1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:26,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,440 --> 00:00:29,920 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:29,960 --> 00:00:34,800 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:35,240 --> 00:00:40,760 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:40,800 --> 00:00:48,560 Speaker 1: and of course, on the Bloomberg. Can I bring Richard Os? 9 00:00:48,560 --> 00:00:50,720 Speaker 1: Please bring in Richard? Host Joins is now President of 10 00:00:50,760 --> 00:00:53,400 Speaker 1: Council and Form Relations, author of A World in Disarray, 11 00:00:53,440 --> 00:00:56,400 Speaker 1: American Foreign Policy and the Crisis of the Old Order. 12 00:00:56,400 --> 00:00:58,760 Speaker 1: He's in our Bloomberg eleven three our studios with Tom 13 00:00:59,040 --> 00:01:00,560 Speaker 1: in New York. Sorry about that, Chard. Let me let 14 00:01:00,600 --> 00:01:03,080 Speaker 1: me start by asking you about what's happening in New 15 00:01:03,120 --> 00:01:05,240 Speaker 1: York today. The Secretary of State rex dealers and headed 16 00:01:05,319 --> 00:01:07,440 Speaker 1: up to the U n UH. He'll be talking about 17 00:01:07,480 --> 00:01:08,800 Speaker 1: North Korea. What do you expect to hear from What 18 00:01:08,840 --> 00:01:10,760 Speaker 1: would you like to hear from him on the issue 19 00:01:10,760 --> 00:01:12,880 Speaker 1: of North Korea today at the U n What the 20 00:01:12,920 --> 00:01:16,480 Speaker 1: United States is doing and the presidents doing it regularly 21 00:01:16,480 --> 00:01:19,440 Speaker 1: in his tweets. It's just essentially saying this is an intolerable, 22 00:01:19,520 --> 00:01:23,520 Speaker 1: unacceptable situation, and they're signaling Beijing that they have got 23 00:01:23,520 --> 00:01:25,480 Speaker 1: to put much more pressure on North Korean And I 24 00:01:25,520 --> 00:01:27,840 Speaker 1: think this is the prelude to in the uh to 25 00:01:28,240 --> 00:01:30,639 Speaker 1: an effort to open up a negotiation between the United 26 00:01:30,640 --> 00:01:33,080 Speaker 1: States and North Korea to see not if we can 27 00:01:33,120 --> 00:01:35,920 Speaker 1: resolve the problem, but at least put a ceiling on 28 00:01:35,959 --> 00:01:39,039 Speaker 1: it in the way both sides can live with. When 29 00:01:39,080 --> 00:01:41,920 Speaker 1: you look at what the President said thus far, is 30 00:01:41,959 --> 00:01:44,840 Speaker 1: he indicating that he's moving toward likely preemptive strikes? He does, 31 00:01:44,840 --> 00:01:46,480 Speaker 1: he want to have more conversations as he want to 32 00:01:46,480 --> 00:01:48,280 Speaker 1: rely more on on sanctions. When you look at what 33 00:01:48,320 --> 00:01:50,880 Speaker 1: that policy might be, what do you see as the 34 00:01:50,880 --> 00:01:53,640 Speaker 1: contours of it. Well, what you're seeing is the putting 35 00:01:53,640 --> 00:01:56,040 Speaker 1: the military option quote unquote on the table, as the 36 00:01:56,120 --> 00:01:58,560 Speaker 1: cliche goes, and they keep talking about it, but no 37 00:01:58,600 --> 00:02:01,680 Speaker 1: one's anxious to go to war. The reality of what 38 00:02:01,760 --> 00:02:04,240 Speaker 1: a second Korean war be is it should make anyone 39 00:02:04,320 --> 00:02:06,800 Speaker 1: pause and then pause again. But they've got to put 40 00:02:06,840 --> 00:02:08,640 Speaker 1: that out there because it is a real option, because 41 00:02:08,639 --> 00:02:11,080 Speaker 1: the whole idea of allowing this to continue to drift 42 00:02:11,560 --> 00:02:14,239 Speaker 1: is a truly unattractive future. And this though, is a 43 00:02:14,360 --> 00:02:17,720 Speaker 1: necessary prelude to set the table again for a negotiation, 44 00:02:17,800 --> 00:02:21,360 Speaker 1: and that requires Chinese pressure on North Korea. Let me 45 00:02:21,400 --> 00:02:25,040 Speaker 1: ask the right wing question, can we negotiate with a nation? 46 00:02:25,320 --> 00:02:29,120 Speaker 1: I guess it's a nation that barely is ruled by law? 47 00:02:29,520 --> 00:02:32,440 Speaker 1: I mean, do they even observed the North Korea even 48 00:02:32,440 --> 00:02:36,520 Speaker 1: observe international law to a limited extent? And the answer is, well, 49 00:02:36,520 --> 00:02:38,919 Speaker 1: you know, again, the alternatives are lousy. That's where the 50 00:02:39,000 --> 00:02:41,480 Speaker 1: Chinese come in to put to use their leverage. And 51 00:02:41,480 --> 00:02:44,480 Speaker 1: we'll try. And we've had negotiations with North Korea before, 52 00:02:44,520 --> 00:02:48,480 Speaker 1: both bilateral and multilateral. We've had shall we say, limited success, 53 00:02:48,520 --> 00:02:51,520 Speaker 1: which is another way of saying also limited failure, And 54 00:02:51,639 --> 00:02:53,640 Speaker 1: you know, we'll go at it one more time. David 55 00:02:53,639 --> 00:02:56,640 Speaker 1: Guray in Washington and Tom keenan New York. David, we 56 00:02:56,680 --> 00:03:00,920 Speaker 1: have Douglas holtz Eken coming up later on tax reform. 57 00:03:01,160 --> 00:03:03,799 Speaker 1: Maybe that's a good way to secure you with Ambassador 58 00:03:03,960 --> 00:03:08,320 Speaker 1: hass into the domestic front. Yeah, when you look at 59 00:03:08,320 --> 00:03:10,440 Speaker 1: all of the let's let's use the hundred day metric, 60 00:03:10,480 --> 00:03:12,080 Speaker 1: and we've had a president here has been uneasy about 61 00:03:12,080 --> 00:03:14,119 Speaker 1: people holding that up. He was keen to talk about 62 00:03:14,160 --> 00:03:15,760 Speaker 1: all that he hoped to accomplish in the free hundred 63 00:03:15,800 --> 00:03:18,200 Speaker 1: days earlier on in them, and now he's he's downplaying 64 00:03:18,200 --> 00:03:20,440 Speaker 1: the importance of it. When you look at the ambitiousness 65 00:03:20,480 --> 00:03:22,920 Speaker 1: of his foreign policy and domestic policy, how do you 66 00:03:22,919 --> 00:03:24,680 Speaker 1: how do you rate sort of what what he's been 67 00:03:24,720 --> 00:03:27,359 Speaker 1: able to do and and what's he learned about governing 68 00:03:27,360 --> 00:03:29,840 Speaker 1: here in these first hundred days. On the farm policy 69 00:03:29,840 --> 00:03:33,240 Speaker 1: society's probably had two pluses, the limited use of force 70 00:03:33,320 --> 00:03:36,600 Speaker 1: in Surria and the marshaling of pressure on on North Korea. 71 00:03:36,880 --> 00:03:39,560 Speaker 1: I think the real diant downside on FIGM policies. He's 72 00:03:39,600 --> 00:03:44,120 Speaker 1: injected so much uncertainty into American FIGN policy that he's 73 00:03:44,160 --> 00:03:47,560 Speaker 1: really worked against the fabric of almost all of our 74 00:03:47,600 --> 00:03:51,280 Speaker 1: alliance relations. I think at home he's learned the difference 75 00:03:51,360 --> 00:03:55,000 Speaker 1: between campaigning or business life on one hand, on political 76 00:03:55,080 --> 00:03:57,720 Speaker 1: governing on the other, whether it's health care or now 77 00:03:57,760 --> 00:04:01,520 Speaker 1: these other issues. He's having real problems building a viable 78 00:04:01,560 --> 00:04:04,320 Speaker 1: coalition with Congress, and more broadly, I think he's seen 79 00:04:04,360 --> 00:04:07,720 Speaker 1: the strength of independent institutions in American democracy. So he 80 00:04:07,760 --> 00:04:11,680 Speaker 1: has his his orders on homeland security and immigration and refugees, 81 00:04:11,920 --> 00:04:14,480 Speaker 1: and time and time again has been rebuffed by the courts. 82 00:04:14,880 --> 00:04:17,400 Speaker 1: So this is almost a course. And Professor Dick new 83 00:04:17,480 --> 00:04:19,960 Speaker 1: stat my former colleague at Harvard about that we have 84 00:04:20,040 --> 00:04:24,040 Speaker 1: separate institutions, each wielding independent power. I think Mr Trump 85 00:04:24,080 --> 00:04:26,919 Speaker 1: is basically getting Civics one O one. You know, after 86 00:04:27,080 --> 00:04:30,000 Speaker 1: after the US launched those tomahawk strikes on Syria, I 87 00:04:30,000 --> 00:04:32,160 Speaker 1: think a lot of people wondering what would happen next? 88 00:04:32,160 --> 00:04:35,520 Speaker 1: Have we gotten any more clarity on what has changed 89 00:04:35,520 --> 00:04:37,359 Speaker 1: when it comes to US Syria policy? And can you 90 00:04:37,440 --> 00:04:39,760 Speaker 1: draw a line between what happened in Syria and indeed 91 00:04:39,800 --> 00:04:41,880 Speaker 1: what our outlook is, what our policy is at toward 92 00:04:41,920 --> 00:04:44,800 Speaker 1: North Korea? Are they Are they connected? On the first part. 93 00:04:44,880 --> 00:04:47,240 Speaker 1: Not a whole lot of change with the American Syria policy. 94 00:04:47,279 --> 00:04:50,080 Speaker 1: We're not going to make the removal of Bosher Alassa 95 00:04:50,240 --> 00:04:53,520 Speaker 1: and his regime of priority. We we can't. Instead, you're 96 00:04:53,520 --> 00:04:56,560 Speaker 1: going to have a focus on hammering isis trying to 97 00:04:56,600 --> 00:04:59,760 Speaker 1: eliminate their control of territory, and the real challenge there 98 00:04:59,760 --> 00:05:01,800 Speaker 1: will coming up with a policy for who would run 99 00:05:01,839 --> 00:05:04,440 Speaker 1: it if and when they don't. I think the use 100 00:05:04,480 --> 00:05:07,200 Speaker 1: of force in Syria wasn't part meant to signal China. 101 00:05:07,480 --> 00:05:09,400 Speaker 1: If you remember, the use of force happened while she 102 00:05:09,800 --> 00:05:13,440 Speaker 1: Jumping was dining in Mara Lago with that delicious chocolate cake, 103 00:05:14,000 --> 00:05:16,480 Speaker 1: and I think it's most delicious. It was. It was 104 00:05:16,520 --> 00:05:18,800 Speaker 1: a message to him and North Korea that this is 105 00:05:18,800 --> 00:05:22,520 Speaker 1: an administration that's more comfortable with the use of military force. 106 00:05:22,560 --> 00:05:26,400 Speaker 1: Then was Mr Obama's help me with with a president's doctrine? 107 00:05:26,440 --> 00:05:28,120 Speaker 1: How long did it take before we got the so 108 00:05:28,240 --> 00:05:33,080 Speaker 1: called Obama historical on a Friday? Well, I'm not so 109 00:05:33,200 --> 00:05:35,440 Speaker 1: quite sure we ever had in Obama. You don't think so, No, 110 00:05:35,560 --> 00:05:37,800 Speaker 1: I think what we had was a bias towards restraint 111 00:05:37,880 --> 00:05:41,240 Speaker 1: and retrenchment. The doctrines have to be real explanations of 112 00:05:41,279 --> 00:05:42,719 Speaker 1: what you're going to do in the world. They have 113 00:05:42,800 --> 00:05:45,680 Speaker 1: to explain big things. They've got to be enduring. I'm 114 00:05:45,720 --> 00:05:50,520 Speaker 1: not sure Mr Obama had one again, much more than theme. No, 115 00:05:50,680 --> 00:05:54,000 Speaker 1: I thought it. Usually doctrines are conferred by history in retrospect. 116 00:05:54,320 --> 00:05:57,000 Speaker 1: Anytime you you declare a doctrine, you don't you haven't 117 00:05:57,000 --> 00:05:59,679 Speaker 1: done looking a little bit silly doctrines are the judgment 118 00:05:59,680 --> 00:06:01,720 Speaker 1: of his three that what you've done really matters and 119 00:06:01,760 --> 00:06:04,880 Speaker 1: really lasts. I have failed David Gura this morning, and 120 00:06:04,920 --> 00:06:08,040 Speaker 1: that I did not speak to Richard hass about the 121 00:06:08,080 --> 00:06:11,040 Speaker 1: Canadian events of the week. We featured the Canadian dollar 122 00:06:11,080 --> 00:06:14,039 Speaker 1: at the beginning of the show one thirty six forty. 123 00:06:14,240 --> 00:06:18,520 Speaker 1: Christiph Friedland, their Foreign Affairs minister, was quite sharp with 124 00:06:18,560 --> 00:06:21,840 Speaker 1: our Matt Miller about how they've never lost on the 125 00:06:21,960 --> 00:06:26,400 Speaker 1: lumber issue. What is the CFR backgrounder on this relation 126 00:06:26,480 --> 00:06:29,400 Speaker 1: that we just take for granted? Well again on this 127 00:06:29,520 --> 00:06:31,680 Speaker 1: on the lumber issue, there's nothing new. When I worked 128 00:06:31,720 --> 00:06:34,039 Speaker 1: in the European Bureau of the State Department in the 129 00:06:34,040 --> 00:06:37,520 Speaker 1: early this was Teddy Roosevelt. It feels like there was 130 00:06:37,640 --> 00:06:41,000 Speaker 1: lumber one of those roads belts. We had the same issue. 131 00:06:41,040 --> 00:06:43,680 Speaker 1: Then every day we'd start the European Bureau staff meeting 132 00:06:43,720 --> 00:06:46,719 Speaker 1: with the latest on softwood lumber. Very little hash j 133 00:06:46,920 --> 00:06:49,120 Speaker 1: became actually something have a standing joke. Well here we are, 134 00:06:49,960 --> 00:06:53,960 Speaker 1: you know, thirty forty years later, the same issue. I think, 135 00:06:54,000 --> 00:06:56,680 Speaker 1: more broadly, though it wasn't a bad day for Canada yesterday. 136 00:06:56,960 --> 00:06:59,039 Speaker 1: The fact that the president got pushed by so many 137 00:06:59,080 --> 00:07:03,000 Speaker 1: of his senior adviceisers to essentially say enough with breaking 138 00:07:03,080 --> 00:07:06,440 Speaker 1: up napptick. You know, whatever your tactical positioning, this relationship 139 00:07:06,839 --> 00:07:10,000 Speaker 1: is simply too important with Canada and Mexico. So I 140 00:07:10,000 --> 00:07:13,720 Speaker 1: actually think things yesterday got back to reality. In your 141 00:07:14,000 --> 00:07:16,280 Speaker 1: study of history and all the work of the Council 142 00:07:16,320 --> 00:07:21,600 Speaker 1: on Foreign Relations, can you teach a dealmaker to negotiate 143 00:07:21,680 --> 00:07:25,360 Speaker 1: within the US world? Uh? So far at least it's 144 00:07:25,400 --> 00:07:29,400 Speaker 1: not clear. The president still New York Times actually is 145 00:07:29,440 --> 00:07:31,200 Speaker 1: a story about it today. Is his whole approach is 146 00:07:31,240 --> 00:07:33,720 Speaker 1: what worked in real estate. You are these narrow, one 147 00:07:33,720 --> 00:07:36,720 Speaker 1: off approaches. You come out out of the box tremendously 148 00:07:37,000 --> 00:07:40,440 Speaker 1: ambitious or aggressively, and what happens then is you've almost 149 00:07:40,480 --> 00:07:42,200 Speaker 1: always got to back down. We had to do it 150 00:07:42,240 --> 00:07:44,400 Speaker 1: with the Chinese over Taiwan. We're doing it with the 151 00:07:44,400 --> 00:07:47,080 Speaker 1: Mexicans over the Wall. So you get a reputation for 152 00:07:47,120 --> 00:07:49,680 Speaker 1: backing down, But in the meantime, you not only lose 153 00:07:49,720 --> 00:07:53,320 Speaker 1: credibility with others, you undermine your friends. The thing with Canada, 154 00:07:53,960 --> 00:07:56,360 Speaker 1: to be so aggressive with your friends sends the message 155 00:07:56,400 --> 00:07:59,520 Speaker 1: we don't really value this relationship. I really think Mr 156 00:07:59,520 --> 00:08:02,280 Speaker 1: Trump has got to figure out the difference between what 157 00:08:02,280 --> 00:08:05,640 Speaker 1: what purportedly worked for him in real estate and being president. 158 00:08:05,680 --> 00:08:07,800 Speaker 1: It's a totally different tool set. You sound like a 159 00:08:07,800 --> 00:08:14,240 Speaker 1: marriage counselor my wife would tell you probably Richard as 160 00:08:14,240 --> 00:08:16,920 Speaker 1: the president of the Council on Foreign Relations and of 161 00:08:16,960 --> 00:08:20,720 Speaker 1: course a former ambassador with work in Northern Ireland a 162 00:08:20,800 --> 00:08:36,079 Speaker 1: few years ago in our studios in New York. Right now, 163 00:08:36,080 --> 00:08:39,160 Speaker 1: we are thrilled to bring you Horondo Rodriguez with black Rock, 164 00:08:39,720 --> 00:08:43,120 Speaker 1: but more importantly with immense public service to finance and 165 00:08:43,160 --> 00:08:47,680 Speaker 1: Treasury for the government of Mexico and uh out of 166 00:08:47,720 --> 00:08:51,440 Speaker 1: Stanford and economic systems and operation research as a Horodo. 167 00:08:51,480 --> 00:08:53,960 Speaker 1: We were talking earlier about Mexico, but we really didn't 168 00:08:54,000 --> 00:08:58,000 Speaker 1: get the NAFTA to President Trump caused damage with a 169 00:08:58,040 --> 00:09:02,120 Speaker 1: relationship with Mexico. This they have nft off and then 170 00:09:02,120 --> 00:09:06,560 Speaker 1: left back on. I think that, um, what he did 171 00:09:06,880 --> 00:09:11,200 Speaker 1: is introduced an additional element of uncertainty that had been 172 00:09:11,960 --> 00:09:19,160 Speaker 1: going away. Um. Mexico again is not considered political or 173 00:09:19,160 --> 00:09:24,240 Speaker 1: economic threat by any relevant political constituency in the US. 174 00:09:24,559 --> 00:09:27,200 Speaker 1: It is a country that has been a strategic ally 175 00:09:27,480 --> 00:09:31,280 Speaker 1: in liberal matters when it comes to trade, when the 176 00:09:31,320 --> 00:09:34,760 Speaker 1: world when when the US engages with the rest of 177 00:09:34,840 --> 00:09:39,640 Speaker 1: the world. So that the work that has been done 178 00:09:39,679 --> 00:09:44,000 Speaker 1: on both sides prior to the recent comments is one 179 00:09:44,840 --> 00:09:50,520 Speaker 1: of preparing institutions, preparing Congress for an upcoming negotiation. There 180 00:09:50,600 --> 00:09:54,280 Speaker 1: is a clear interest to improve NAFTA, and these in 181 00:09:54,320 --> 00:09:57,800 Speaker 1: a way is just sending a message that you've gotta 182 00:09:57,840 --> 00:10:00,720 Speaker 1: be careful because surprise may comment use. Three or four 183 00:10:00,800 --> 00:10:03,960 Speaker 1: years ago, Mexico was opposed to child for an eleven success. 184 00:10:04,160 --> 00:10:06,880 Speaker 1: Is that success still there? I think I'm a growth 185 00:10:06,880 --> 00:10:10,760 Speaker 1: of Mexico. I think it is, But other things have 186 00:10:10,920 --> 00:10:14,040 Speaker 1: happened at the same time. Mexico sort of stood out 187 00:10:14,120 --> 00:10:18,640 Speaker 1: because of its reform impetus, not only the willingness but 188 00:10:18,720 --> 00:10:22,960 Speaker 1: the capacity to push through several reforms of the constitutional 189 00:10:23,040 --> 00:10:28,040 Speaker 1: and legal level, opening up the energy sector, telecoms, competition label, 190 00:10:28,600 --> 00:10:32,840 Speaker 1: and other things. Now, at the same time, what has 191 00:10:32,920 --> 00:10:37,520 Speaker 1: happened is that oil prices and oil production in Mexico 192 00:10:37,559 --> 00:10:42,720 Speaker 1: decline significantly, creating macroeconomic challenge especially on the fiscal side, 193 00:10:42,760 --> 00:10:46,680 Speaker 1: that have been starting to be addressed, But at the 194 00:10:46,720 --> 00:10:52,080 Speaker 1: same time also challenges on corruption matters at the federal 195 00:10:52,200 --> 00:10:58,600 Speaker 1: and state government level have actually created a political environment 196 00:10:58,760 --> 00:11:01,880 Speaker 1: where the popularity of the president is at all time 197 00:11:02,000 --> 00:11:07,680 Speaker 1: lows and in anticipation of next year's presidential election. Clearly 198 00:11:07,880 --> 00:11:13,079 Speaker 1: the left wing candy they UH left wing party candidate 199 00:11:13,320 --> 00:11:18,320 Speaker 1: has been benefiting from all these sort of UH social 200 00:11:18,400 --> 00:11:21,800 Speaker 1: dynamics in Mexico. Where is their their opportunity right now? Yes, 201 00:11:21,840 --> 00:11:24,480 Speaker 1: in Mexico, but in Latin American more generally, when you're 202 00:11:24,480 --> 00:11:26,880 Speaker 1: when you're looking at where to investor, you're looking at corporate, 203 00:11:26,920 --> 00:11:29,800 Speaker 1: so you're looking at sovereign's what's attractive to you. So 204 00:11:29,960 --> 00:11:33,640 Speaker 1: clearly as you say that the Mexican peso, with the 205 00:11:33,679 --> 00:11:37,440 Speaker 1: weakness around these commerses, is clearly one of the most 206 00:11:37,559 --> 00:11:40,720 Speaker 1: attractive investment opportunities that we see out there in the 207 00:11:40,800 --> 00:11:44,520 Speaker 1: emerging world. We like Colombia as well. Columbia is an 208 00:11:44,600 --> 00:11:49,240 Speaker 1: interesting a case where the macro rebalancing after major shocks 209 00:11:49,240 --> 00:11:55,800 Speaker 1: both on production and other agricultural elements, have forced a 210 00:11:55,880 --> 00:12:00,520 Speaker 1: significant adjustment of the external and physical accounts. In UH Colombia, 211 00:12:00,600 --> 00:12:03,720 Speaker 1: the central Bank is in the middle of an aggressive 212 00:12:03,920 --> 00:12:09,800 Speaker 1: easing cycle, so long term rates in Colombia is actually 213 00:12:10,320 --> 00:12:12,760 Speaker 1: something that we like. We like Brazil on the equity 214 00:12:12,800 --> 00:12:17,480 Speaker 1: side as well, the very aggressive easing cycled by a 215 00:12:17,520 --> 00:12:21,000 Speaker 1: central bank. I mean they're lowering a hundred basis points 216 00:12:21,040 --> 00:12:24,400 Speaker 1: per meeting, perhaps going to a hundred and twenty five 217 00:12:25,240 --> 00:12:29,079 Speaker 1: next meeting. It is an economy that has turned the corner. 218 00:12:30,120 --> 00:12:33,800 Speaker 1: The country has also turned the corner politically. It's starting 219 00:12:33,840 --> 00:12:36,680 Speaker 1: to get ready for the next year's presidential election. And 220 00:12:36,720 --> 00:12:41,000 Speaker 1: although the economy is somewhat of flatlining at this point, 221 00:12:41,040 --> 00:12:45,800 Speaker 1: the prospects of reform to restart economic growth in Brazil 222 00:12:46,000 --> 00:12:50,040 Speaker 1: is looking good. It is clearly one of our topics 223 00:12:50,120 --> 00:12:54,679 Speaker 1: on the equity side, Brazilian equity markets. Thank you so much. 224 00:12:55,880 --> 00:12:58,440 Speaker 1: Quickly this wanting too quick with black Rock as well 225 00:12:58,440 --> 00:13:00,240 Speaker 1: in Mexico, Thank you so much. And the course on 226 00:13:00,280 --> 00:13:10,280 Speaker 1: Emerging Markets with black Rock Worldwide, brought to you by 227 00:13:10,520 --> 00:13:14,199 Speaker 1: Bank of America. Mary Lynch dedicated to bringing our clients 228 00:13:14,320 --> 00:13:18,520 Speaker 1: insights and solutions to meet the challenges of a transforming world. 229 00:13:18,960 --> 00:13:22,679 Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Feeder 230 00:13:22,760 --> 00:13:32,240 Speaker 1: and Smith Incorporated Member s I p C. There's something 231 00:13:32,280 --> 00:13:35,680 Speaker 1: new from Bloomberg. It's called Lens. Starting right now, you 232 00:13:35,720 --> 00:13:38,960 Speaker 1: can use the Bloomberg Io s app off your iPhone 233 00:13:39,080 --> 00:13:43,680 Speaker 1: or iPad or our new Google Chrome Extension to read 234 00:13:43,760 --> 00:13:47,679 Speaker 1: any news story on any website, scan it, and then 235 00:13:47,720 --> 00:13:51,880 Speaker 1: instantly see the news stories relevant market data from Bloomberg. 236 00:13:52,160 --> 00:13:55,280 Speaker 1: In addition, see all the bios of the key people 237 00:13:55,720 --> 00:13:58,920 Speaker 1: mentioned in the story. It's called Lens, and it is 238 00:13:59,000 --> 00:14:02,080 Speaker 1: just that, a lens into the people and the data 239 00:14:02,200 --> 00:14:06,440 Speaker 1: of any story you may be reading. Again. Lens brings 240 00:14:06,440 --> 00:14:09,720 Speaker 1: you the power of Bloomberg's news and data. Download or 241 00:14:09,720 --> 00:14:13,120 Speaker 1: io s app or search for the Bloomberg extension at 242 00:14:13,120 --> 00:14:16,440 Speaker 1: the Chrome Store to try lens out. Learn more at 243 00:14:16,480 --> 00:14:24,000 Speaker 1: Bloomberg dot com slash lens. Join me here in our 244 00:14:24,000 --> 00:14:27,160 Speaker 1: Bloomberg ninty nine studios. Now is Zekemmanuel, healthcare expert zekem Manual, 245 00:14:27,200 --> 00:14:30,440 Speaker 1: Professor of healthcare Management at the University of Pennsylvania. As 246 00:14:30,440 --> 00:14:32,800 Speaker 1: we look at what's happening on a Capitol Hill, there 247 00:14:32,800 --> 00:14:34,720 Speaker 1: was some optimism in the Republican camp that there would 248 00:14:34,720 --> 00:14:36,880 Speaker 1: be the votes needed to get their legislation through this week. 249 00:14:36,880 --> 00:14:39,400 Speaker 1: It seems that last night all of that change. There 250 00:14:39,440 --> 00:14:41,360 Speaker 1: will not be a vote here this week. The House 251 00:14:41,440 --> 00:14:43,920 Speaker 1: leadership saying, Zeke Manuel, great to have you you with us, 252 00:14:43,920 --> 00:14:46,000 Speaker 1: get us up to speed. You've been talking to to lawmakers. 253 00:14:46,040 --> 00:14:48,920 Speaker 1: What's what's the objective here? Is is policy driving? This 254 00:14:49,040 --> 00:14:51,840 Speaker 1: is politics driving this? What what Republicans hope to do? 255 00:14:51,880 --> 00:14:54,360 Speaker 1: Where is their agreement between these two sides. This is 256 00:14:54,400 --> 00:14:58,560 Speaker 1: definitely not about policy. The two point oh Republican reform 257 00:14:58,600 --> 00:15:02,440 Speaker 1: bill is, if any worse than one point oh uh, 258 00:15:02,480 --> 00:15:05,880 Speaker 1: and so it's gonna have a hard time. I don't 259 00:15:05,880 --> 00:15:08,560 Speaker 1: think there's as much attention on it. But um, moderate 260 00:15:08,600 --> 00:15:11,680 Speaker 1: Republicans do not like it. It doesn't bode well for 261 00:15:11,760 --> 00:15:14,520 Speaker 1: them in the election. The public doesn't like it because 262 00:15:14,520 --> 00:15:17,200 Speaker 1: what the public is concerned about is the high costs 263 00:15:17,240 --> 00:15:21,360 Speaker 1: of healthcare. They're concerned about high deductibles, high copayments, high 264 00:15:21,480 --> 00:15:25,360 Speaker 1: drug costs, and this bill does absolutely nothing on that. 265 00:15:25,720 --> 00:15:28,360 Speaker 1: And so I think this builds chance of success are 266 00:15:28,640 --> 00:15:31,680 Speaker 1: law I was not at all surprised that, in fact, 267 00:15:32,000 --> 00:15:34,360 Speaker 1: they didn't. They pulled a vote because they don't have 268 00:15:34,440 --> 00:15:36,040 Speaker 1: the votes, and they're not going to have the votes, 269 00:15:36,080 --> 00:15:39,040 Speaker 1: and I've predicted that they won't pass anything, and hopefully 270 00:15:39,040 --> 00:15:42,600 Speaker 1: after we go through this feudal exercise a few more times, 271 00:15:43,040 --> 00:15:46,560 Speaker 1: we will actually get too serious negotiations about policy and 272 00:15:46,600 --> 00:15:49,960 Speaker 1: about what to do about the state of healthcare. There 273 00:15:50,040 --> 00:15:52,880 Speaker 1: was a great piece by bloom Review. Comes Peter Rizager 274 00:15:53,360 --> 00:15:55,760 Speaker 1: looking at this and saying, if if you want by partisanship, 275 00:15:55,800 --> 00:15:57,640 Speaker 1: if you want something to happen, focus here on containing 276 00:15:57,680 --> 00:16:00,640 Speaker 1: consts and improving value. Is that the problem of the 277 00:16:00,760 --> 00:16:02,800 Speaker 1: legislature is that where that needs to happen or can 278 00:16:02,800 --> 00:16:05,800 Speaker 1: it happen elsewhere? Well, there are some things the administration 279 00:16:05,840 --> 00:16:09,160 Speaker 1: can do from a regulatory basis, and UH that you 280 00:16:09,200 --> 00:16:13,400 Speaker 1: know that those are would be good. Unfortunately, Secretary Price 281 00:16:13,880 --> 00:16:16,280 Speaker 1: put on hold some of those changes when he put 282 00:16:16,280 --> 00:16:20,720 Speaker 1: on hold introducing the bundled payments for cabbage bypass surgery 283 00:16:20,720 --> 00:16:23,640 Speaker 1: and acute my cardial infarction. We need those bundle payments, 284 00:16:23,720 --> 00:16:26,920 Speaker 1: we need different ways of paying um, and we should 285 00:16:26,920 --> 00:16:29,920 Speaker 1: not put them on hold for re examination. I think 286 00:16:30,680 --> 00:16:33,120 Speaker 1: over the long term, UH, costs are going to be 287 00:16:33,160 --> 00:16:36,120 Speaker 1: the key thing that Americans care about, and I would 288 00:16:36,120 --> 00:16:40,200 Speaker 1: just have your listeners remember Massachusetts in two thousand and six, 289 00:16:40,280 --> 00:16:43,520 Speaker 1: they began this sort of universal coverage approach. They've gotten 290 00:16:43,840 --> 00:16:48,440 Speaker 1: pretty well, they're sort of covered in Massachusetts. And then 291 00:16:48,480 --> 00:16:51,800 Speaker 1: once you get coverage, you then automatically more or less 292 00:16:51,800 --> 00:16:54,440 Speaker 1: shift to costs and trying to get costs under control 293 00:16:54,680 --> 00:16:57,200 Speaker 1: and I think that's where we are in the United States. 294 00:16:57,480 --> 00:17:00,080 Speaker 1: We did the Coverage Bill. It's not perfect, but it 295 00:17:00,160 --> 00:17:03,120 Speaker 1: actually advanced things pretty well. We're about ten percent uninsured 296 00:17:03,120 --> 00:17:06,440 Speaker 1: in the country now, um and so naturally people, I've 297 00:17:06,480 --> 00:17:09,440 Speaker 1: got coverage, but it's really hard and expensive to use, 298 00:17:09,480 --> 00:17:12,000 Speaker 1: and let's get the system better, both in terms of 299 00:17:12,040 --> 00:17:14,240 Speaker 1: costs and in terms of quality. And that's I think 300 00:17:14,240 --> 00:17:16,520 Speaker 1: the natural progression of these debates. It strikes me that 301 00:17:16,560 --> 00:17:19,439 Speaker 1: the chief challenge here as Republican lawmakers look at this, 302 00:17:19,480 --> 00:17:21,479 Speaker 1: is there aren't components of the affordable caring that are 303 00:17:21,520 --> 00:17:24,640 Speaker 1: well liked by a lot of people. Be that letting 304 00:17:24,640 --> 00:17:26,600 Speaker 1: your kids stay on your plan until he's X age, 305 00:17:26,760 --> 00:17:29,120 Speaker 1: be that not having to worry about pre existing conditions 306 00:17:29,520 --> 00:17:33,000 Speaker 1: that makes reform difficult. Having those things that everyone seems 307 00:17:33,000 --> 00:17:35,800 Speaker 1: to like, well for Bloomberg people. You guys know behavioral 308 00:17:35,800 --> 00:17:38,760 Speaker 1: economics pretty well, and there's something called loss of version. 309 00:17:38,800 --> 00:17:41,400 Speaker 1: Once I have something, I don't like it being taken away, 310 00:17:41,760 --> 00:17:44,320 Speaker 1: and that's what we're seeing with healthcare. Oh, I got 311 00:17:44,400 --> 00:17:46,399 Speaker 1: have this health insurance. I don't like it taken away. 312 00:17:46,600 --> 00:17:48,800 Speaker 1: I have the safety net under me that if you know, 313 00:17:48,840 --> 00:17:51,800 Speaker 1: God forbid, my employer pulls the insurance or I become unemployed, 314 00:17:51,880 --> 00:17:53,320 Speaker 1: or I want to start my own company. I have 315 00:17:53,400 --> 00:17:55,879 Speaker 1: the safety that I can get coverage. People don't like 316 00:17:55,960 --> 00:17:58,440 Speaker 1: that being taken away, but they also want it now 317 00:17:58,480 --> 00:18:01,199 Speaker 1: to be affordable. And they've their drug prices go up. 318 00:18:01,240 --> 00:18:03,600 Speaker 1: They've seen the deductive bowls go up, and they are 319 00:18:03,720 --> 00:18:05,840 Speaker 1: very upset by that. So I think that's our next, 320 00:18:06,280 --> 00:18:08,720 Speaker 1: our next phase. Tom Keene in New York City with 321 00:18:08,800 --> 00:18:14,840 Speaker 1: John Tucker, wonderful spring morning. It's beautiful. David's in Washington. 322 00:18:15,040 --> 00:18:17,600 Speaker 1: David's in Washington, And don't let our steam guests know 323 00:18:18,000 --> 00:18:20,840 Speaker 1: that the only reason we booked him was because maybe 324 00:18:20,880 --> 00:18:26,040 Speaker 1: he can get US Cubs tickets. I possibly we'll broker that. 325 00:18:26,160 --> 00:18:28,159 Speaker 1: We'll broker that during the next break. Zac Comnuel with 326 00:18:28,240 --> 00:18:31,280 Speaker 1: us here, professor of healthcare management at the University of Pennsylvania, 327 00:18:31,359 --> 00:18:33,879 Speaker 1: joining us in our Bloomberg Students time. I know you 328 00:18:33,920 --> 00:18:35,520 Speaker 1: want to talk about insurance here in just a moment, 329 00:18:35,520 --> 00:18:38,679 Speaker 1: but Zeke, let me ask you about lobbying might in 330 00:18:38,720 --> 00:18:41,360 Speaker 1: this town during the Trump administration. Every article I read 331 00:18:41,359 --> 00:18:43,760 Speaker 1: about what's been happening on Capitol Hill says special interest 332 00:18:43,760 --> 00:18:46,040 Speaker 1: groups have been key in scuttling this or pushing it 333 00:18:46,080 --> 00:18:48,920 Speaker 1: one way or another. How does healthcare lobbying look look 334 00:18:48,960 --> 00:18:52,080 Speaker 1: to you? And the year two thousand seventeen, it's pretty 335 00:18:52,080 --> 00:18:56,040 Speaker 1: intense as usual and getting the right people, uh to 336 00:18:56,160 --> 00:18:59,240 Speaker 1: listen to you. The drug companies still have a lot 337 00:18:59,280 --> 00:19:02,360 Speaker 1: of might. But you know, one of the reasons I think, 338 00:19:02,400 --> 00:19:05,120 Speaker 1: for example, this Republican proposal is not doing so well 339 00:19:05,200 --> 00:19:07,080 Speaker 1: is the fact that the A m A, the American 340 00:19:07,080 --> 00:19:10,119 Speaker 1: Hospital Association a r P, and a whole slew of 341 00:19:10,119 --> 00:19:13,080 Speaker 1: other people in the healthcare industry are against it. They 342 00:19:13,160 --> 00:19:17,320 Speaker 1: want the exchanges shored up, and uh, this bill doesn't 343 00:19:17,359 --> 00:19:20,040 Speaker 1: do that, and so they've come out strongly against it. 344 00:19:20,119 --> 00:19:24,080 Speaker 1: And so when you've got all the healthcare industry against it, uh, 345 00:19:24,119 --> 00:19:27,640 Speaker 1: and uh, you know, it's a hard, uphill fight. Zeke 346 00:19:27,680 --> 00:19:30,200 Speaker 1: help us here into the weekend. And that I see 347 00:19:30,359 --> 00:19:35,480 Speaker 1: map aftermap of regions of the nation with four insurers, 348 00:19:35,560 --> 00:19:40,359 Speaker 1: three insurers, two insurers, one insurer, and the scary thought 349 00:19:40,400 --> 00:19:44,560 Speaker 1: of no insure under the Affordable Care Act. What do 350 00:19:44,640 --> 00:19:48,480 Speaker 1: those insurers want? Do they want to be part of 351 00:19:48,520 --> 00:19:51,160 Speaker 1: the Affordable Care Act? Or is this just an excuse 352 00:19:51,200 --> 00:19:53,720 Speaker 1: to run Well, let me let me make two points. First, 353 00:19:53,760 --> 00:19:56,680 Speaker 1: if you look at Anthem recently reported that they're doing 354 00:19:56,680 --> 00:19:59,920 Speaker 1: well and the exchanges, thank you very much. Despite all 355 00:20:00,160 --> 00:20:02,760 Speaker 1: chatter out there, most of the insurance companies who are 356 00:20:02,760 --> 00:20:06,800 Speaker 1: participating are doing okay. Uh. They raised their rates and 357 00:20:06,840 --> 00:20:09,920 Speaker 1: they got that matched their risk pool, and so they're 358 00:20:09,960 --> 00:20:13,400 Speaker 1: doing okay. The big problem is insurance hate uncertainty, and 359 00:20:13,440 --> 00:20:15,000 Speaker 1: what we have and how is a huge amount of 360 00:20:15,040 --> 00:20:20,399 Speaker 1: uncertain Three things would actually make them much happier and 361 00:20:20,480 --> 00:20:25,320 Speaker 1: therefore would bring rates down. Uh, and certainly rate increases down. First, 362 00:20:25,480 --> 00:20:27,920 Speaker 1: say you're gonna enforce the individual mandate so that you 363 00:20:28,000 --> 00:20:30,880 Speaker 1: get more young people coming in, and don't say you're 364 00:20:30,920 --> 00:20:33,439 Speaker 1: not going to enforce it and not impose penalties and 365 00:20:33,640 --> 00:20:41,520 Speaker 1: undermine the situation. Second, we need risk corridors and reinsurance payments. Uh. 366 00:20:41,560 --> 00:20:46,200 Speaker 1: Those were scuttled by our good friend Senator Rubio. Uh. 367 00:20:46,480 --> 00:20:50,040 Speaker 1: Those are very important in case a insurance company gets 368 00:20:50,040 --> 00:20:53,560 Speaker 1: a disproportionate number of sick people. That again brings rates down. 369 00:20:53,800 --> 00:20:57,400 Speaker 1: Sometimes I've heard as much as five uh. And then 370 00:20:57,440 --> 00:21:00,560 Speaker 1: the third element is these cost sharing subsidies. So for 371 00:21:00,640 --> 00:21:04,240 Speaker 1: families in America earning up to two of poverty who 372 00:21:04,240 --> 00:21:07,800 Speaker 1: are on the exchanges that means they're earning sixty roughly 373 00:21:07,960 --> 00:21:11,359 Speaker 1: or less um. They get help paying the deductibles and 374 00:21:11,359 --> 00:21:15,200 Speaker 1: the code pays um. And if they don't, uh get 375 00:21:15,240 --> 00:21:17,920 Speaker 1: government support for that. The insurance companies around the hook 376 00:21:17,920 --> 00:21:20,679 Speaker 1: and they're like, oh, why should I participate? And the 377 00:21:20,720 --> 00:21:23,000 Speaker 1: Republicans say, oh, we'll decide those on a month to 378 00:21:23,080 --> 00:21:27,080 Speaker 1: month basis. That that is no good for literally no 379 00:21:27,200 --> 00:21:29,920 Speaker 1: help for insurance company. And again that's worth another ten 380 00:21:30,000 --> 00:21:32,800 Speaker 1: percent on the premiums. So you want to get premiums down, 381 00:21:33,040 --> 00:21:36,520 Speaker 1: attract insurance companies in because the market is stable. You 382 00:21:36,600 --> 00:21:40,240 Speaker 1: have to do those three kings. And you know, and 383 00:21:40,240 --> 00:21:43,440 Speaker 1: they're not by the way, Tom, they're not complicated. Everyone 384 00:21:43,520 --> 00:21:46,680 Speaker 1: knows they're there um. And if you you know, if 385 00:21:46,720 --> 00:21:49,760 Speaker 1: the Republicans upset the market by not paying the cost 386 00:21:49,760 --> 00:21:53,240 Speaker 1: sharing subsidies, not enforcing the mandate, everyone knows who knows 387 00:21:53,240 --> 00:21:56,000 Speaker 1: who's at fault. Now, when you control all branches of government, 388 00:21:56,000 --> 00:21:57,399 Speaker 1: you can't point the finger and say, oh, it's a 389 00:21:57,400 --> 00:22:00,439 Speaker 1: Democrats problem. No, you have the power to solve the problem. 390 00:22:00,720 --> 00:22:03,320 Speaker 1: You have to solve it. My theme for the first 391 00:22:03,400 --> 00:22:06,359 Speaker 1: hundred days has been the phrase the minority majority Party 392 00:22:06,400 --> 00:22:10,200 Speaker 1: and that's a Republican party struggling with leadership and governance, 393 00:22:10,240 --> 00:22:12,960 Speaker 1: and what what is their majority position going to be? 394 00:22:13,440 --> 00:22:17,080 Speaker 1: What do the moderate Republicans want out of the Zeka 395 00:22:17,160 --> 00:22:21,960 Speaker 1: Manuel world? What's their best outcome? I think the best 396 00:22:22,000 --> 00:22:26,719 Speaker 1: outcome is let's fix the Affordable Care Act UH and 397 00:22:26,880 --> 00:22:30,639 Speaker 1: get what's working working, and let's get some meaningful cost 398 00:22:30,680 --> 00:22:34,080 Speaker 1: control enacted that will actually, over the long home the 399 00:22:34,119 --> 00:22:38,520 Speaker 1: next four or five years, get costs down to growing 400 00:22:38,800 --> 00:22:41,399 Speaker 1: so healthcare costs doesn't don't go any faster than the 401 00:22:41,440 --> 00:22:46,280 Speaker 1: overall economy. Those two things eminently possible. There is a 402 00:22:46,359 --> 00:22:49,800 Speaker 1: deal here. There is a bipartisan approach to this. Cost 403 00:22:49,840 --> 00:22:53,000 Speaker 1: control is not one or the other. What the problem 404 00:22:53,000 --> 00:22:56,320 Speaker 1: with the UM Republican bill, and I've said this over 405 00:22:56,359 --> 00:22:58,199 Speaker 1: and over and I've said that to the President and 406 00:22:58,280 --> 00:23:01,320 Speaker 1: to UH Speaker Ryan, is this is a cost shift bill. 407 00:23:01,400 --> 00:23:04,200 Speaker 1: It's not a cost control bill. It takes costs from 408 00:23:04,240 --> 00:23:07,479 Speaker 1: the government shifts them to individuals. That is not a 409 00:23:07,520 --> 00:23:10,800 Speaker 1: solution to keep for the long term. We do have 410 00:23:11,119 --> 00:23:14,399 Speaker 1: and you know, I have produced paper on this for 411 00:23:14,600 --> 00:23:17,080 Speaker 1: various people. We do have a number of ways that 412 00:23:17,119 --> 00:23:20,840 Speaker 1: we can actually reduce costs in the system. We could 413 00:23:20,880 --> 00:23:24,239 Speaker 1: start with drugs, since there's a big bipartisan group for that, 414 00:23:24,280 --> 00:23:26,359 Speaker 1: the American public wants to do that, but we have 415 00:23:26,480 --> 00:23:29,040 Speaker 1: to extend it to hospitals and doctors and everyone in 416 00:23:29,080 --> 00:23:32,280 Speaker 1: the system. But there is a very, very big middle. 417 00:23:32,800 --> 00:23:35,800 Speaker 1: What we can't be UH is wagged by either the 418 00:23:35,840 --> 00:23:38,680 Speaker 1: far right Freedom Caucus, which seems to control the day 419 00:23:38,920 --> 00:23:41,639 Speaker 1: and doesn't want to do anything UH to have the 420 00:23:41,680 --> 00:23:45,400 Speaker 1: government intervene, or fire left people who are only interested 421 00:23:45,440 --> 00:23:48,640 Speaker 1: in single pay. There's a vast middle, and that's where 422 00:23:48,680 --> 00:23:52,040 Speaker 1: we have to focus. And if we did focus on that, 423 00:23:52,359 --> 00:23:55,600 Speaker 1: we would have a bipartisan UH group that would support 424 00:23:55,640 --> 00:23:59,320 Speaker 1: a lot of reforms, again shoring up the exchanges, making 425 00:23:59,320 --> 00:24:01,879 Speaker 1: sure everyone can get coverage, and then moving on to 426 00:24:02,000 --> 00:24:03,879 Speaker 1: good cost control. And I think you can do it 427 00:24:03,920 --> 00:24:06,000 Speaker 1: all together. As you go to the White House into 428 00:24:06,000 --> 00:24:08,880 Speaker 1: Capitol Hill and talk to policymakers here in Washington and elsewhere, 429 00:24:09,080 --> 00:24:11,040 Speaker 1: is there anyone who says the Affordable Care Act as 430 00:24:11,040 --> 00:24:13,200 Speaker 1: it stands is fine? In other words, is there agreement 431 00:24:13,240 --> 00:24:15,600 Speaker 1: that there needs to be some reform to the legislation. Well, 432 00:24:15,600 --> 00:24:19,200 Speaker 1: even Hillary Clinton, when she ran for the presidency, said, 433 00:24:19,240 --> 00:24:22,160 Speaker 1: you know, we need to make fixes Look, it's been 434 00:24:22,200 --> 00:24:25,480 Speaker 1: seven years in one month roughly since the Affordable Care 435 00:24:25,480 --> 00:24:28,600 Speaker 1: Act has been passed. You know, problems are going to develop, 436 00:24:28,640 --> 00:24:32,160 Speaker 1: un anticipated problems as well as problems that the bill 437 00:24:32,280 --> 00:24:34,600 Speaker 1: was never perfect in the first place. So we know 438 00:24:34,960 --> 00:24:39,840 Speaker 1: it needs to reforms. Does it need drastic surgery? Uh? No? 439 00:24:40,520 --> 00:24:43,280 Speaker 1: And uh, you know, I think that's where the big 440 00:24:43,320 --> 00:24:45,440 Speaker 1: mistake is. And the American public once't you say we're 441 00:24:45,440 --> 00:24:48,960 Speaker 1: taking it away, whoa, whoa. No, we don't want it 442 00:24:49,000 --> 00:24:51,240 Speaker 1: to go away. We do want it to be fixed. Um. 443 00:24:51,359 --> 00:24:53,959 Speaker 1: And so I think that's where the public is. And 444 00:24:54,000 --> 00:24:57,000 Speaker 1: that's one of the reasons it's so hard for the 445 00:24:57,080 --> 00:25:00,280 Speaker 1: Republican Party to just repeal it. I mean, it's a 446 00:25:00,040 --> 00:25:02,720 Speaker 1: eight piece of rhetoric to get elected, but it's not 447 00:25:02,800 --> 00:25:05,520 Speaker 1: a great way to govern. And I think unfortunately these 448 00:25:05,560 --> 00:25:08,120 Speaker 1: things have come together so that all we have now 449 00:25:08,240 --> 00:25:12,520 Speaker 1: is rhetoric on the political campaign rather than substance. Let's 450 00:25:13,080 --> 00:25:15,720 Speaker 1: roll up our sleeves and actually do something substittive here 451 00:25:15,800 --> 00:25:18,359 Speaker 1: that most people will be happy with. Let me just 452 00:25:18,400 --> 00:25:21,520 Speaker 1: situate this in all that's going on the conversation about yes, 453 00:25:21,600 --> 00:25:24,439 Speaker 1: government funding, but also tax reform and financial market to 454 00:25:24,640 --> 00:25:28,199 Speaker 1: regulation reform. There's a lot happening. Can you attribute the 455 00:25:28,200 --> 00:25:30,320 Speaker 1: fact that we're maybe not having the kind of serious 456 00:25:30,320 --> 00:25:31,840 Speaker 1: conversation you'd like to the fact that there were so 457 00:25:31,840 --> 00:25:34,040 Speaker 1: many distractions. We've talked to people who have said, look, 458 00:25:34,080 --> 00:25:35,600 Speaker 1: in any given year, if you would have just pursue 459 00:25:35,640 --> 00:25:38,600 Speaker 1: tax reform alone, that would be an ambitious undertaking for 460 00:25:38,760 --> 00:25:41,679 Speaker 1: this Congress. Are there simply too many distractions or is 461 00:25:41,680 --> 00:25:45,200 Speaker 1: it that coupled with the politics. I think it's all 462 00:25:45,200 --> 00:25:48,120 Speaker 1: of it. I don't. I don't. I wouldn't call them distractions. Look, 463 00:25:48,160 --> 00:25:50,280 Speaker 1: you have an agenda that you want to get past. 464 00:25:50,520 --> 00:25:53,160 Speaker 1: I actually think the irony is if you could get 465 00:25:53,160 --> 00:25:56,000 Speaker 1: bipartisan agreement on healthcare, it would actually give you more 466 00:25:56,040 --> 00:26:00,200 Speaker 1: political capital to attack things like a tax reform, h 467 00:26:00,280 --> 00:26:03,680 Speaker 1: infrastructure build. Those are the three big issues. Let's do 468 00:26:03,720 --> 00:26:06,800 Speaker 1: them serially and go for the middle. And that has 469 00:26:06,840 --> 00:26:10,359 Speaker 1: not been what's happening. Uh. They have tried to go 470 00:26:10,480 --> 00:26:14,399 Speaker 1: for an extreme one party uh a solution, and that 471 00:26:14,480 --> 00:26:17,720 Speaker 1: won't work because the Republican parties have shown we're not 472 00:26:17,880 --> 00:26:22,160 Speaker 1: unified on the Republican right. UH. And so we need 473 00:26:22,240 --> 00:26:23,560 Speaker 1: to go to the middle where it's going to be 474 00:26:23,560 --> 00:26:26,280 Speaker 1: both Some you know, a fair number of Democrats and 475 00:26:26,320 --> 00:26:29,200 Speaker 1: a fair number of Republicans, and that's I think where 476 00:26:29,480 --> 00:26:32,640 Speaker 1: we're directed. But if you did that, then people say, hey, yeah, 477 00:26:32,800 --> 00:26:35,040 Speaker 1: I can work with these people. We can find some 478 00:26:35,280 --> 00:26:37,320 Speaker 1: modern solutions. I'm not going to get everything. We'll go 479 00:26:37,359 --> 00:26:41,320 Speaker 1: back to actual politics, where politics is the art of 480 00:26:41,320 --> 00:26:43,840 Speaker 1: the compromise, the art of the deal, where not everyone 481 00:26:43,920 --> 00:26:47,520 Speaker 1: walks away with everything they wanted, but things actually improve. 482 00:26:47,920 --> 00:26:51,120 Speaker 1: And that I think is what's really uh missing here. 483 00:26:51,480 --> 00:26:55,280 Speaker 1: Um we've got you know, uh controlled by the most 484 00:26:55,320 --> 00:26:58,520 Speaker 1: extreme elements, and we've seeded control. If the Republicans say 485 00:26:58,520 --> 00:27:00,520 Speaker 1: we're only going to pass this bill with republic looking volks, 486 00:27:00,640 --> 00:27:04,359 Speaker 1: then you have the most extreme people dictating what's at stake, 487 00:27:04,520 --> 00:27:07,720 Speaker 1: and that is no formula for success. That is for 488 00:27:07,800 --> 00:27:11,840 Speaker 1: sure not gonna work. You remember twenty three uh House 489 00:27:11,880 --> 00:27:16,159 Speaker 1: Republicans uh are in districts that Mrs Clinton won. Okay, 490 00:27:16,359 --> 00:27:18,879 Speaker 1: they're not inclined to vote the way the Freedom Caucus 491 00:27:18,880 --> 00:27:22,000 Speaker 1: wants to go. Uh. So you just can't pass anything 492 00:27:22,080 --> 00:27:25,240 Speaker 1: under those circumstances. You know, I think the real important 493 00:27:25,240 --> 00:27:27,600 Speaker 1: thing is is for us to look, you know, two 494 00:27:27,680 --> 00:27:29,600 Speaker 1: or three years down the line and say all right, 495 00:27:29,600 --> 00:27:32,240 Speaker 1: what's the big issue. There's a lot of cost control. 496 00:27:32,280 --> 00:27:34,040 Speaker 1: That's the big issue, all right. See Commanuel joining us 497 00:27:34,040 --> 00:27:36,200 Speaker 1: here our nine studios with the University of Pennsylvania. This 498 00:27:36,240 --> 00:27:52,080 Speaker 1: is Blomberg Surveillance. David Gura and Tom Keane David Garray 499 00:27:52,119 --> 00:27:54,520 Speaker 1: in Washington, d C. Today, Tom Keane in New York 500 00:27:54,560 --> 00:27:56,240 Speaker 1: looking forward to this interview we'reou to have here with 501 00:27:56,280 --> 00:27:58,520 Speaker 1: Douglas Hoole, Seek and the president of American Action Form, 502 00:27:58,640 --> 00:28:01,199 Speaker 1: former director of the Congressional Budget Office. We spent a 503 00:28:01,200 --> 00:28:04,520 Speaker 1: lot of time, Doug yesterday talking about your opinion piece 504 00:28:04,560 --> 00:28:07,240 Speaker 1: in the Washington Post. Trump's tax plan is built on 505 00:28:07,280 --> 00:28:09,719 Speaker 1: a fairy tale. We also were marveling at what that 506 00:28:09,760 --> 00:28:13,200 Speaker 1: tax plan looked like, just physically. This this one page document, 507 00:28:13,240 --> 00:28:16,560 Speaker 1: two hundred words, a variety of typefaces. Here we are 508 00:28:16,680 --> 00:28:18,479 Speaker 1: ninety nine days in. Did you expect that we were 509 00:28:18,480 --> 00:28:21,200 Speaker 1: going to get more from the White House than we did? Look, 510 00:28:21,240 --> 00:28:23,240 Speaker 1: I think we have to acknowledge the accomplishment. Not only 511 00:28:23,320 --> 00:28:25,679 Speaker 1: is the return now on a postcard, the tax code 512 00:28:25,720 --> 00:28:27,960 Speaker 1: is one page. I mean, it's never been done before. 513 00:28:28,640 --> 00:28:30,960 Speaker 1: Let's let's let's dig into the substance a little bit here, 514 00:28:31,000 --> 00:28:32,879 Speaker 1: A lot of what was on that piece of paper 515 00:28:32,920 --> 00:28:34,760 Speaker 1: mirrored what the President had been talking about on the 516 00:28:35,000 --> 00:28:38,440 Speaker 1: campaign trail when he was a candidate. What what did 517 00:28:38,480 --> 00:28:40,360 Speaker 1: you see there that you like? And what did you 518 00:28:40,400 --> 00:28:42,959 Speaker 1: see that you didn't? Uh? What I saw that I 519 00:28:43,000 --> 00:28:45,520 Speaker 1: liked was a focus on some things that would be 520 00:28:45,560 --> 00:28:49,040 Speaker 1: genuinely pro growth, lower tax rates on business, a move 521 00:28:49,120 --> 00:28:52,440 Speaker 1: to a territorial tax system for our corporations. That's a 522 00:28:52,640 --> 00:28:56,880 Speaker 1: switch from the campaign, I think, a significant switch. Um. 523 00:28:56,920 --> 00:28:59,840 Speaker 1: And you know, we saw some movement down in the 524 00:29:00,040 --> 00:29:02,920 Speaker 1: individual rates. So in terms of the sort of basic 525 00:29:03,000 --> 00:29:06,200 Speaker 1: recipe of of tax form, lower rates, broader base, you 526 00:29:06,240 --> 00:29:09,040 Speaker 1: see the lower rates. Um. What's missing, and the thing 527 00:29:09,080 --> 00:29:11,840 Speaker 1: that troubles me the most is the absence of any 528 00:29:12,000 --> 00:29:15,840 Speaker 1: real discussion of the base broadening and the casual assertion 529 00:29:15,880 --> 00:29:17,960 Speaker 1: by the Secretary of Treasury that we can just grow 530 00:29:18,240 --> 00:29:20,239 Speaker 1: enough that will it'll pay for itself. And that's that's 531 00:29:20,280 --> 00:29:22,160 Speaker 1: simply not true. And that's the part I don't like 532 00:29:22,240 --> 00:29:24,000 Speaker 1: about that casual assertion. I mean, we hear in time 533 00:29:24,000 --> 00:29:27,040 Speaker 1: and time again the prospects of getting to three percent growth. 534 00:29:27,080 --> 00:29:28,640 Speaker 1: We hear the Treasury Secretary saying what we here the 535 00:29:28,680 --> 00:29:32,040 Speaker 1: President saying it as well. And there's something elliptical about 536 00:29:32,080 --> 00:29:34,280 Speaker 1: this that you would be in favor of taxi form 537 00:29:34,280 --> 00:29:37,120 Speaker 1: because that's gonna boost growth, and boosting growth is gonna 538 00:29:37,120 --> 00:29:38,960 Speaker 1: pay for taxi form. It goes around and around and around. 539 00:29:39,440 --> 00:29:43,720 Speaker 1: How problematic is that? It's absolutely true that if you 540 00:29:43,720 --> 00:29:46,760 Speaker 1: have a solid piece of pro growth tax reform that 541 00:29:46,920 --> 00:29:50,080 Speaker 1: is revenue neutral and as a result, could be passed 542 00:29:50,120 --> 00:29:53,120 Speaker 1: in a permanent fashion, you could have a significant impact 543 00:29:53,120 --> 00:29:55,120 Speaker 1: on the growth rate. I don't think you can get 544 00:29:55,120 --> 00:29:57,640 Speaker 1: a percentage point, and I certainly don't think it pays 545 00:29:57,640 --> 00:30:00,680 Speaker 1: for itself. So if for example, you fleshed out the 546 00:30:00,720 --> 00:30:04,120 Speaker 1: House Blueprint, passed that as a piece of legislation in 547 00:30:04,200 --> 00:30:07,520 Speaker 1: revenue neutral fashion, the joints of the antaxation is going 548 00:30:07,560 --> 00:30:10,080 Speaker 1: to give it something that looks like maybe three five 549 00:30:10,120 --> 00:30:13,360 Speaker 1: hundred six hundred billion dollars in in feedback. But but 550 00:30:14,000 --> 00:30:15,480 Speaker 1: there's a limit to what you can get, and you 551 00:30:15,480 --> 00:30:18,120 Speaker 1: should just acknowledge. If we assume that the President United 552 00:30:18,160 --> 00:30:22,120 Speaker 1: States Doug has not read Intertemporal Analysis of State and 553 00:30:22,200 --> 00:30:32,240 Speaker 1: Local Government spending tests this by Douglas Hole, teacon As Tilly, 554 00:30:32,440 --> 00:30:36,080 Speaker 1: and the wonderful RV. Rosen. If they haven't gone back 555 00:30:36,120 --> 00:30:40,720 Speaker 1: and read your ra that's French word there, Doug, help 556 00:30:40,840 --> 00:30:46,000 Speaker 1: me with the who instructs the President and the Secretary 557 00:30:46,000 --> 00:30:50,000 Speaker 1: of the Treasury on how this gets done. If they're 558 00:30:50,000 --> 00:30:54,120 Speaker 1: not listening in their fairy tale two people like you, 559 00:30:54,680 --> 00:31:00,520 Speaker 1: who will they listen to get legitimate reform. So I 560 00:31:00,560 --> 00:31:02,680 Speaker 1: think there was some good news that came out of this, 561 00:31:02,760 --> 00:31:05,400 Speaker 1: and I will answer the question. The good news was 562 00:31:06,120 --> 00:31:09,960 Speaker 1: the President signaled by by having this rollout and by 563 00:31:10,080 --> 00:31:14,160 Speaker 1: putting out the proposal, however thin that rough outline was 564 00:31:14,640 --> 00:31:17,120 Speaker 1: that the status quo is unacceptable, and that really is true. 565 00:31:17,200 --> 00:31:20,200 Speaker 1: The status quoto. We all know that. Okay, So step 566 00:31:20,320 --> 00:31:24,160 Speaker 1: number two. If you look at that that proposal, it 567 00:31:24,240 --> 00:31:27,440 Speaker 1: does not rule out anything that has been discussed on 568 00:31:27,480 --> 00:31:29,840 Speaker 1: Capitol Hill. There's nothing in this blueprint they got ruled out. 569 00:31:29,840 --> 00:31:32,200 Speaker 1: There's nothing in the Senate integration approaches that that got 570 00:31:32,280 --> 00:31:34,520 Speaker 1: ruled out. And that's where they're going to end up 571 00:31:34,520 --> 00:31:36,680 Speaker 1: going for the expertise. Now they have it in house, 572 00:31:36,920 --> 00:31:38,840 Speaker 1: if they can get staffed up, if they could have 573 00:31:38,840 --> 00:31:41,440 Speaker 1: an Assistant Secretary for tax policy, that would help sort 574 00:31:41,600 --> 00:31:44,080 Speaker 1: if they did those sort of you know, appointments and 575 00:31:44,160 --> 00:31:47,320 Speaker 1: got them done Treasury has a very deep bench. It's there, 576 00:31:47,480 --> 00:31:49,920 Speaker 1: it just isn't being put into action at the moment. 577 00:31:49,920 --> 00:31:53,200 Speaker 1: You represented Senator McCain in his effort for higher office. 578 00:31:53,280 --> 00:31:56,960 Speaker 1: Maybe he wouldn't have played as much golf as a president, Doug, 579 00:31:57,800 --> 00:32:02,000 Speaker 1: What will the Senate first toward war zones for creation? 580 00:32:02,680 --> 00:32:07,600 Speaker 1: What will be the response of good senators to a 581 00:32:07,800 --> 00:32:13,760 Speaker 1: deal making president on taxed from I can't get there. Look, 582 00:32:13,960 --> 00:32:17,560 Speaker 1: the White House has to has to provide a lot 583 00:32:17,600 --> 00:32:20,280 Speaker 1: of leadership to get tax form done. I mean, we 584 00:32:20,280 --> 00:32:22,400 Speaker 1: we learned that in the thirty one years since we 585 00:32:22,560 --> 00:32:25,640 Speaker 1: last got it done. It took a Ronald Reagan running 586 00:32:25,680 --> 00:32:28,760 Speaker 1: for reelection on the promise to tax reform. He won 587 00:32:28,840 --> 00:32:31,760 Speaker 1: forty nine states, which is pretty good. He then wrote 588 00:32:31,760 --> 00:32:33,920 Speaker 1: the tax reform, sent it to Capitol Hill, and it 589 00:32:34,040 --> 00:32:37,760 Speaker 1: still was extraordinarily hard to get it done. So in 590 00:32:37,800 --> 00:32:41,680 Speaker 1: this environment, you're going to need a President Trump saying 591 00:32:41,720 --> 00:32:43,920 Speaker 1: to the people who sent him to Washington to make 592 00:32:43,960 --> 00:32:46,400 Speaker 1: the economy better, this is what I want. This is 593 00:32:46,400 --> 00:32:48,560 Speaker 1: what's going to help the average American. And they're gonna 594 00:32:48,560 --> 00:32:50,720 Speaker 1: have to be all in. Now, what they're all in 595 00:32:50,920 --> 00:32:53,160 Speaker 1: on is an important thing, and they're gonna have to 596 00:32:53,160 --> 00:32:54,800 Speaker 1: negotiate with that with the House of the Senate in 597 00:32:54,800 --> 00:32:57,440 Speaker 1: the White House. That's the process that that needs to 598 00:32:57,960 --> 00:33:00,360 Speaker 1: get deeper and richer over the course of next couple 599 00:33:00,400 --> 00:33:03,400 Speaker 1: of months or simply isn't gonna happen. Tuck the sole 600 00:33:03,440 --> 00:33:05,400 Speaker 1: Teken with us here in our Bloomberg nine nine studios 601 00:33:05,400 --> 00:33:06,960 Speaker 1: in Washington, d C. We're gonna come back and talk 602 00:33:06,960 --> 00:33:10,000 Speaker 1: more perhaps about the prospects of a government comment shutdown, 603 00:33:10,000 --> 00:33:12,440 Speaker 1: talk about funding, talk about what was reported to be 604 00:33:12,480 --> 00:33:14,840 Speaker 1: a return to regular order. I've yet to see the 605 00:33:14,840 --> 00:33:17,080 Speaker 1: contract of that coming to finder focus. But we'll talk 606 00:33:17,120 --> 00:33:19,080 Speaker 1: about budget policy as well with the cold t can hear, 607 00:33:19,120 --> 00:33:22,200 Speaker 1: former director of the Congressional Budget Office, on Bloomberg Surveillance 608 00:33:22,240 --> 00:33:25,040 Speaker 1: and from Bloomberg Radio. Taka sold Tea can here with 609 00:33:25,120 --> 00:33:27,160 Speaker 1: us in the Bloomberg nine. Is you want to react 610 00:33:27,200 --> 00:33:29,400 Speaker 1: to the to the numbers here that just generally speaking, 611 00:33:29,440 --> 00:33:31,120 Speaker 1: react to s the growth that we're seeing in the 612 00:33:31,200 --> 00:33:35,360 Speaker 1: US right now. Expected it was, um, I thought it's 613 00:33:35,360 --> 00:33:37,720 Speaker 1: coming out point eight, So you know that's that's exactly 614 00:33:37,760 --> 00:33:40,400 Speaker 1: the same number. It has the characteristics that I worried about, 615 00:33:40,400 --> 00:33:43,400 Speaker 1: which is the soft PC number. We saw the household 616 00:33:43,400 --> 00:33:45,560 Speaker 1: sector weekend. Over the course of the second half of 617 00:33:45,560 --> 00:33:50,600 Speaker 1: two thousand sixteen, we've seen sort of mixed data coming 618 00:33:50,600 --> 00:33:53,680 Speaker 1: out of the monthly data, and so I'd say the 619 00:33:53,760 --> 00:33:59,120 Speaker 1: jury is still out on genuine acceleration UM And I'm 620 00:33:59,240 --> 00:34:01,320 Speaker 1: with the President in the sense that I think there 621 00:34:01,360 --> 00:34:03,440 Speaker 1: needs to be a turning of the dial on the 622 00:34:03,480 --> 00:34:08,319 Speaker 1: policy front and some genuinely UM supportive pro growth policies. 623 00:34:09,480 --> 00:34:11,319 Speaker 1: The biggest of those would be the tax form we 624 00:34:11,320 --> 00:34:13,920 Speaker 1: talked about if that was done and done well. But 625 00:34:13,920 --> 00:34:16,879 Speaker 1: but I will say I think one of the things 626 00:34:16,960 --> 00:34:19,600 Speaker 1: that the administration and Congress have done that hasn't really 627 00:34:19,640 --> 00:34:24,400 Speaker 1: been appreciated is just the complete freeze on on regulatory activity. 628 00:34:24,400 --> 00:34:27,640 Speaker 1: And the difference between what was going on and now 629 00:34:27,760 --> 00:34:31,120 Speaker 1: is really quite dramatic. Yeah, we're joking about watching Painter. 630 00:34:31,200 --> 00:34:32,160 Speaker 1: I think there are a lot of people in this 631 00:34:32,200 --> 00:34:33,799 Speaker 1: town who would love to watch Painter. I would love 632 00:34:33,840 --> 00:34:35,960 Speaker 1: to see return to regular order here. We are looking 633 00:34:36,000 --> 00:34:38,520 Speaker 1: at the projects for another short term spending bill. Will 634 00:34:38,520 --> 00:34:40,000 Speaker 1: get something that will keep the government open for a 635 00:34:40,040 --> 00:34:42,360 Speaker 1: week while Congress continues to hammer out what their what 636 00:34:42,400 --> 00:34:45,400 Speaker 1: they're hammering out, how used to that is washing at 637 00:34:45,440 --> 00:34:48,320 Speaker 1: this point were used to continuing resolutions. It is way 638 00:34:48,320 --> 00:34:51,319 Speaker 1: too used to to that. I mean, how often in 639 00:34:51,400 --> 00:34:56,000 Speaker 1: the past decade have they passed twelve appropriations bills in 640 00:34:56,000 --> 00:34:57,960 Speaker 1: the House of Sentence signed them the way they're supposed to. 641 00:34:58,160 --> 00:35:00,600 Speaker 1: It doesn't happen. I think it's happened once, maybe twice. 642 00:35:00,800 --> 00:35:04,399 Speaker 1: And so this stop gap way of doing business has 643 00:35:04,440 --> 00:35:06,920 Speaker 1: become the norm. It was supposed to be the exception, 644 00:35:07,400 --> 00:35:09,680 Speaker 1: and I don't I don't think it benefits anyone, Doug, 645 00:35:09,719 --> 00:35:11,960 Speaker 1: I want to rip up the script here the uproar 646 00:35:12,120 --> 00:35:15,200 Speaker 1: today in pagedro over it, pay the cost over it. 647 00:35:15,760 --> 00:35:18,000 Speaker 1: Business Insider had a great article on this. I think 648 00:35:18,040 --> 00:35:21,680 Speaker 1: it was in Foreign Policy. Can't remember yesterday on speaking feast, 649 00:35:21,719 --> 00:35:25,560 Speaker 1: the Senator Warren of Massachusetts is I was troubled by 650 00:35:25,680 --> 00:35:28,600 Speaker 1: that that being a large speaking fee by the former 651 00:35:28,640 --> 00:35:32,239 Speaker 1: president of the United States. I don't accept speaking feast, folks. 652 00:35:32,400 --> 00:35:34,800 Speaker 1: That's part of my agreement with Bloomberg. But Doug, you 653 00:35:34,920 --> 00:35:38,759 Speaker 1: do is an esteem public official. You've got many agencies 654 00:35:38,800 --> 00:35:42,480 Speaker 1: including l A. I isn't somebody able to serve public 655 00:35:42,600 --> 00:35:46,000 Speaker 1: service at the low salary like you did at CBO. 656 00:35:46,320 --> 00:35:48,520 Speaker 1: You made like forty eight thousand, three hundred dollars a 657 00:35:48,640 --> 00:35:51,919 Speaker 1: year or whatever it's CBO and then when you get out, 658 00:35:52,480 --> 00:35:56,239 Speaker 1: you got to make the bacon to catch up, don't you. Uh. 659 00:35:56,560 --> 00:35:58,120 Speaker 1: In my case, I had two kids in college and 660 00:35:58,320 --> 00:35:59,880 Speaker 1: it was the way to pay the bills, and I 661 00:36:00,080 --> 00:36:03,040 Speaker 1: was happy to do it. Um. I don't have any 662 00:36:03,080 --> 00:36:06,080 Speaker 1: deep objection to this. Uh, it's why are we having 663 00:36:06,160 --> 00:36:08,200 Speaker 1: this upward now that it's a world to make a 664 00:36:08,239 --> 00:36:12,919 Speaker 1: big fat fee to provide immense wisdom to people after 665 00:36:13,239 --> 00:36:16,919 Speaker 1: X number of years of government service. UM, I don't 666 00:36:17,000 --> 00:36:21,080 Speaker 1: understand this. There's a a close corollary, which is accepting 667 00:36:21,120 --> 00:36:23,640 Speaker 1: the large fee speaking and then somehow being tasked to 668 00:36:23,800 --> 00:36:26,560 Speaker 1: change policy. But but that's that's not what goes on. 669 00:36:26,719 --> 00:36:29,879 Speaker 1: I think that's the concern that somehow, by accepting the fee, 670 00:36:29,880 --> 00:36:32,279 Speaker 1: you've turned in this case the foreign president United States 671 00:36:32,360 --> 00:36:35,799 Speaker 1: into the agent of of some some group. That's that's 672 00:36:35,840 --> 00:36:38,400 Speaker 1: a that's a fantasy. That's not what happens. And David, 673 00:36:38,480 --> 00:36:43,080 Speaker 1: to help you out here Google with room room board 674 00:36:43,120 --> 00:36:50,000 Speaker 1: and fees combine Dennison University sixty thousand, seven hundred ten dollars, 675 00:36:50,800 --> 00:36:55,680 Speaker 1: that's where darken the door you have to look forward to. Yeah, 676 00:36:55,840 --> 00:36:58,400 Speaker 1: I mean, David, I mean, I I don't mean to 677 00:36:58,440 --> 00:37:01,200 Speaker 1: get up on my soapbox, but once again this Friday, 678 00:37:01,600 --> 00:37:04,399 Speaker 1: David Gurrow, we have this uproar over speaking face. There 679 00:37:04,400 --> 00:37:06,600 Speaker 1: you go. We do, We certainly do on the news 680 00:37:06,640 --> 00:37:08,080 Speaker 1: that President bomb I think it's going to travel to 681 00:37:08,160 --> 00:37:10,840 Speaker 1: Europe to give a speech for for four it's a 682 00:37:10,880 --> 00:37:15,120 Speaker 1: big I mean, the whole seacons now at that level, well, yes, 683 00:37:15,360 --> 00:37:18,759 Speaker 1: I would you would accept it if for those for 684 00:37:18,880 --> 00:37:22,000 Speaker 1: those listening who are concerned about giving the president dollars 685 00:37:22,320 --> 00:37:26,719 Speaker 1: give it to me. He will gladly. I just ask 686 00:37:26,760 --> 00:37:29,160 Speaker 1: you about congressional leadership, and let me let me pivot 687 00:37:29,160 --> 00:37:30,680 Speaker 1: away from that just a little bit. We looked at 688 00:37:30,719 --> 00:37:32,680 Speaker 1: President Obama here for for wisdom on the future of 689 00:37:33,080 --> 00:37:36,000 Speaker 1: the Democratic Party. Where else are you seeing leadership in 690 00:37:36,000 --> 00:37:38,600 Speaker 1: the Democratic Party? In the Republican Party? You mentioned John 691 00:37:38,680 --> 00:37:41,960 Speaker 1: McCain during War zones on on on his holiday getting 692 00:37:41,960 --> 00:37:44,520 Speaker 1: out there doing. Who are the iconic figures in these 693 00:37:44,520 --> 00:37:48,000 Speaker 1: two parties right now? Aside from from the President, I 694 00:37:48,560 --> 00:37:50,759 Speaker 1: think the party's in flux. I think we saw that 695 00:37:50,840 --> 00:37:53,880 Speaker 1: in the two thousand and sixteam election. The sort of 696 00:37:54,080 --> 00:37:57,319 Speaker 1: traditional standard bears and the presidential primary didn't do very well. 697 00:37:58,000 --> 00:38:00,400 Speaker 1: We saw Donald Trump win the nomination in the end, 698 00:38:00,920 --> 00:38:04,080 Speaker 1: uh that that bleeds back into the House in the Senate, 699 00:38:04,120 --> 00:38:08,160 Speaker 1: where there's a clear leadership at the moment, but it's 700 00:38:08,200 --> 00:38:10,279 Speaker 1: not obvious who's the next in line. So that's sort 701 00:38:10,280 --> 00:38:13,400 Speaker 1: of pecking. You know. Republicans have traditionally always liked to 702 00:38:13,480 --> 00:38:16,400 Speaker 1: know who the next person was, and it's not been 703 00:38:16,440 --> 00:38:18,680 Speaker 1: that way for quite some time though. Tuchas will taken 704 00:38:18,719 --> 00:38:20,839 Speaker 1: with us here in our Bloomberg nine Studios the Breaking 705 00:38:20,880 --> 00:38:23,439 Speaker 1: the American Action form. Former director of the Congressional Budget Office, 706 00:38:23,480 --> 00:38:26,160 Speaker 1: former Chief Economist to the President, George Which Council of 707 00:38:26,200 --> 00:38:29,160 Speaker 1: Economic Advisor David this interview was like a fairy tale. 708 00:38:30,760 --> 00:38:33,000 Speaker 1: Do do read his Do read his piece in the 709 00:38:33,040 --> 00:38:35,400 Speaker 1: Washington Post Again, Trump's tax plan is built on a 710 00:38:35,440 --> 00:38:36,759 Speaker 1: fairy tale. I'll put that out on Twitter. I know 711 00:38:36,840 --> 00:38:40,000 Speaker 1: you will as well. Top, but a useful read here. 712 00:38:40,040 --> 00:38:55,400 Speaker 1: As the conversation about tax reform in Washington continues. Secretary 713 00:38:55,440 --> 00:38:57,320 Speaker 1: State Rex Taylors And in New York today meeting with 714 00:38:57,360 --> 00:38:59,200 Speaker 1: members of the UN Security Council. He will share a 715 00:38:59,239 --> 00:39:01,680 Speaker 1: special meeting on Worth Korea here at ten o'clock at 716 00:39:01,680 --> 00:39:03,640 Speaker 1: Wall Street Time. Force and perspective on this. Let's go 717 00:39:04,160 --> 00:39:06,160 Speaker 1: to Victor Jaws. He's the Korea Chair at the Center 718 00:39:06,200 --> 00:39:09,240 Speaker 1: of Strategic and International Studies, the Song Chair the Department 719 00:39:09,280 --> 00:39:11,600 Speaker 1: of Government, the School of Foreign Service at Georgetown University, 720 00:39:11,640 --> 00:39:15,760 Speaker 1: and former Director for Asian Affairs at the National Security Council. 721 00:39:16,120 --> 00:39:18,080 Speaker 1: I looked at the Reuter's interview that's making a lot 722 00:39:18,120 --> 00:39:21,399 Speaker 1: of headlines this morning, Professor Chaw, the President saying, quote, 723 00:39:21,400 --> 00:39:23,319 Speaker 1: there's a chance that we could end up having a major, 724 00:39:23,520 --> 00:39:26,960 Speaker 1: major conflict with North Korea, and perhaps worryingly more worryingly 725 00:39:27,320 --> 00:39:30,719 Speaker 1: to people who read that interview, the word absolutely following it. 726 00:39:30,800 --> 00:39:32,200 Speaker 1: What did you make of what the President had to 727 00:39:32,239 --> 00:39:33,600 Speaker 1: say and what do you expect to hear from the 728 00:39:33,640 --> 00:39:38,839 Speaker 1: Secretary of State today when the UN Security Council meets. Um, Well, 729 00:39:39,440 --> 00:39:40,799 Speaker 1: I think there are a lot of there. There are 730 00:39:40,840 --> 00:39:43,719 Speaker 1: a number of conflicting signals coming out of the administration 731 00:39:43,840 --> 00:39:46,440 Speaker 1: right now. On the one hand, as you mentioned, President 732 00:39:46,480 --> 00:39:49,719 Speaker 1: Trump made those comments about conflict. On the other hand, 733 00:39:49,840 --> 00:39:53,160 Speaker 1: yesterday UH Secretary tell us and said the United States 734 00:39:53,239 --> 00:39:56,759 Speaker 1: was also ready for diplomacy with North Korea. So Um, 735 00:39:56,960 --> 00:39:58,840 Speaker 1: I think, I think what they are doing, they're putting 736 00:39:58,840 --> 00:40:01,160 Speaker 1: all their options on the able. Right now, the focus 737 00:40:01,280 --> 00:40:04,640 Speaker 1: is on trying the economically pressure North Korea through the 738 00:40:04,800 --> 00:40:08,719 Speaker 1: China relationship, but the purpose of the pressure is to 739 00:40:08,800 --> 00:40:11,600 Speaker 1: try to get them back to the negotiating table for 740 00:40:11,760 --> 00:40:14,279 Speaker 1: some sort of deal. I think that the message at 741 00:40:14,320 --> 00:40:16,960 Speaker 1: the u N is going to be one, UM, this 742 00:40:17,160 --> 00:40:19,600 Speaker 1: is the number one national security issue for the United 743 00:40:19,600 --> 00:40:22,920 Speaker 1: States today. I've heard that all week in Washington, d C. 744 00:40:23,280 --> 00:40:27,239 Speaker 1: On Capitol Hill and around town. And to that, UM, 745 00:40:27,560 --> 00:40:30,360 Speaker 1: the u N has to be ready to move quickly 746 00:40:30,440 --> 00:40:33,040 Speaker 1: with sanctions and a new you are and Security Council resolution. 747 00:40:33,080 --> 00:40:35,440 Speaker 1: If North Korea does a six nuclear test. Where do 748 00:40:35,520 --> 00:40:37,719 Speaker 1: you see that the pressure being applied. I look at 749 00:40:38,040 --> 00:40:41,279 Speaker 1: the rhetoric in particularly with the rhetoric on Twitter as 750 00:40:41,320 --> 00:40:44,239 Speaker 1: ones want to do here under this UH, this current administration, 751 00:40:44,320 --> 00:40:47,200 Speaker 1: the president seemingly expressing a lot of confidence in his 752 00:40:47,360 --> 00:40:50,239 Speaker 1: his friendly relationship with with the Chinese president, moving away 753 00:40:50,280 --> 00:40:53,040 Speaker 1: from labeling the country a currency manipulator. What kind of 754 00:40:53,080 --> 00:40:55,160 Speaker 1: pressure can the US apply on China at this point 755 00:40:55,200 --> 00:40:57,560 Speaker 1: when it comes to North Korea. So I think there 756 00:40:57,600 --> 00:41:00,920 Speaker 1: are two types of pressure. One is um our movement 757 00:41:00,960 --> 00:41:04,200 Speaker 1: of military assets to the region, as we've seen with 758 00:41:04,320 --> 00:41:07,160 Speaker 1: the carrier strike group that Carl Vincent that eventually made 759 00:41:07,200 --> 00:41:10,800 Speaker 1: it to the waters off the kreen eventually that eventually 760 00:41:10,840 --> 00:41:13,320 Speaker 1: made it there off the Korean peninsula, And that I 761 00:41:13,400 --> 00:41:16,040 Speaker 1: think is something that Chinese don't like. Um. And then 762 00:41:16,080 --> 00:41:19,560 Speaker 1: the other is really Trump leveraging the overall US China 763 00:41:19,600 --> 00:41:23,160 Speaker 1: relationship that Chinese want. They don't want instability to see here. 764 00:41:23,239 --> 00:41:25,160 Speaker 1: This is the year of their big Party Congress, So 765 00:41:25,280 --> 00:41:28,480 Speaker 1: Jumping doesn't want a crisis on his border. Um. And 766 00:41:28,680 --> 00:41:31,480 Speaker 1: China does have a lot of economic influence on North Korea. 767 00:41:31,520 --> 00:41:35,360 Speaker 1: They don't have any political influence. But you know on 768 00:41:35,400 --> 00:41:37,960 Speaker 1: North Korea's trade is with China. You are truly one 769 00:41:38,040 --> 00:41:40,840 Speaker 1: of our nation's experts on Korea. I would suggest I 770 00:41:40,960 --> 00:41:44,480 Speaker 1: need education, and maybe the President of United States needs education. 771 00:41:45,120 --> 00:41:48,640 Speaker 1: Outside of the capital, What does North Korea like? If 772 00:41:48,680 --> 00:41:52,480 Speaker 1: I take the road north northeast from the capital and 773 00:41:52,560 --> 00:41:55,880 Speaker 1: I'm distant from the Yellow River, there's Chang Gang or 774 00:41:56,040 --> 00:41:58,799 Speaker 1: John Chung Chang Gang. I can't pronounce it. I guess 775 00:41:58,840 --> 00:42:03,040 Speaker 1: it's a mining district. How medieval. How backward is the 776 00:42:03,120 --> 00:42:07,759 Speaker 1: rest of North Korea? Um? It is pretty backward. I mean, 777 00:42:07,800 --> 00:42:10,400 Speaker 1: once you get out of the capital, city, the pattemptin 778 00:42:10,560 --> 00:42:15,760 Speaker 1: village of of the of kung young Um it deteriorates rapidly, 779 00:42:16,000 --> 00:42:20,640 Speaker 1: very little electricity electricity. I once took a drive when 780 00:42:20,680 --> 00:42:23,520 Speaker 1: I was in government doing this, and I drove for 781 00:42:23,680 --> 00:42:27,759 Speaker 1: about sixty miles and I didn't through farmland, and I 782 00:42:27,880 --> 00:42:31,000 Speaker 1: did not see a mechanized vehicle anywhere. The only thing 783 00:42:31,040 --> 00:42:33,880 Speaker 1: I saw was a farmer with a with an ox 784 00:42:34,120 --> 00:42:38,320 Speaker 1: and a plow um. And you pass buildings that have 785 00:42:38,600 --> 00:42:40,800 Speaker 1: no windows in them, but you know people live in 786 00:42:40,880 --> 00:42:44,239 Speaker 1: them because there's laundry hanging in the windows. Um it is. 787 00:42:44,480 --> 00:42:46,719 Speaker 1: It is quite quite bad. And when you talk about 788 00:42:46,719 --> 00:42:49,520 Speaker 1: the mining areas, this is this is an area where 789 00:42:49,560 --> 00:42:51,319 Speaker 1: they have a lot of a lot of their uh 790 00:42:52,280 --> 00:42:55,799 Speaker 1: their human rights violations. They have they who they deemed 791 00:42:55,840 --> 00:42:59,920 Speaker 1: political criminals working in the mines, you know, digging, digging 792 00:43:00,000 --> 00:43:03,320 Speaker 1: out with their bare hands, with no safety precautions whatsoever. 793 00:43:03,600 --> 00:43:05,800 Speaker 1: Do we have intelligence on this? I think of the 794 00:43:05,880 --> 00:43:08,840 Speaker 1: failure of US intelligence at nineteen I believe it was 795 00:43:08,920 --> 00:43:11,839 Speaker 1: eighty nine with the collapse of the Soviet Union. Would 796 00:43:11,840 --> 00:43:14,800 Speaker 1: you suggest that the president has available a level of 797 00:43:14,880 --> 00:43:19,440 Speaker 1: intelligence where informed decisions can be made? Um? Well, North 798 00:43:19,520 --> 00:43:22,400 Speaker 1: Korea is famously known as the hardest intelligence target in 799 00:43:22,440 --> 00:43:25,200 Speaker 1: the world. UM, and and I think that is true. 800 00:43:25,400 --> 00:43:28,120 Speaker 1: I think our intelligence community does the best they can 801 00:43:28,280 --> 00:43:31,640 Speaker 1: with the equipment and the capabilities they have. But of 802 00:43:31,719 --> 00:43:35,279 Speaker 1: course we don't. We are not able to penetrate North 803 00:43:35,360 --> 00:43:38,120 Speaker 1: Korea like we can other countries, Iran or other places. 804 00:43:38,160 --> 00:43:40,680 Speaker 1: It's just not it's just not the same. So it 805 00:43:40,880 --> 00:43:43,040 Speaker 1: is this is the biggest security challenge and it is 806 00:43:43,120 --> 00:43:45,879 Speaker 1: also at the same time the hardest intelligence target. That's 807 00:43:45,920 --> 00:43:48,560 Speaker 1: not a good combination. Professor jaw A few Americans have 808 00:43:48,640 --> 00:43:51,000 Speaker 1: been in the room negotiating with the with the North Koreans. 809 00:43:51,000 --> 00:43:53,279 Speaker 1: You've been there as part of that Six Party Talk 810 00:43:53,320 --> 00:43:57,640 Speaker 1: delegation team a while back. What do they like in negotiations? 811 00:43:57,719 --> 00:44:00,680 Speaker 1: What what is North Korean diplomacy look like? And and 812 00:44:01,160 --> 00:44:03,360 Speaker 1: judging based on that, how how how high is the 813 00:44:03,400 --> 00:44:06,840 Speaker 1: likelihood here we can have a diplomatic solution. Um. So, 814 00:44:07,040 --> 00:44:09,600 Speaker 1: I you know, they're they're not sort of banging the 815 00:44:09,719 --> 00:44:13,600 Speaker 1: table and screaming. I mean they are professional diplomats. They 816 00:44:13,719 --> 00:44:17,920 Speaker 1: have a brief, they have instructions. Um. They you know, 817 00:44:18,000 --> 00:44:20,760 Speaker 1: they're aiming to get in agreement as well as everybody 818 00:44:20,800 --> 00:44:23,279 Speaker 1: else at the table. Um. I would say one of 819 00:44:23,320 --> 00:44:27,640 Speaker 1: the big differences is that they have absolutely no flexibility. Um. 820 00:44:27,960 --> 00:44:30,560 Speaker 1: They it's harder for them to call back to capitals 821 00:44:30,640 --> 00:44:35,239 Speaker 1: to get approval, to to try out a new idea. UM. 822 00:44:35,400 --> 00:44:39,759 Speaker 1: So in that sense, Um, their inflexibility is really a 823 00:44:39,840 --> 00:44:42,719 Speaker 1: function of the way their whole system is organized. And 824 00:44:43,320 --> 00:44:47,440 Speaker 1: for that reason they cannot They're not very nimble negotiators. UM, 825 00:44:47,680 --> 00:44:50,200 Speaker 1: they're sort of they have one brief, that's all they 826 00:44:50,239 --> 00:44:52,799 Speaker 1: can say, and then everybody else has to figure out 827 00:44:52,840 --> 00:44:55,919 Speaker 1: how to try to make it work because they really 828 00:44:55,960 --> 00:44:58,719 Speaker 1: can't move. And in the last thirty seconds, so we 829 00:44:58,800 --> 00:45:00,719 Speaker 1: have with here, we are we seeing market change. You 830 00:45:00,800 --> 00:45:02,920 Speaker 1: when it comes to US policy toward North Korea. We 831 00:45:03,000 --> 00:45:05,360 Speaker 1: you've mentioned this with attention that the issue is is 832 00:45:05,440 --> 00:45:10,279 Speaker 1: getting is the policy itself changing? I think the context 833 00:45:10,400 --> 00:45:13,200 Speaker 1: of the policy is changing, and that is largely because 834 00:45:13,800 --> 00:45:16,440 Speaker 1: North Korea is driving too for an i CBM threatn 835 00:45:16,480 --> 00:45:19,760 Speaker 1: interconno ballistic missile threat that can range the United States. 836 00:45:19,840 --> 00:45:22,200 Speaker 1: That's something no previous U S presidents has had to 837 00:45:22,280 --> 00:45:24,920 Speaker 1: deal with. That makes it a homeland security threat. And 838 00:45:25,040 --> 00:45:27,000 Speaker 1: so for that reason, I think that means the United 839 00:45:27,000 --> 00:45:29,680 Speaker 1: States is willing to take more risk, whether that's in 840 00:45:29,840 --> 00:45:33,320 Speaker 1: terms of military policy or in terms of diplomacy. President 841 00:45:33,360 --> 00:45:35,520 Speaker 1: Trump is going to have to sect except more risk 842 00:45:35,600 --> 00:45:38,640 Speaker 1: as he maps out of policy and strategy for North Korea. 843 00:45:46,360 --> 00:45:50,400 Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and 844 00:45:50,560 --> 00:45:55,880 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 845 00:45:56,000 --> 00:45:59,480 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David 846 00:45:59,560 --> 00:46:03,719 Speaker 1: Gura is at David Gura. Before the podcast, you can 847 00:46:03,800 --> 00:46:18,239 Speaker 1: always catch us worldwide. I'm Bloomberg Radio, brought you by 848 00:46:18,520 --> 00:46:22,200 Speaker 1: Bank of America Mary Lynch, dedicated to bringing our clients 849 00:46:22,320 --> 00:46:26,440 Speaker 1: insights and solutions to meet the challenges of a transforming world. 850 00:46:26,960 --> 00:46:30,680 Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Fenner 851 00:46:30,800 --> 00:46:34,279 Speaker 1: and Smith Incorporated, Member s I p C.