as Deputy of the FBI,

513
00:26:30,760 --> 00:26:33,199
Speaker 9: which to me is the most important thing here because

514
00:26:33,280 --> 00:26:35,560
Speaker 9: he's supposed to be running the day to day operations

515
00:26:35,600 --> 00:26:38,720
Speaker 9: the FBI and has somehow been embroiled in this scandal

516
00:26:38,960 --> 00:26:40,560
Speaker 9: to the point where he didn't show up for work

517
00:26:40,560 --> 00:26:43,600
Speaker 9: for a couple of days. Now that is unacceptable to

518
00:26:43,720 --> 00:26:44,680
Speaker 9: most taxpayers.

519
00:26:46,560 --> 00:26:49,920
Speaker 2: Well, we're else maybe wondering about Bongino's future, We're also

520
00:26:49,960 --> 00:26:53,240
Speaker 2: wondering about Eric Adams, who we just heard from, future,

521
00:26:53,280 --> 00:26:54,960
Speaker 2: whether or not who you can end up being re

522
00:26:55,000 --> 00:26:56,879
Speaker 2: elected mayor of New York City. I would point out

523
00:26:56,960 --> 00:26:59,960
Speaker 2: Christina that on Odd Lots with Joe Wisenthal and Tracy Alloway,

524
00:26:59,840 --> 00:27:02,199
Speaker 2: they talked about a lot more than just Epstein. That

525
00:27:02,200 --> 00:27:04,960
Speaker 2: full conversation can be found on Spotify, Apple, wherever you

526
00:27:05,000 --> 00:27:07,679
Speaker 2: get your podcast. But they, no surprise, talked about the

527
00:27:07,720 --> 00:27:10,639
Speaker 2: mayoral race, and specifically Adams had some choice criticism for

528
00:27:10,720 --> 00:27:14,240
Speaker 2: zoah Mam Donnie, who of course is the Democratic nominee,

529
00:27:14,280 --> 00:27:18,040
Speaker 2: specifically his attitude when it comes to billionaires. You're up

530
00:27:18,040 --> 00:27:20,640
Speaker 2: at Fordham, you know New York politics, Well, knowing mom

531
00:27:20,720 --> 00:27:23,720
Speaker 2: Donnie is set to meet with the House Democratic Leader

532
00:27:23,760 --> 00:27:27,359
Speaker 2: Hakim Jeffries in New York today, what does he need

533
00:27:27,400 --> 00:27:29,480
Speaker 2: to do to actually win this thing in the general

534
00:27:29,520 --> 00:27:31,520
Speaker 2: Knowing it's not just Adams that he's up against, but

535
00:27:31,600 --> 00:27:35,159
Speaker 2: Andrew Cuomo as well, with this weird independent factor we

536
00:27:35,160 --> 00:27:36,480
Speaker 2: don't usually see.

537
00:27:37,200 --> 00:27:40,000
Speaker 10: Right, So personance first, Rick, you know, as the native

538
00:27:40,040 --> 00:27:42,520
Speaker 10: New Yorker, I would say that we are very welcoming

539
00:27:42,880 --> 00:27:47,240
Speaker 10: to aliens and nottorus from other places. So'll just put

540
00:27:47,240 --> 00:27:49,800
Speaker 10: that out there. But John Mumdani, you know, going into

541
00:27:49,840 --> 00:27:52,440
Speaker 10: the general election, have to remember it's not ranked choice

542
00:27:52,520 --> 00:27:54,880
Speaker 10: voting the way we saw in the Democratic primary. He's

543
00:27:54,880 --> 00:27:57,520
Speaker 10: going up against not just current mayor Eric Adams, three

544
00:27:57,600 --> 00:28:02,000
Speaker 10: term governor Andrew Pomo, the Republican nominee, and also another

545
00:28:02,400 --> 00:28:05,960
Speaker 10: prominent lawyer, independent nominee, Jim Walden. So there are five

546
00:28:06,080 --> 00:28:08,919
Speaker 10: people currently in the race, to say nothing of all

547
00:28:09,000 --> 00:28:12,639
Speaker 10: the small names that are always on a ballot. This

548
00:28:12,720 --> 00:28:15,959
Speaker 10: thirty three year old state legislator has to sort of

549
00:28:16,440 --> 00:28:18,959
Speaker 10: capture the attention. I talk about this every week on

550
00:28:19,000 --> 00:28:23,399
Speaker 10: my podcast FAQ. Which is the real estate community, the

551
00:28:23,440 --> 00:28:27,400
Speaker 10: business community, the labor community, and the Hasidic community. Those

552
00:28:27,440 --> 00:28:29,879
Speaker 10: are the four communities that can make or break a

553
00:28:29,920 --> 00:28:32,520
Speaker 10: mayor's chances of getting across the finish line. And it

554
00:28:32,560 --> 00:28:34,919
Speaker 10: is first past the post. It is not a fifty

555
00:28:34,960 --> 00:28:37,639
Speaker 10: percent majority that is needed. It is whoever gets the

556
00:28:37,680 --> 00:28:40,320
Speaker 10: most votes becomes the one hundred eleventh mayor of New

557
00:28:40,400 --> 00:28:43,680
Speaker 10: York City. And so, Mam Donnie. He's relatively unknown to

558
00:28:43,760 --> 00:28:47,000
Speaker 10: the business community. He's relatively unknown to the labor community,

559
00:28:47,000 --> 00:28:49,720
Speaker 10: which is incredibly diverse. He's definitely unknown to the real

560
00:28:49,800 --> 00:28:52,600
Speaker 10: estate community, and also to the Hasidic community. And there

561
00:28:52,600 --> 00:28:55,360
Speaker 10: are lots of conversations that he's had about Israel and

562
00:28:55,400 --> 00:28:59,280
Speaker 10: domestic versus international policy that he's attempting to clarify and

563
00:29:00,080 --> 00:29:03,560
Speaker 10: provide more nuance. So this is a summer where he's

564
00:29:03,560 --> 00:29:07,480
Speaker 10: a fantastic campaigner, but we know that campaigning is not governance,

565
00:29:07,720 --> 00:29:09,600
Speaker 10: and so part of what he's trying to do is

566
00:29:09,680 --> 00:29:12,280
Speaker 10: to convince a large portion of New Yorkers that he

567
00:29:12,320 --> 00:29:15,680
Speaker 10: actually can govern. We've had abysmal turnout over the past

568
00:29:15,680 --> 00:29:19,680
Speaker 10: few elections where we are electing mayors with barely twenty

569
00:29:19,720 --> 00:29:22,600
Speaker 10: five percent. I think we will see a high turnout

570
00:29:22,880 --> 00:29:27,120
Speaker 10: election just because we have Republicans who may go with

571
00:29:27,160 --> 00:29:30,960
Speaker 10: the Republican nominee Kretisliwa, or they may be more inclined

572
00:29:30,960 --> 00:29:32,959
Speaker 10: to go with someone like Eric Adams or even an

573
00:29:32,960 --> 00:29:36,360
Speaker 10: Andrew CuMo because they think that those individuals can negotiate

574
00:29:36,560 --> 00:29:40,600
Speaker 10: with Donald Trump in a better fashion, all.

575
00:29:40,640 --> 00:29:43,320
Speaker 2: Right, Christina Greer and Rick Davis our political panel on

576
00:29:43,360 --> 00:29:45,400
Speaker 2: this Friday edition of Balance of Power.

577
00:29:45,680 --> 00:29:49,160
Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch

578
00:29:49,240 --> 00:29:52,040
Speaker 1: us live weekdays at noon and five pm. He's during

579
00:29:52,200 --> 00:29:55,560
Speaker 1: on Apple Cocklay and Android Auto with the Bloomberg Business app.

580
00:29:55,680 --> 00:29:58,680
Speaker 1: You can also listen live on Amazon Alexa from our

581
00:29:58,720 --> 00:30:03,520
Speaker 1: flagship New York station. Does say Alexa played Bloomberg eleven thirty.

582
00:30:04,760 --> 00:30:07,000
Speaker 2: A week, of course, that has been dominated by many

583
00:30:07,040 --> 00:30:09,760
Speaker 2: of the headlines we've discussed so far here on Balance

584
00:30:09,760 --> 00:30:13,040
Speaker 2: of Power, from what's happened legislatively in Congress, to what's

585
00:30:13,080 --> 00:30:15,440
Speaker 2: going on with the Jeffrey Epstein case and how that's

586
00:30:15,480 --> 00:30:19,280
Speaker 2: engulfing the Trump administration, but also, of course the ongoing

587
00:30:19,320 --> 00:30:22,240
Speaker 2: saga of President Trump and his relationship to the chair

588
00:30:22,280 --> 00:30:24,360
Speaker 2: of the Federal Reserve, Jerome Powell, and whether or not

589
00:30:24,640 --> 00:30:26,680
Speaker 2: Chairman Powell is going to be safe in his job

590
00:30:27,040 --> 00:30:29,360
Speaker 2: for much longer. Of course, the President suggests he does

591
00:30:29,400 --> 00:30:31,440
Speaker 2: not intend at this time to fire Chairman Powell, but

592
00:30:31,440 --> 00:30:34,240
Speaker 2: that is not stopping him from pressuring pal to lower

593
00:30:34,240 --> 00:30:36,600
Speaker 2: interest rates. Seems we see this every day now on

594
00:30:36,680 --> 00:30:39,760
Speaker 2: True Social including a post this morning too Late, his

595
00:30:39,880 --> 00:30:42,400
Speaker 2: nickname for Chairman Powell and the Fed are choking out

596
00:30:42,400 --> 00:30:45,080
Speaker 2: the housing market with their high rate, making it high

597
00:30:45,080 --> 00:30:48,320
Speaker 2: people are making it difficult for people, especially the young,

598
00:30:48,640 --> 00:30:50,760
Speaker 2: to buy a house. He goes on to say Tyler

599
00:30:51,560 --> 00:30:55,320
Speaker 2: that the US is rocking. There is very low inflation,

600
00:30:55,840 --> 00:30:59,280
Speaker 2: and we deserve to be He says, at one percent,

601
00:31:00,120 --> 00:31:02,640
Speaker 2: that is far below where the Fed fund but Fed

602
00:31:02,640 --> 00:31:03,880
Speaker 2: funds rate currently.

603
00:31:03,600 --> 00:31:05,480
Speaker 3: Is right, and we actually had asked Joe Livorni, a

604
00:31:05,520 --> 00:31:10,960
Speaker 3: counselor to Secretary Besent yesterday about this. Perhaps we'll have

605
00:31:11,000 --> 00:31:13,440
Speaker 3: to see where they actually end up, thinking that the

606
00:31:13,480 --> 00:31:15,959
Speaker 3: Fed funds rate should shake out. But it is apparent

607
00:31:16,000 --> 00:31:19,280
Speaker 3: that the administration feels bolsterred by what has been positive

608
00:31:19,440 --> 00:31:24,280
Speaker 3: economic data. Retail sales yesterday, University of Michigan consumer sentiment today,

609
00:31:24,360 --> 00:31:27,160
Speaker 3: all of course factors when we are talking about this

610
00:31:27,200 --> 00:31:30,840
Speaker 3: pressure campaign from the White House, and actually our colleagues

611
00:31:30,880 --> 00:31:33,760
Speaker 3: earlier today on Bloomberg Television sent down with the Federal

612
00:31:33,760 --> 00:31:36,880
Speaker 3: Reserve Governor Christopher Waller. You heard Charlie mention it earlier

613
00:31:36,920 --> 00:31:39,600
Speaker 3: on surveillance. He is of course seen as a potential

614
00:31:39,680 --> 00:31:42,440
Speaker 3: replacement for Jerome Powell, and he hinted himself that he

615
00:31:42,480 --> 00:31:45,640
Speaker 3: would dissent if his colleagues end up holding rates steady

616
00:31:45,720 --> 00:31:47,680
Speaker 3: in their July meeting. We want to bring you part

617
00:31:47,720 --> 00:31:50,640
Speaker 3: of that conversation now, including starting out with some of

618
00:31:50,680 --> 00:31:53,680
Speaker 3: his thoughts on the Trump administration's tariff policies.

619
00:31:54,360 --> 00:31:57,800
Speaker 12: Tariffs are attacks, and in public finance you learn that

620
00:31:58,280 --> 00:32:01,360
Speaker 12: you may levy attacks on a firm who bears the incidents.

621
00:32:01,720 --> 00:32:04,200
Speaker 12: The burden of that tax can be a group of

622
00:32:04,240 --> 00:32:07,600
Speaker 12: people or one person, not necessarily the firm.

623
00:32:07,720 --> 00:32:10,080
Speaker 4: So this is what I've heard from a lot of firms.

624
00:32:10,120 --> 00:32:13,560
Speaker 12: If there's a ten percent tax, they'll force their suppliers

625
00:32:13,600 --> 00:32:15,920
Speaker 12: to eat some of that cost. Workers meet some of

626
00:32:15,920 --> 00:32:18,800
Speaker 12: that cost in terms of less hiring and things like that.

627
00:32:19,320 --> 00:32:21,560
Speaker 12: The firm will take it out of their profit margins,

628
00:32:22,160 --> 00:32:24,280
Speaker 12: and then lastly, some of it will get passed on.

629
00:32:24,600 --> 00:32:26,640
Speaker 12: And as I mentioned last night, I've heard this for

630
00:32:26,800 --> 00:32:29,600
Speaker 12: months now. Like the rule is ten percent, it's roughly

631
00:32:30,040 --> 00:32:31,720
Speaker 12: rule if thumb is a third to third, a third.

632
00:32:32,720 --> 00:32:35,600
Speaker 12: Suppliers lead to third, firms lead to third. Consumer is

633
00:32:35,600 --> 00:32:37,760
Speaker 12: going to eat a third of that TEARFF. So if

634
00:32:37,760 --> 00:32:39,800
Speaker 12: you eat a third of it, and it's ten percent.

635
00:32:39,920 --> 00:32:42,120
Speaker 12: Like I've been arguing, this is like three tenths of

636
00:32:42,200 --> 00:32:46,720
Speaker 12: a three basic three tenths on the inflation rate for

637
00:32:46,800 --> 00:32:47,360
Speaker 12: a few.

638
00:32:47,120 --> 00:32:50,360
Speaker 4: Months and that's it, and it'll persist.

639
00:32:50,360 --> 00:32:52,480
Speaker 12: If you do twelve month over twelve month, that base

640
00:32:52,520 --> 00:32:54,560
Speaker 12: effect will not go away for a while and then

641
00:32:54,560 --> 00:32:56,920
Speaker 12: it'll just drop off a cliff. So that's why I've

642
00:32:56,920 --> 00:32:58,680
Speaker 12: been arguing, you want to look at like three months

643
00:32:58,680 --> 00:33:01,760
Speaker 12: and six months to see if these tariff effects pop

644
00:33:01,840 --> 00:33:04,479
Speaker 12: up and then go away, and so that's more critical

645
00:33:04,480 --> 00:33:05,000
Speaker 12: to looking.

646
00:33:04,800 --> 00:33:05,440
Speaker 4: At twelve month.

647
00:33:08,800 --> 00:33:11,360
Speaker 13: Yes, but the way the president is putting these tariffs

648
00:33:11,400 --> 00:33:15,080
Speaker 13: on might not match up with theory. Chris, the smooth

649
00:33:15,120 --> 00:33:17,760
Speaker 13: hol attacks was passed and came into effect on a

650
00:33:17,760 --> 00:33:21,960
Speaker 13: certain date. The President is not yet put on most

651
00:33:22,000 --> 00:33:24,320
Speaker 13: of these tariffs they're in. Theory is still coming and

652
00:33:24,360 --> 00:33:26,760
Speaker 13: we still haven't seen the Section two thirty two tariffs

653
00:33:26,800 --> 00:33:29,080
Speaker 13: for the most part, the National defense tariffs that he

654
00:33:29,160 --> 00:33:32,400
Speaker 13: wants to put on semiconductors and pharmaceuticals, et cetera. So

655
00:33:32,480 --> 00:33:35,840
Speaker 13: if the process is stretched out, consumers could be hit

656
00:33:36,000 --> 00:33:39,640
Speaker 13: by a series an ongoing series of tariff increases, and

657
00:33:39,680 --> 00:33:42,520
Speaker 13: given what they've just been through, isn't there danger that

658
00:33:42,600 --> 00:33:44,800
Speaker 13: inflation psychology starts to seep in?

659
00:33:45,440 --> 00:33:46,840
Speaker 4: Well, that's exactly the point.

660
00:33:47,440 --> 00:33:49,400
Speaker 12: All my example has been is if you put the

661
00:33:49,400 --> 00:33:51,960
Speaker 12: ten percent uniform tariff on and keep it roughly in

662
00:33:52,040 --> 00:33:55,640
Speaker 12: that range, than what I've described as will happen. If

663
00:33:55,640 --> 00:33:59,360
Speaker 12: there's constantly a sequence of higher and higher and higher tariffs,

664
00:33:59,360 --> 00:34:04,280
Speaker 12: then you are going at this rolling potential impact on prices.

665
00:34:03,560 --> 00:34:05,040
Speaker 4: That's true.

666
00:34:05,840 --> 00:34:08,960
Speaker 12: If it's still just a question of delaying it, that

667
00:34:09,000 --> 00:34:11,719
Speaker 12: doesn't change my argument. Whether you see the spike in

668
00:34:11,800 --> 00:34:15,520
Speaker 12: July or it happens in June or Army, August or September.

669
00:34:16,080 --> 00:34:19,560
Speaker 12: When it happens is irrelevant for the economics.

670
00:34:19,600 --> 00:34:21,400
Speaker 4: That's a non start of an argument.

671
00:34:22,200 --> 00:34:25,120
Speaker 12: Firms could also just spread it out in smaller increments

672
00:34:25,160 --> 00:34:27,839
Speaker 12: over several months. The total effects still ends up being

673
00:34:27,880 --> 00:34:30,320
Speaker 12: the same. They just get there in a later fashion

674
00:34:30,400 --> 00:34:33,200
Speaker 12: and it'll be smaller amounts. So the bigger thing is

675
00:34:33,239 --> 00:34:35,560
Speaker 12: if we just continue to get another wave of tariffs,

676
00:34:35,600 --> 00:34:38,520
Speaker 12: another wave of tariffs, and oother waves of tariffs, that's

677
00:34:38,520 --> 00:34:41,480
Speaker 12: when things become more problematic thinking about what's going to

678
00:34:41,480 --> 00:34:42,360
Speaker 12: happen with inflation.

679
00:34:44,040 --> 00:34:46,799
Speaker 2: FED Governor Christopher Waller in conversation with our colleagues on

680
00:34:46,800 --> 00:34:50,560
Speaker 2: Bloomberg Surveillance, including Bloomberg's very own Mike McKee earlier today

681
00:34:50,560 --> 00:34:53,640
Speaker 2: talking about tariffs and the unknown factor that it plays,

682
00:34:54,320 --> 00:34:58,120
Speaker 2: an unknown policy that exists around them, which of course

683
00:34:58,160 --> 00:34:59,680
Speaker 2: is one of the reasons that the Federal Reserve is

684
00:34:59,719 --> 00:35:02,399
Speaker 2: maintain at least for now, that it feels comfortable where

685
00:35:02,400 --> 00:35:05,359
Speaker 2: it is, keeping rates on hold until it has more

686
00:35:05,400 --> 00:35:09,719
Speaker 2: clarity around that specific element and how it will influence

687
00:35:09,800 --> 00:35:11,799
Speaker 2: the economy. But of course President Trump does not want

688
00:35:11,800 --> 00:35:13,799
Speaker 2: the FED to be on hold, as we mentioned once

689
00:35:13,840 --> 00:35:16,000
Speaker 2: again today, pushing the Fed to lower interest rates. He

690
00:35:16,040 --> 00:35:19,120
Speaker 2: believes the FED should be down at one percent. That

691
00:35:19,120 --> 00:35:21,920
Speaker 2: would be substantial cuts from where we are now, and

692
00:35:21,960 --> 00:35:23,640
Speaker 2: we want to get into this and other issues as

693
00:35:23,640 --> 00:35:26,600
Speaker 2: we turn out in Natasha Surin. She's professor at Yale

694
00:35:26,600 --> 00:35:30,120
Speaker 2: Budget Lab, former Deputy Assistant Secretary for Economic Policy, and

695
00:35:30,200 --> 00:35:33,600
Speaker 2: former counselor to the Treasury Secretary Janet Yellen at the

696
00:35:33,640 --> 00:35:37,480
Speaker 2: Treasury Department. Tasha, welcome back to Bloomberg TV and Radio.

697
00:35:37,520 --> 00:35:40,360
Speaker 2: When we consider the President, who in that true social

698
00:35:40,360 --> 00:35:42,600
Speaker 2: post is he pushed for a one percent FED funds rate,

699
00:35:42,680 --> 00:35:45,040
Speaker 2: talked about how that rate would save the US a

700
00:35:45,120 --> 00:35:47,720
Speaker 2: trillion dollars a year in terms of the interest payments

701
00:35:48,320 --> 00:35:50,440
Speaker 2: that we have to make. Is that really how it

702
00:35:50,600 --> 00:35:53,160
Speaker 2: will work in reality? If that is the narrative he

703
00:35:53,239 --> 00:35:55,760
Speaker 2: is pushing the Fed cuts rates, it makes our financial

704
00:35:55,760 --> 00:35:58,880
Speaker 2: situation fiscally as a nation much easier.

705
00:35:59,400 --> 00:36:01,880
Speaker 14: So the challenge that we kind of have to grapple

706
00:36:01,920 --> 00:36:05,800
Speaker 14: with is that the Federal Reserve, and the Federal Reserve's

707
00:36:05,840 --> 00:36:09,040
Speaker 14: independence is really crucial to the role that it's able

708
00:36:09,040 --> 00:36:11,879
Speaker 14: to play in the economy as a stabilizer. So when

709
00:36:11,880 --> 00:36:14,680
Speaker 14: the Federal Reserve makes decisions, it has two things in mind.

710
00:36:14,719 --> 00:36:17,719
Speaker 14: It has what does the employment picture look like and

711
00:36:17,760 --> 00:36:20,720
Speaker 14: what does inflation look like? And it's reacting to those

712
00:36:20,760 --> 00:36:25,600
Speaker 14: two particular, really substantive data questions. If you're in a

713
00:36:25,719 --> 00:36:29,719
Speaker 14: universe where instead a Federal Reserve that's become politicized is

714
00:36:29,800 --> 00:36:33,759
Speaker 14: reacting to what President Trump thinks that the interest rates

715
00:36:33,800 --> 00:36:37,280
Speaker 14: should be. Well, in that situation, you kind of break

716
00:36:37,400 --> 00:36:41,120
Speaker 14: the relationship between what the Federal Reserve actually gets to set,

717
00:36:41,480 --> 00:36:43,600
Speaker 14: which is the Federal funds rate, the rate at which

718
00:36:43,680 --> 00:36:47,360
Speaker 14: banks lend to one another, and things like mortgage rates

719
00:36:47,480 --> 00:36:50,920
Speaker 14: or car loan rates or small business loan rates. That

720
00:36:50,960 --> 00:36:55,319
Speaker 14: are actually relevant to consumers in this economy, so perversely

721
00:36:55,480 --> 00:36:58,920
Speaker 14: by sort of trying to push so aggressively for an

722
00:36:58,960 --> 00:37:02,520
Speaker 14: interest rate that is way outside of the realm of

723
00:37:02,560 --> 00:37:06,440
Speaker 14: what any economic observers think makes sense in an environment

724
00:37:06,480 --> 00:37:11,360
Speaker 14: where employment is basically at fourish percent and inflation is

725
00:37:11,400 --> 00:37:14,080
Speaker 14: still not back to target and in fact taking upward

726
00:37:14,120 --> 00:37:18,520
Speaker 14: because of this tariff policy, you really don't have any

727
00:37:18,640 --> 00:37:22,839
Speaker 14: case to make for those type of rate choices outside

728
00:37:22,840 --> 00:37:26,000
Speaker 14: of just politicization of the Federal Reserve, which comes with

729
00:37:26,120 --> 00:37:26,880
Speaker 14: real risks.

730
00:37:28,440 --> 00:37:30,279
Speaker 3: I'm also hoping, Natasha, that you can give us a

731
00:37:30,280 --> 00:37:32,000
Speaker 3: little bit more context here too, because we have to

732
00:37:32,080 --> 00:37:33,560
Speaker 3: keep in mind that the Fed chair is only one

733
00:37:33,640 --> 00:37:36,640
Speaker 3: vote on the Federal Market Committee, and we did speak

734
00:37:36,680 --> 00:37:39,960
Speaker 3: to Bill Polti, the head of the Federal Housing Finance Agency,

735
00:37:39,960 --> 00:37:42,360
Speaker 3: who told us earlier this week on Balance Power that

736
00:37:42,360 --> 00:37:44,640
Speaker 3: they are seeking for pal to step down his chair

737
00:37:44,719 --> 00:37:47,880
Speaker 3: but also his position on the board. Can you just

738
00:37:48,080 --> 00:37:51,000
Speaker 3: give us a little bit Could this complicate the administration's

739
00:37:51,080 --> 00:37:53,799
Speaker 3: ultimate goal here when you do have other members who

740
00:37:53,840 --> 00:37:56,520
Speaker 3: are voting, and what we are hearing from those other

741
00:37:56,600 --> 00:37:58,640
Speaker 3: members when it does come to the future of rate.

742
00:37:58,600 --> 00:38:01,480
Speaker 14: Cuts, and you know it it's like really important for

743
00:38:01,640 --> 00:38:05,279
Speaker 14: your viewers, I think and listeners to understand there is

744
00:38:05,400 --> 00:38:08,600
Speaker 14: no sort of button that the FED Chair pushes to

745
00:38:08,840 --> 00:38:10,160
Speaker 14: change the interest rate.

746
00:38:10,600 --> 00:38:11,200
Speaker 4: The way that it.

747
00:38:11,160 --> 00:38:13,880
Speaker 14: Works, as you're describing is the Federal Reserve Chair is

748
00:38:13,920 --> 00:38:17,239
Speaker 14: one of twelve members on the Federal Open Markets Committee

749
00:38:17,400 --> 00:38:19,440
Speaker 14: that makes decisions. They meet eight times a year, they

750
00:38:19,520 --> 00:38:23,520
Speaker 14: make decisions on the trajectory of the interest rate, and importantly,

751
00:38:23,640 --> 00:38:26,560
Speaker 14: these are decisions that are made by a group of people.

752
00:38:26,640 --> 00:38:29,120
Speaker 14: And so the FED Chair, even if the President was

753
00:38:29,400 --> 00:38:31,560
Speaker 14: effective at getting a FED Chair in, who is going

754
00:38:31,600 --> 00:38:34,680
Speaker 14: to push for his desired rate cuts that he's sort

755
00:38:34,719 --> 00:38:37,440
Speaker 14: of trying to effectuate from the top in ways that

756
00:38:37,480 --> 00:38:39,080
Speaker 14: break Federal Reserve independence.

757
00:38:39,400 --> 00:38:40,160
Speaker 4: Well, the rest of the.

758
00:38:40,160 --> 00:38:41,800
Speaker 14: Board is going to be in a situation and the

759
00:38:41,840 --> 00:38:43,040
Speaker 14: rest of the committee is going to be in a

760
00:38:43,080 --> 00:38:46,160
Speaker 14: situation where they're actually trying to push against exactly that

761
00:38:46,239 --> 00:38:48,799
Speaker 14: impulse because they want to preserve the independence of the

762
00:38:48,800 --> 00:38:52,560
Speaker 14: Federal Reserve, not both because they are sort of institutionally

763
00:38:52,680 --> 00:38:55,680
Speaker 14: very concerned about it, but also because only then can

764
00:38:55,719 --> 00:38:59,560
Speaker 14: we be in a situation where we are actually trusted

765
00:38:59,600 --> 00:39:03,680
Speaker 14: in credible as being reactive to inflation and being reactive

766
00:39:03,680 --> 00:39:07,160
Speaker 14: to the employment picture. And what's important for your viewers

767
00:39:07,200 --> 00:39:09,680
Speaker 14: listeners also to understand is like we and some sense

768
00:39:09,719 --> 00:39:13,880
Speaker 14: have run this experiment before, Like President Nixon put a

769
00:39:13,960 --> 00:39:16,920
Speaker 14: ton of pressure on the Federal Reserve to cut rates

770
00:39:16,960 --> 00:39:20,920
Speaker 14: in ways that would be short term politically expedient. They did,

771
00:39:21,239 --> 00:39:23,680
Speaker 14: and as a result of that, you saw inflation take

772
00:39:23,760 --> 00:39:26,600
Speaker 14: up from three percent to thirteen percent over the course

773
00:39:26,640 --> 00:39:29,560
Speaker 14: of two years in ways that required a massive course

774
00:39:29,600 --> 00:39:32,799
Speaker 14: correction and led to a significant downturn. So I don't

775
00:39:32,800 --> 00:39:35,680
Speaker 14: think anyone should be rooting for that in this country,

776
00:39:35,719 --> 00:39:38,480
Speaker 14: and it certainly goes against what the Trump administration is

777
00:39:38,520 --> 00:39:40,480
Speaker 14: hoping to see from an economic perspective.

778
00:39:41,880 --> 00:39:45,920
Speaker 2: Yeah, the historical context is important to keep in mind here, Natasha,

779
00:39:45,920 --> 00:39:48,200
Speaker 2: and appreciate you pointing that out as you talk about

780
00:39:48,239 --> 00:39:51,720
Speaker 2: the idea of trust and credibility for the Federal Reserve.

781
00:39:51,760 --> 00:39:53,920
Speaker 2: I also render about the trust and credibility of the

782
00:39:53,920 --> 00:39:57,920
Speaker 2: President as we consider his very frequently changing deadlines when

783
00:39:57,960 --> 00:40:01,160
Speaker 2: it comes to tariff and tre policy, because this is

784
00:40:01,200 --> 00:40:02,840
Speaker 2: what the Fed is having to contend with, why it

785
00:40:02,880 --> 00:40:05,920
Speaker 2: makes their decision making perhaps so hard. How do you

786
00:40:05,960 --> 00:40:08,640
Speaker 2: at budget lab even try to game out the tariffs

787
00:40:08,640 --> 00:40:10,960
Speaker 2: in the likely revenue we are going to be getting

788
00:40:11,440 --> 00:40:14,120
Speaker 2: from them. When the deadlines keep moving and the numbers

789
00:40:14,600 --> 00:40:17,960
Speaker 2: keep changing, is it even really possible to model?

790
00:40:18,360 --> 00:40:20,600
Speaker 14: I mean, we are doing our best. My colleagues and

791
00:40:20,600 --> 00:40:23,120
Speaker 14: I at the Budget Lab are sort of tracing every

792
00:40:23,120 --> 00:40:26,120
Speaker 14: single twist and turn with respect to tariff policy in

793
00:40:26,160 --> 00:40:28,799
Speaker 14: this country. And you know, to our account, we've seen

794
00:40:28,840 --> 00:40:32,520
Speaker 14: if the effect of teri freate change like almost sixty

795
00:40:32,560 --> 00:40:34,839
Speaker 14: times over the course of the last several months as

796
00:40:34,880 --> 00:40:38,960
Speaker 14: a result of the President's different political policies that have

797
00:40:39,080 --> 00:40:41,440
Speaker 14: been pursued in this trade war. The thing that I

798
00:40:41,440 --> 00:40:44,319
Speaker 14: think is like really important to grapple with. And you

799
00:40:44,440 --> 00:40:47,359
Speaker 14: heard actually Governor Waller say a version of this. You've

800
00:40:47,400 --> 00:40:49,080
Speaker 14: heard Chair Powell say a version.

801
00:40:48,840 --> 00:40:49,560
Speaker 4: Of this as well.

802
00:40:49,840 --> 00:40:52,120
Speaker 14: The President's been like super specific, he would like to

803
00:40:52,120 --> 00:40:55,160
Speaker 14: see interest rates lower sort of Chare Powell and the

804
00:40:55,160 --> 00:40:57,319
Speaker 14: rest of the Fed have been pretty specific as well

805
00:40:57,360 --> 00:40:59,799
Speaker 14: that in a world in which this sort of uncertainty

806
00:40:59,880 --> 00:41:03,319
Speaker 14: is associated with trade policy didn't exist, the Federal Reserve

807
00:41:03,360 --> 00:41:06,160
Speaker 14: would have already cut. And so you're in a world

808
00:41:06,520 --> 00:41:09,520
Speaker 14: where it is hard in some sense to even game

809
00:41:09,640 --> 00:41:12,239
Speaker 14: out what exactly the tariffs are meant to be. For

810
00:41:12,920 --> 00:41:16,560
Speaker 14: are they tools for revenue raising? Are they sort of

811
00:41:16,800 --> 00:41:20,720
Speaker 14: important in order to balance our strategic alignment with VISA

812
00:41:20,760 --> 00:41:24,000
Speaker 14: VI and adversary like China? Are they really about bringing

813
00:41:24,040 --> 00:41:27,440
Speaker 14: manufacturing back into the United States? And the result of

814
00:41:27,480 --> 00:41:30,759
Speaker 14: that is no one, you, I, and certainly not the

815
00:41:30,760 --> 00:41:34,360
Speaker 14: business community has any sense where these tariffs are actually

816
00:41:34,400 --> 00:41:38,520
Speaker 14: fundamentally going to land. And that creates a difficulty that

817
00:41:38,719 --> 00:41:41,520
Speaker 14: we can disagree about what the right effect of terif

818
00:41:41,520 --> 00:41:44,200
Speaker 14: for it, should be in the economy. But certainly this

819
00:41:44,320 --> 00:41:47,759
Speaker 14: sort of start stop that makes it impossible really to

820
00:41:47,880 --> 00:41:52,040
Speaker 14: plan with any sense of where policy is ultimately going

821
00:41:52,080 --> 00:41:56,080
Speaker 14: to land makes it really challenging to think as an estimator,

822
00:41:56,160 --> 00:41:59,600
Speaker 14: certainly very challenging to think about what the likely revenue

823
00:41:59,600 --> 00:42:02,279
Speaker 14: CONSTPT lenses are going to be, But certainly as a

824
00:42:02,320 --> 00:42:05,799
Speaker 14: business trying to make investment decisions makes it incredibly complicated

825
00:42:05,840 --> 00:42:07,000
Speaker 14: to think about that as well.

826
00:42:08,400 --> 00:42:10,439
Speaker 3: Natasha, just in our final minute, I want to build

827
00:42:10,440 --> 00:42:12,720
Speaker 3: off of this because we did see Michigan consumer sentiment

828
00:42:12,800 --> 00:42:15,840
Speaker 3: for July today come in above estimates. What are we

829
00:42:15,960 --> 00:42:19,440
Speaker 3: learning when there is uncertainty though about the consumer's tolerance here?

830
00:42:19,560 --> 00:42:22,400
Speaker 3: Since confidence at one point was plunging a mid taiff concerns,

831
00:42:22,719 --> 00:42:24,880
Speaker 3: but today's data did show it at a five month high.

832
00:42:25,080 --> 00:42:27,279
Speaker 14: You know, I think it's really hard to make any

833
00:42:27,600 --> 00:42:29,880
Speaker 14: too much out of any one particular data point. We

834
00:42:29,920 --> 00:42:32,920
Speaker 14: also got data this week about inflation that showed that

835
00:42:33,160 --> 00:42:35,960
Speaker 14: in certain particular industries if you look at things like

836
00:42:36,000 --> 00:42:40,239
Speaker 14: consumer electronics, or if you look at things like household furnishings,

837
00:42:40,280 --> 00:42:44,359
Speaker 14: which is a category that includes furniture industries or subindustries

838
00:42:44,360 --> 00:42:47,239
Speaker 14: where the tariffs are likely to have substantial bite, you're

839
00:42:47,360 --> 00:42:50,640
Speaker 14: starting to see an uptick in prices. I don't want

840
00:42:50,640 --> 00:42:52,600
Speaker 14: to make too much of any one particular data point

841
00:42:52,640 --> 00:42:55,400
Speaker 14: other than to tell you that the result of our

842
00:42:55,560 --> 00:42:57,799
Speaker 14: estimates at Yell Budget lab which are trying to stay

843
00:42:57,840 --> 00:43:00,320
Speaker 14: current with respect to where the President says to heariffs

844
00:43:00,360 --> 00:43:03,239
Speaker 14: are going to be come August first, this next deadline

845
00:43:03,760 --> 00:43:05,920
Speaker 14: is that consumers are going to see a twenty eight

846
00:43:06,040 --> 00:43:10,239
Speaker 14: hundred dollars on average decrease in their post in their

847
00:43:10,280 --> 00:43:13,160
Speaker 14: household income as a result of higher prices and for

848
00:43:13,239 --> 00:43:15,520
Speaker 14: the bottom of the distribution. That's on top of something

849
00:43:15,520 --> 00:43:17,480
Speaker 14: that you all have been talking a great deal about,

850
00:43:17,800 --> 00:43:21,040
Speaker 14: which is these these important cuts to social programs like

851
00:43:21,120 --> 00:43:24,239
Speaker 14: Medicated that have been recently effectuated. So I think there's

852
00:43:24,280 --> 00:43:27,120
Speaker 14: a lot here that's pretty important. Natasha, we have to

853
00:43:27,200 --> 00:43:27,600
Speaker 14: leave it there.

854
00:43:27,719 --> 00:43:30,480
Speaker 2: Natasha certain a Yale budget lab here with us on

855
00:43:30,560 --> 00:43:31,720
Speaker 2: Balance of Power Flity.

856
00:43:34,520 --> 00:43:36,960
Speaker 7: Thanks for listening to the Balance of Power podcast.

857
00:43:37,560 --> 00:43:40,680
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858
00:43:40,800 --> 00:43:43,359
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859
00:43:43,440 --> 00:43:46,680
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860
00:43:46,960 --> 00:43:48,360
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