1 00:00:12,480 --> 00:00:15,319 Speaker 1: This is Wall Street Week. I'm David Weston bringing you 2 00:00:15,440 --> 00:00:18,400 Speaker 1: stories of capitalism. This week, we take a look at 3 00:00:18,400 --> 00:00:21,720 Speaker 1: the Trump administration's creativity in finding the cash for that 4 00:00:21,920 --> 00:00:26,040 Speaker 1: sovereign wealth fund the President wants so badly, plus national 5 00:00:26,079 --> 00:00:29,840 Speaker 1: security rubs up against economic policy and the art of 6 00:00:29,880 --> 00:00:34,879 Speaker 1: the deal in the saga of TikTok and getting the 7 00:00:34,880 --> 00:00:37,800 Speaker 1: planes to run on time, the state of the US 8 00:00:37,880 --> 00:00:41,519 Speaker 1: air traffic control system, and rival competing solutions for how 9 00:00:41,560 --> 00:00:45,280 Speaker 1: to make it better. But we start with President Trump's 10 00:00:45,280 --> 00:00:46,479 Speaker 1: big tariff announcement. 11 00:00:46,560 --> 00:00:49,920 Speaker 2: My fellow Americans, this is Liberation. 12 00:00:49,520 --> 00:00:52,279 Speaker 1: Day and what it may mean for the US economy. 13 00:00:52,760 --> 00:00:56,400 Speaker 1: Our special contributor Larry Summers of Harvard tells us the story. 14 00:00:58,200 --> 00:01:04,720 Speaker 3: I think that we basically have a moment when we're 15 00:01:04,800 --> 00:01:14,160 Speaker 3: discussing whether the existing system of global economic integration, where 16 00:01:14,640 --> 00:01:20,880 Speaker 3: products are produced in supply chains across multiple countries, is 17 00:01:20,959 --> 00:01:24,000 Speaker 3: going to be something we're going to preserve with all 18 00:01:24,040 --> 00:01:28,720 Speaker 3: the efficiencies, all the benefits to consumers, all the increase 19 00:01:28,959 --> 00:01:33,600 Speaker 3: in their purchasing power that has brought, or. 20 00:01:33,520 --> 00:01:37,000 Speaker 2: Whether we're going to try to turn the clock back 21 00:01:37,480 --> 00:01:40,800 Speaker 2: to where it was before the Second World War. And 22 00:01:41,520 --> 00:01:43,319 Speaker 2: if we turn it back. 23 00:01:44,680 --> 00:01:48,600 Speaker 3: I think that's going to be enormously costly for the 24 00:01:48,680 --> 00:01:51,120 Speaker 3: United States and for the world economy. 25 00:01:51,800 --> 00:01:56,200 Speaker 2: I think people may not just because there's always. 26 00:01:55,880 --> 00:02:02,400 Speaker 3: A clamor about something, appreciate just how sweeping the proposals 27 00:02:02,440 --> 00:02:06,280 Speaker 3: the United States has made are. The United States has 28 00:02:06,480 --> 00:02:11,840 Speaker 3: traditionally been the world's leading advocate of open markets, to 29 00:02:12,040 --> 00:02:19,399 Speaker 3: keep our alliances together, to help the best American companies 30 00:02:19,440 --> 00:02:24,279 Speaker 3: and workers be able to export, to help American consumers 31 00:02:24,320 --> 00:02:29,000 Speaker 3: buy goods at low costs. We're talking now about the 32 00:02:29,080 --> 00:02:34,919 Speaker 3: United States imposing by far the highest tariffs of any 33 00:02:35,000 --> 00:02:39,560 Speaker 3: reasonable sized economy in the world. We're talking about the 34 00:02:39,680 --> 00:02:44,560 Speaker 3: United States having tariffs that are well above the level 35 00:02:44,639 --> 00:02:48,440 Speaker 3: of the Smooth Hawley tariffs that made the depression great. 36 00:02:49,240 --> 00:02:54,200 Speaker 3: And markets are processing that, and they're seeing. 37 00:02:55,639 --> 00:02:57,320 Speaker 2: A big. 38 00:02:59,040 --> 00:03:03,799 Speaker 3: Set of problems, a big set of reductions in economic 39 00:03:03,960 --> 00:03:05,720 Speaker 3: activity ahead. 40 00:03:05,960 --> 00:03:07,359 Speaker 2: And the stock market. 41 00:03:07,040 --> 00:03:11,000 Speaker 3: Only measures a very small fraction of the losses to 42 00:03:11,040 --> 00:03:15,440 Speaker 3: the economy from policies of this kind. There are also 43 00:03:15,560 --> 00:03:24,239 Speaker 3: big losses to workers, to consumers, and that's spread more broadly. 44 00:03:24,760 --> 00:03:28,840 Speaker 3: So we're going to make very important choices in the 45 00:03:28,840 --> 00:03:34,320 Speaker 3: weeks ahead. I hope we make them wisely, which will 46 00:03:34,360 --> 00:03:40,800 Speaker 3: involve back in off of the policies that have been announced. 47 00:03:40,720 --> 00:03:44,080 Speaker 1: And that's what happened on Wednesday when President Trump announced 48 00:03:44,080 --> 00:03:47,040 Speaker 1: the ninety day suspension of most of the tariffs, with 49 00:03:47,120 --> 00:03:50,360 Speaker 1: the notable exception of China. You referred to history a 50 00:03:50,440 --> 00:03:53,160 Speaker 1: couple times before the World War Two, Smooth Holly, back 51 00:03:53,200 --> 00:03:56,760 Speaker 1: in nineteen thirty Does history give us any guidance about 52 00:03:56,760 --> 00:04:00,000 Speaker 1: where we might go? For example, Richard Nixon, who's president, 53 00:04:00,080 --> 00:04:01,720 Speaker 1: did take us off the gold standard, and there was 54 00:04:01,760 --> 00:04:05,640 Speaker 1: a fairly abrupt change in global economics as a result 55 00:04:05,680 --> 00:04:08,040 Speaker 1: of what President Nixon did. Have we had this sort 56 00:04:08,080 --> 00:04:11,240 Speaker 1: of abrupt departure from what has been before an economic 57 00:04:11,240 --> 00:04:12,120 Speaker 1: policy before. 58 00:04:12,680 --> 00:04:16,120 Speaker 3: This is a much more abrupt change than when Richard 59 00:04:16,200 --> 00:04:20,400 Speaker 3: Nixon took us off the gold standard. Then there were 60 00:04:20,600 --> 00:04:25,320 Speaker 3: ten percent tariffs and those were just the Those were 61 00:04:25,400 --> 00:04:30,679 Speaker 3: the policy. Now the ten percent tariffs are treated as 62 00:04:30,760 --> 00:04:37,600 Speaker 3: some kind of base. The efforts of the United States 63 00:04:37,640 --> 00:04:41,320 Speaker 3: in the aftermath of what President Nixon did were to 64 00:04:41,480 --> 00:04:48,600 Speaker 3: cooperate with other countries, not to coerce other countries. So 65 00:04:49,000 --> 00:04:53,120 Speaker 3: I don't know that there really is a historical precedent 66 00:04:53,760 --> 00:05:00,640 Speaker 3: for what's being done now. And marcuts are speaking with 67 00:05:00,960 --> 00:05:05,800 Speaker 3: incredible clarity. Sometimes markets are hard to interpret, but this 68 00:05:05,880 --> 00:05:07,400 Speaker 3: is not one of those times. 69 00:05:07,480 --> 00:05:10,720 Speaker 1: You have handled your fair share of crises, both of 70 00:05:10,760 --> 00:05:12,640 Speaker 1: the Treasure Department and Secretary, but also in the White 71 00:05:12,680 --> 00:05:15,720 Speaker 1: House during the Great Financial Crisis. From your experience, if 72 00:05:15,720 --> 00:05:18,560 Speaker 1: you were back in the White House or Treasure Department, 73 00:05:18,600 --> 00:05:21,320 Speaker 1: what would you be looking at as perhaps the next 74 00:05:21,320 --> 00:05:23,560 Speaker 1: shoe to drop? What would you be most concerned about 75 00:05:23,640 --> 00:05:24,000 Speaker 1: right now? 76 00:05:24,080 --> 00:05:28,599 Speaker 3: I'd be I would have one concern if I was 77 00:05:28,640 --> 00:05:31,760 Speaker 3: in the White House or in the Treasury, and that 78 00:05:31,920 --> 00:05:34,240 Speaker 3: was my boss, the President of the United States. 79 00:05:35,080 --> 00:05:39,800 Speaker 2: The main shoe that will drop or will not drop. 80 00:05:40,040 --> 00:05:44,440 Speaker 3: Is the next thing the President says and the next. 81 00:05:44,240 --> 00:05:45,720 Speaker 2: Order that he gives. 82 00:05:46,480 --> 00:05:51,159 Speaker 3: And so I would be telling his political advisors that 83 00:05:51,240 --> 00:05:54,119 Speaker 3: this had nothing to do with what was being said 84 00:05:54,160 --> 00:05:58,200 Speaker 3: in other countries, this had nothing important to do with 85 00:05:59,000 --> 00:06:04,800 Speaker 3: business executives' actions in the United States, that if the 86 00:06:04,839 --> 00:06:08,920 Speaker 3: president was on this course, there would not be confidence, 87 00:06:09,440 --> 00:06:13,159 Speaker 3: and if the President signaled a willingness to adjust his course, 88 00:06:13,720 --> 00:06:14,920 Speaker 3: there would be. 89 00:06:15,839 --> 00:06:17,520 Speaker 2: Confidence and show. 90 00:06:17,760 --> 00:06:23,280 Speaker 3: The sole preoccupation that I would have if I were 91 00:06:23,520 --> 00:06:29,840 Speaker 3: in the government, would be with what the President was saying, 92 00:06:29,960 --> 00:06:36,560 Speaker 3: and frankly, As I've said before, David, there are a 93 00:06:36,960 --> 00:06:41,800 Speaker 3: very limited number of issues, and it has to be 94 00:06:41,960 --> 00:06:46,880 Speaker 3: immensely significant. That makes it the right and moral thing 95 00:06:47,800 --> 00:06:52,320 Speaker 3: for a senior official to resign because he is not 96 00:06:52,480 --> 00:06:57,800 Speaker 3: comfortable with the direction that the president is setting. And 97 00:06:58,200 --> 00:07:03,440 Speaker 3: the president is titled to have advisors who believe in 98 00:07:03,480 --> 00:07:09,680 Speaker 3: his policies, and individuals are entitled to follow their conscience, 99 00:07:10,240 --> 00:07:12,960 Speaker 3: and so there are moments when the right thing to 100 00:07:13,040 --> 00:07:18,920 Speaker 3: do is for a senior official to resign. When Elliott 101 00:07:19,000 --> 00:07:23,040 Speaker 3: Richardson resigned when given what he found to be an 102 00:07:23,160 --> 00:07:28,080 Speaker 3: unacceptable order from Richard Nixon, that was such an example. 103 00:07:28,600 --> 00:07:33,360 Speaker 3: When Cyrus Vance resigned because he didn't support what the 104 00:07:33,400 --> 00:07:36,360 Speaker 3: Carter administration was doing in Iran. 105 00:07:37,040 --> 00:07:39,560 Speaker 2: That was an example. 106 00:07:40,200 --> 00:07:46,120 Speaker 3: When a number of officials in President Clinton's administration were 107 00:07:46,120 --> 00:07:50,480 Speaker 3: not able to support his welfare reform bill, they chose 108 00:07:51,800 --> 00:07:53,840 Speaker 3: to resign. 109 00:07:54,480 --> 00:07:56,640 Speaker 2: Frankly, if I were in an. 110 00:07:56,640 --> 00:08:02,320 Speaker 3: Administration that we're pursuing policies as dangerous as these, I 111 00:08:02,360 --> 00:08:07,080 Speaker 3: would be thinking very carefully about whether I had the 112 00:08:07,120 --> 00:08:13,480 Speaker 3: ability to influence policies in a positive direction, or whether. 113 00:08:13,480 --> 00:08:15,880 Speaker 2: The right thing for me to do is to resign. 114 00:08:16,200 --> 00:08:17,840 Speaker 1: So, Larry, you and I have talked in the past 115 00:08:17,960 --> 00:08:22,600 Speaker 1: about the question whether, in fact various people into enemies 116 00:08:22,600 --> 00:08:25,560 Speaker 1: will absorb the increased terriffs so it won't actually to 117 00:08:25,600 --> 00:08:28,720 Speaker 1: a largerie fall in the consumer. What do you make 118 00:08:28,760 --> 00:08:33,280 Speaker 1: of the arguments that producers intermediaries may well absorb a 119 00:08:33,320 --> 00:08:33,959 Speaker 1: lot of the pain. 120 00:08:34,360 --> 00:08:42,720 Speaker 3: I think they're unquestionably wrong. Economists have studied very carefully 121 00:08:43,160 --> 00:08:47,559 Speaker 3: the experience of the previous Trump tariff increases. For example, 122 00:08:47,600 --> 00:08:52,239 Speaker 3: they looked at washing machines that were tariffed versus dryers 123 00:08:52,600 --> 00:08:58,040 Speaker 3: that were not tarffed. They used a variety of different methodologies. 124 00:08:58,520 --> 00:09:06,000 Speaker 3: Essentially all the study concluded that prices go up with tariffs. 125 00:09:06,480 --> 00:09:10,800 Speaker 3: I've had the opportunity now to speak with senior executives 126 00:09:10,800 --> 00:09:13,080 Speaker 3: at a range of major retailers. 127 00:09:13,760 --> 00:09:15,320 Speaker 2: That is certainly their view. 128 00:09:15,440 --> 00:09:20,000 Speaker 3: I suspect when you start getting earnings calls and business 129 00:09:20,080 --> 00:09:25,240 Speaker 3: leaders are asked, will they absorb tariffs, will they be 130 00:09:25,280 --> 00:09:29,040 Speaker 3: able to push tariffs back on to their suppliers, or 131 00:09:29,120 --> 00:09:33,520 Speaker 3: do they expect tariffs to raise consumer prices? I suspect 132 00:09:33,559 --> 00:09:37,880 Speaker 3: they will acknowledge that the dominant effect will be on 133 00:09:40,160 --> 00:09:46,480 Speaker 3: consumer prices. And the important thing for people to understand 134 00:09:46,679 --> 00:09:51,520 Speaker 3: is that this moment is very different than the previous. 135 00:09:51,160 --> 00:09:52,360 Speaker 2: Trump tariff moment. 136 00:09:52,960 --> 00:09:55,160 Speaker 3: It comes at a moment when we already have some 137 00:09:55,280 --> 00:09:59,400 Speaker 3: inflation psychology, It comes at a moment when the economy 138 00:09:59,480 --> 00:10:04,400 Speaker 3: is pretty close to full employment. And most importantly, these 139 00:10:04,440 --> 00:10:08,160 Speaker 3: tariffs are more than ten times as large as the 140 00:10:08,200 --> 00:10:11,360 Speaker 3: tariffs that were put in place in twenty eighteen, and 141 00:10:11,400 --> 00:10:15,760 Speaker 3: therefore there's far less room for them to be absorbed 142 00:10:16,360 --> 00:10:24,040 Speaker 3: in the traditional margin of distributors or suppliers. So I 143 00:10:24,080 --> 00:10:30,480 Speaker 3: think it's fundamentally dishonest to make any claim that these 144 00:10:31,040 --> 00:10:34,640 Speaker 3: tariffs are going to do anything other than be passed 145 00:10:34,679 --> 00:10:36,160 Speaker 3: on in the form of higher. 146 00:10:35,840 --> 00:10:38,280 Speaker 2: Prices coming up. 147 00:10:38,520 --> 00:10:41,520 Speaker 1: President Trump wants a sovereign wealth fun of his very own, 148 00:10:42,000 --> 00:10:43,600 Speaker 1: but to get there, he's going to have to come 149 00:10:43,679 --> 00:10:47,040 Speaker 1: up with some cold, hard cash. We suggest where he 150 00:10:47,120 --> 00:11:01,000 Speaker 1: might look for it. This is a story about creative solutions. 151 00:11:01,440 --> 00:11:04,120 Speaker 1: What happens when a country wants a sovereign wealth fund 152 00:11:04,200 --> 00:11:06,960 Speaker 1: but doesn't have ready cash to put into it. The 153 00:11:07,000 --> 00:11:10,600 Speaker 1: Trump administration is willing to get creative to answer that question, 154 00:11:10,920 --> 00:11:13,679 Speaker 1: and our colleague Michael McKee brings us the story. 155 00:11:15,040 --> 00:11:18,480 Speaker 2: We are going to monetize the asset side of the 156 00:11:18,559 --> 00:11:20,960 Speaker 2: US balance sheet for the American people. 157 00:11:21,160 --> 00:11:24,440 Speaker 4: President Trump's executive order for a US sovereign wealth fund 158 00:11:24,520 --> 00:11:28,280 Speaker 4: will require the country to raise trillions of dollars and fast. 159 00:11:28,800 --> 00:11:31,280 Speaker 4: The biggest sovereign wealth fund in the world is Norway's 160 00:11:31,320 --> 00:11:34,800 Speaker 4: worth one point eight trillion. It's run by Nikolai Tangan. 161 00:11:35,160 --> 00:11:37,640 Speaker 5: We have invested in nine thousand companies around the world. 162 00:11:38,120 --> 00:11:40,440 Speaker 5: We own one and a half percent of all the 163 00:11:40,440 --> 00:11:42,360 Speaker 5: equities in the world. I think you need money to 164 00:11:42,400 --> 00:11:44,360 Speaker 5: set it up. I don't think it makes sense to 165 00:11:44,400 --> 00:11:45,640 Speaker 5: borrow money to set it up. 166 00:11:45,880 --> 00:11:48,800 Speaker 6: It's mostly countries that run a surplus, that have access 167 00:11:48,800 --> 00:11:51,800 Speaker 6: cash to spend, that don't need to deficit finance or 168 00:11:52,400 --> 00:11:55,600 Speaker 6: debt issue to finance their deficits. 169 00:11:55,920 --> 00:11:58,600 Speaker 4: MC Command is the head of US rate strategy at 170 00:11:58,600 --> 00:12:00,320 Speaker 4: Bank of America. 171 00:12:00,000 --> 00:12:02,480 Speaker 6: And the US does not meet any of those categories, 172 00:12:02,559 --> 00:12:06,400 Speaker 6: so it would be fairly non traditional across the countries 173 00:12:06,440 --> 00:12:09,240 Speaker 6: who are utilizing sovereign wealth funds today. 174 00:12:09,920 --> 00:12:13,600 Speaker 4: Former tech investment banker from Morgan Stanley Michael Grimes is 175 00:12:13,640 --> 00:12:16,680 Speaker 4: tasked with setting up the new sovereign wealth fund. One 176 00:12:16,679 --> 00:12:19,760 Speaker 4: of the administration's suggestions to raise the money needed is 177 00:12:19,840 --> 00:12:24,400 Speaker 4: by monetizing the country's balance sheet. So what is on 178 00:12:24,520 --> 00:12:25,520 Speaker 4: that balance sheet? 179 00:12:25,880 --> 00:12:28,720 Speaker 6: Well, the Treasury Secretary has talked about this certainly said 180 00:12:28,760 --> 00:12:31,520 Speaker 6: that they do. The current administration does want to try 181 00:12:31,520 --> 00:12:36,240 Speaker 6: and monetize the balance sheet to use all available financial resources. However, 182 00:12:36,400 --> 00:12:39,800 Speaker 6: we struggle to understand exactly what would want to be 183 00:12:39,880 --> 00:12:41,800 Speaker 6: monetized on the balance sheet. 184 00:12:42,000 --> 00:12:44,680 Speaker 4: As of the fiscal year ending September twenty twenty four, 185 00:12:45,080 --> 00:12:48,160 Speaker 4: the US balance sheet shows total assets of five point 186 00:12:48,200 --> 00:12:53,080 Speaker 4: six trillion dollars coming from cash, property, investments, and inventory. 187 00:12:53,800 --> 00:12:57,440 Speaker 4: Also on that balance sheet two hundred metric tons of 188 00:12:57,480 --> 00:13:01,520 Speaker 4: gold valued at about seven hundred and sixty five billion dollars. 189 00:13:02,160 --> 00:13:04,560 Speaker 6: So there is a relationship between the Treasury and FED 190 00:13:04,920 --> 00:13:08,120 Speaker 6: that has set the price of gold essentially nine times 191 00:13:08,160 --> 00:13:11,680 Speaker 6: lower than where the market is today, and there is 192 00:13:12,080 --> 00:13:15,840 Speaker 6: discussion out there about the possibility of remarking gold to 193 00:13:15,960 --> 00:13:20,680 Speaker 6: current value to then generate additional resources that the government 194 00:13:20,760 --> 00:13:26,840 Speaker 6: could utilize. Seems pretty easy and clean in one respect. However, 195 00:13:26,880 --> 00:13:28,679 Speaker 6: we believe it's going to be a bit more complicated 196 00:13:28,679 --> 00:13:33,520 Speaker 6: in practice. Current law suggests that Congress actually sets the 197 00:13:33,640 --> 00:13:37,320 Speaker 6: statutory rate on gold, So Congress would have to be 198 00:13:37,320 --> 00:13:41,160 Speaker 6: the ones who decide to accept a remarking of gold, 199 00:13:41,679 --> 00:13:43,920 Speaker 6: and we are not sure that Congress would necessarily want 200 00:13:43,960 --> 00:13:46,840 Speaker 6: to do that in order to allow the government to 201 00:13:46,880 --> 00:13:50,360 Speaker 6: have more resources that essentially don't need to be paid 202 00:13:50,360 --> 00:13:53,640 Speaker 6: for with deficits or higher treasury issuance that would free 203 00:13:53,720 --> 00:13:57,040 Speaker 6: up It would essentially create money to be spent in 204 00:13:57,080 --> 00:14:02,000 Speaker 6: the economy, almost in ways similar to QE, and in 205 00:14:02,040 --> 00:14:05,200 Speaker 6: an environment with still elevated inflation and some signs that 206 00:14:05,200 --> 00:14:08,200 Speaker 6: inflation expectations are ticking up, we are not so sure 207 00:14:08,200 --> 00:14:11,319 Speaker 6: Congress would want to move in that direction. Now, if 208 00:14:11,320 --> 00:14:15,400 Speaker 6: they choose not to monetize gold on the government's balance sheet, 209 00:14:15,880 --> 00:14:19,200 Speaker 6: then if you look at what other assets could be monetized, 210 00:14:19,560 --> 00:14:24,600 Speaker 6: they generally take you mostly to land, property, and other 211 00:14:24,920 --> 00:14:26,000 Speaker 6: natural resources. 212 00:14:26,160 --> 00:14:29,760 Speaker 4: Plus, if you're talking about remarking gold, the technical way 213 00:14:29,760 --> 00:14:32,280 Speaker 4: of getting that money to the treasury. 214 00:14:32,320 --> 00:14:33,600 Speaker 2: Goes through the Federal Reserve. 215 00:14:34,240 --> 00:14:37,680 Speaker 4: You raise the risk of the FED seeing being seen 216 00:14:37,720 --> 00:14:40,880 Speaker 4: as politicized, and you raise the risk possibly of inflation. 217 00:14:41,240 --> 00:14:46,040 Speaker 6: Absolutely, it would essentially impact the Fed's balance sheet in 218 00:14:46,320 --> 00:14:51,600 Speaker 6: very similar ways to how QE impacts the Fed's balance sheet. However, 219 00:14:51,840 --> 00:14:55,840 Speaker 6: in contrast to QE, you would have the asset that's changing, 220 00:14:56,000 --> 00:14:58,400 Speaker 6: not be securities holdings on the asset side of the 221 00:14:58,400 --> 00:15:01,040 Speaker 6: Fed's balance sheet, but you would have it be gold 222 00:15:01,240 --> 00:15:04,080 Speaker 6: that is increasing. And then if gold does increase, then 223 00:15:04,200 --> 00:15:07,200 Speaker 6: other liabilities on the Fed's balat sheet would naturally need 224 00:15:07,200 --> 00:15:11,000 Speaker 6: to grow. Those would presumably be commercial bank reserves, cash 225 00:15:11,040 --> 00:15:14,800 Speaker 6: that commercial banks hold, or cash in money markets in 226 00:15:14,840 --> 00:15:18,920 Speaker 6: the overnight reverse repo facility. Either way, it essentially grows 227 00:15:18,960 --> 00:15:20,920 Speaker 6: the size of the Fed's balance sheet. It grows the 228 00:15:20,960 --> 00:15:23,560 Speaker 6: money supply, and then that does mean that there are 229 00:15:23,640 --> 00:15:26,240 Speaker 6: greater risks that it could stoke inflation. It certainly gives 230 00:15:26,240 --> 00:15:30,320 Speaker 6: the government more resources to go out and spend on 231 00:15:30,360 --> 00:15:33,120 Speaker 6: whatever it might want to spend on, or to help 232 00:15:33,240 --> 00:15:36,480 Speaker 6: finance the deficit if there's lower revenue growth due to 233 00:15:36,600 --> 00:15:39,520 Speaker 6: a reduction in taxes. So yes, it runs the risk 234 00:15:39,560 --> 00:15:42,160 Speaker 6: of being inflationary, and we doubt that the FED would 235 00:15:42,160 --> 00:15:45,120 Speaker 6: be terribly comfortable with that, given where inflation is today 236 00:15:45,480 --> 00:15:48,360 Speaker 6: and where some measures of inflation expectations are going. 237 00:15:48,920 --> 00:15:52,160 Speaker 4: President Trump has another idea to monetize the ballot sheet. 238 00:15:52,600 --> 00:15:55,600 Speaker 4: He's suggesting the government can sell off its federal buildings 239 00:15:55,760 --> 00:15:59,440 Speaker 4: and properties which fall under property, plant and equipment, coming 240 00:15:59,480 --> 00:16:02,200 Speaker 4: in at around one trillion dollars on the balance sheet. 241 00:16:03,080 --> 00:16:05,560 Speaker 6: We could see a case where they might sell some 242 00:16:05,600 --> 00:16:09,080 Speaker 6: government buildings that are not being utilized, especially with some 243 00:16:09,120 --> 00:16:12,120 Speaker 6: of the other changes taking place in federal employment right now, 244 00:16:13,040 --> 00:16:15,200 Speaker 6: But it's hard for us to envision what else could 245 00:16:15,200 --> 00:16:18,040 Speaker 6: be monetized beyond that. Might they sell land that the 246 00:16:18,040 --> 00:16:21,680 Speaker 6: military is using, possibly, but presumably the military is using 247 00:16:21,720 --> 00:16:25,280 Speaker 6: that for good reason. Could they sell other natural resources 248 00:16:25,360 --> 00:16:28,120 Speaker 6: or treasures like the Statue of Liberty? I hope not, 249 00:16:29,040 --> 00:16:33,240 Speaker 6: but that is a theoretical possibility. So we're just not 250 00:16:33,480 --> 00:16:36,160 Speaker 6: really certain what else they would sell. But if you're 251 00:16:36,160 --> 00:16:38,640 Speaker 6: not going to remark gold, then there are very few 252 00:16:38,640 --> 00:16:42,880 Speaker 6: other options, we think, for them to monetize the asset 253 00:16:43,000 --> 00:16:46,080 Speaker 6: side of the government's balance sheet outside of maybe selling 254 00:16:46,120 --> 00:16:46,840 Speaker 6: some buildings. 255 00:16:47,080 --> 00:16:50,480 Speaker 4: Is there a reason we would necessarily want to run 256 00:16:50,880 --> 00:16:53,880 Speaker 4: a sovereign wealth fund to do these kind of investments 257 00:16:53,920 --> 00:16:57,560 Speaker 4: instead of just doing the investments, say through the International 258 00:16:57,640 --> 00:17:00,160 Speaker 4: Development Bank or something like that. They've been taught for 259 00:17:00,240 --> 00:17:02,280 Speaker 4: years about an infrastructure bank that. 260 00:17:02,280 --> 00:17:05,080 Speaker 6: Sort of thing, sure, or doing them through Congress having 261 00:17:05,160 --> 00:17:09,480 Speaker 6: Congress appropriate funds for these types of purposes. Why would 262 00:17:09,560 --> 00:17:12,320 Speaker 6: you utilize a sovereign wealth fund for that well, presumably 263 00:17:12,359 --> 00:17:16,080 Speaker 6: because it gives the individuals who are overseeing the sovereign 264 00:17:16,080 --> 00:17:19,480 Speaker 6: wealth fund more flexibility as to where investments can be made, 265 00:17:20,240 --> 00:17:22,399 Speaker 6: and presumably it would be done in a way that 266 00:17:22,440 --> 00:17:27,960 Speaker 6: does not require as much congressional authorization or potentially oversight. 267 00:17:28,080 --> 00:17:31,000 Speaker 6: So it's just a more degrees of flexibility I think 268 00:17:31,080 --> 00:17:32,960 Speaker 6: for those who would be overseeing that fund. 269 00:17:33,359 --> 00:17:36,920 Speaker 4: Salar Garamoni is a professor at Penn State University who's 270 00:17:36,960 --> 00:17:39,840 Speaker 4: done some research on what a US sovereign wealth fund 271 00:17:39,880 --> 00:17:43,320 Speaker 4: would mean for the US. Well, the sovereign wealth funds 272 00:17:43,400 --> 00:17:47,800 Speaker 4: we hear about all have wealth. They come from locations 273 00:17:47,880 --> 00:17:50,880 Speaker 4: where there is mineral wealth or something that adds to 274 00:17:50,920 --> 00:17:53,880 Speaker 4: the treasury. The US has a big deficit. We don't 275 00:17:53,880 --> 00:17:55,879 Speaker 4: have sovereign wealth at this point. 276 00:17:56,160 --> 00:17:59,480 Speaker 7: Yeah, it's interesting. There have been very very few, if 277 00:17:59,600 --> 00:18:02,720 Speaker 7: in fact, there may not have been any sovereign wealth 278 00:18:02,720 --> 00:18:06,119 Speaker 7: funds that were not created by some sort of a surplus. 279 00:18:06,200 --> 00:18:09,320 Speaker 7: And as you just noted, we have a deficit and 280 00:18:09,359 --> 00:18:13,000 Speaker 7: we have a national debt and no surplus. There might 281 00:18:13,040 --> 00:18:19,520 Speaker 7: be creative ways to gather assets and put it into 282 00:18:19,560 --> 00:18:22,800 Speaker 7: the portfolio of a sovereign wealth fund. But again I 283 00:18:22,840 --> 00:18:27,879 Speaker 7: would venture out and underline that work creative. So it 284 00:18:28,000 --> 00:18:30,320 Speaker 7: may not be intuitive, but I think there are ways. 285 00:18:31,320 --> 00:18:33,520 Speaker 4: One major challenge that stands in the way of a 286 00:18:33,640 --> 00:18:37,000 Speaker 4: US sovereign wealth fund is the issue of the national debt, 287 00:18:37,200 --> 00:18:39,639 Speaker 4: which runs thirty six trillion dollars deep. 288 00:18:40,040 --> 00:18:42,600 Speaker 7: One of the concerns about the proposed US Sovereign Wealth 289 00:18:42,600 --> 00:18:46,000 Speaker 7: Fund is that is it the most efficient way to 290 00:18:46,359 --> 00:18:50,280 Speaker 7: address the specific reasons for the creation of the sovereign 291 00:18:50,359 --> 00:18:53,679 Speaker 7: wealth fund. For instance, if the reason is to be 292 00:18:54,720 --> 00:19:00,280 Speaker 7: infrastructure spending, Congress has already allocated billions of dollars toward 293 00:19:00,600 --> 00:19:04,200 Speaker 7: trillions of dollars in fact, toward infrastructure spending. So yeah, 294 00:19:04,200 --> 00:19:07,880 Speaker 7: there is a concern that creating a brand new bureaucracy 295 00:19:07,920 --> 00:19:11,639 Speaker 7: to answer whatever the question might be, whether it's potential 296 00:19:11,680 --> 00:19:15,720 Speaker 7: social security shortfalls down the road, whether it's infrastructure projects, 297 00:19:16,680 --> 00:19:22,359 Speaker 7: would it make sense to divert the attention from paying 298 00:19:22,359 --> 00:19:26,240 Speaker 7: for those specific projects and going through a brand new 299 00:19:26,280 --> 00:19:28,720 Speaker 7: bureaucracy to address those issues. 300 00:19:29,160 --> 00:19:32,120 Speaker 4: But there might be some benefits to a potential US 301 00:19:32,160 --> 00:19:33,040 Speaker 4: Sovereign Wealth fund. 302 00:19:33,640 --> 00:19:37,280 Speaker 7: Ideally, if the long term interests financial interests of the 303 00:19:37,400 --> 00:19:40,840 Speaker 7: United States is the primary concern and not so much 304 00:19:40,960 --> 00:19:48,760 Speaker 7: driving geopolitical interests, and that can have legitimacy too. Infrastructure 305 00:19:48,760 --> 00:19:54,119 Speaker 7: projects potentially addressing potential shortcomings of social security and so 306 00:19:54,160 --> 00:19:58,560 Speaker 7: on could potentially be looked at a legitimate usage of 307 00:19:58,600 --> 00:20:01,560 Speaker 7: the Solemn Law Fund. However, there could also be the 308 00:20:01,600 --> 00:20:05,320 Speaker 7: possibility that the Solemn Wealth Fund's primary purpose it's not 309 00:20:05,400 --> 00:20:08,840 Speaker 7: so much the long term financial interests and the financial 310 00:20:08,880 --> 00:20:12,880 Speaker 7: outcomes of the fund itself, but being in line with 311 00:20:12,920 --> 00:20:17,480 Speaker 7: some other national interests, whether it's related to foreign policy 312 00:20:18,119 --> 00:20:19,200 Speaker 7: or whatever else. 313 00:20:20,560 --> 00:20:21,360 Speaker 2: The case might be. 314 00:20:21,920 --> 00:20:24,840 Speaker 4: Where could a fund like that invest, Would it work 315 00:20:24,920 --> 00:20:28,000 Speaker 4: to have it invest in the US, or would it 316 00:20:28,080 --> 00:20:30,639 Speaker 4: need to go overseas to avoid conflicts of interest. 317 00:20:30,840 --> 00:20:34,240 Speaker 7: There are Solemn well funds that are created with specific 318 00:20:34,400 --> 00:20:40,679 Speaker 7: legal mandates of asset allocation strategies and even the asset 319 00:20:40,720 --> 00:20:44,800 Speaker 7: classes in which they can invest. Norwegian legal mandate, for instance, 320 00:20:44,800 --> 00:20:48,600 Speaker 7: for the Norwegian Solemn Well Fund is as specific as 321 00:20:48,640 --> 00:20:52,280 Speaker 7: saying that no more than five percent of the fund's 322 00:20:52,359 --> 00:20:57,639 Speaker 7: assets can be invested in asset class X, and there 323 00:20:57,640 --> 00:21:02,680 Speaker 7: are also percentages specifically these around areas of geography. So 324 00:21:03,280 --> 00:21:07,960 Speaker 7: ideally there should be a legal mandate transparently discussed that 325 00:21:08,280 --> 00:21:13,359 Speaker 7: limits that puts at least constraints on what the solemn 326 00:21:13,400 --> 00:21:16,760 Speaker 7: wealth fund can invest in. Ideally, a good solemn wealth 327 00:21:16,800 --> 00:21:24,960 Speaker 7: fund would be diversified across geographies, across asset classes, across 328 00:21:25,000 --> 00:21:28,760 Speaker 7: even etterteral asset managers, which is something that many solemn 329 00:21:28,840 --> 00:21:30,440 Speaker 7: wealth funds employ. 330 00:21:31,240 --> 00:21:34,080 Speaker 4: The idea of a sovereign wealth fund is not new 331 00:21:34,160 --> 00:21:37,480 Speaker 4: to the twenty US states that have sovereign wealth funds, 332 00:21:37,840 --> 00:21:38,919 Speaker 4: including Alaska. 333 00:21:39,359 --> 00:21:44,399 Speaker 8: It's a way for Alaskans to store their non renewable resource, 334 00:21:44,480 --> 00:21:48,280 Speaker 8: especially oil, mining, minerals, etc. So in nineteen seventy six, 335 00:21:49,200 --> 00:21:52,560 Speaker 8: the state legislature sent to the people of Alaska a 336 00:21:52,600 --> 00:21:57,000 Speaker 8: constitution resolution to constitutionalize the concept of a permanent fund 337 00:21:57,080 --> 00:22:00,680 Speaker 8: in our constitution, and that was successful. Fund was born 338 00:22:00,720 --> 00:22:04,600 Speaker 8: in seventy six. Nineteen eighty the Permanent Fund Dividend came 339 00:22:04,640 --> 00:22:06,960 Speaker 8: into being. This is all as a result of oil 340 00:22:06,960 --> 00:22:09,520 Speaker 8: that was discovered in Alaska and some really really smart 341 00:22:09,560 --> 00:22:13,280 Speaker 8: people that had a lot of foresight. The fear was 342 00:22:13,320 --> 00:22:15,520 Speaker 8: that we would spend all of our oil money and 343 00:22:15,840 --> 00:22:19,000 Speaker 8: we wouldn't have anything for future generations. What the permanent 344 00:22:19,040 --> 00:22:22,320 Speaker 8: Fund does is it captures the woryalties of oil and 345 00:22:22,400 --> 00:22:27,840 Speaker 8: minerals and puts them into a constitutionally protected fund. That 346 00:22:27,880 --> 00:22:32,800 Speaker 8: fund is called the CORPUS. It is invested into equities, private, 347 00:22:33,240 --> 00:22:36,520 Speaker 8: public equities, real estate, et cetera. And the idea is 348 00:22:36,520 --> 00:22:40,000 Speaker 8: to continually grow the fund so that over time we 349 00:22:40,040 --> 00:22:42,040 Speaker 8: will have we will have a fund that can help 350 00:22:42,080 --> 00:22:45,199 Speaker 8: future generations of Alaskans at the same time paying out 351 00:22:45,200 --> 00:22:48,040 Speaker 8: a dividend every year to Cerne Alaskans. About six hundred 352 00:22:48,040 --> 00:22:50,480 Speaker 8: and forty thousand Alaskans would receive a dividend this coming year. 353 00:22:51,359 --> 00:22:53,840 Speaker 4: Just because it's a good idea for his state, that 354 00:22:53,840 --> 00:22:56,959 Speaker 4: doesn't mean Governor Dudley V sees a similar path forward 355 00:22:57,040 --> 00:22:58,640 Speaker 4: for the federal Sovereign Wealth Fund. 356 00:22:59,119 --> 00:23:01,080 Speaker 8: I don't know if it makes sense to borrow money 357 00:23:01,119 --> 00:23:03,439 Speaker 8: to put into the fund, but I think what the 358 00:23:03,600 --> 00:23:05,920 Speaker 8: federal government can do is something similar with you know 359 00:23:06,000 --> 00:23:09,199 Speaker 8: what Alaska has done, and that is royalties on federal lands, 360 00:23:09,440 --> 00:23:14,040 Speaker 8: whether it's oil, whether it's gas, possibly timber mining. Any 361 00:23:14,080 --> 00:23:17,240 Speaker 8: income that's produced on federal lands could actually have some 362 00:23:17,320 --> 00:23:19,119 Speaker 8: of that go into a permanitive fund and grow a 363 00:23:19,160 --> 00:23:22,120 Speaker 8: permit fund, just like Alaska has. So, especially when you're 364 00:23:22,119 --> 00:23:25,160 Speaker 8: looking at non renewable resources oil and gas, it may 365 00:23:25,200 --> 00:23:27,280 Speaker 8: make sense and there is a lot of federal land. 366 00:23:27,840 --> 00:23:30,680 Speaker 8: There are a lot of offshore leases, on shore leases potentially, 367 00:23:31,160 --> 00:23:33,240 Speaker 8: and so you know, it is something to think about. 368 00:23:33,920 --> 00:23:36,880 Speaker 8: We're proud of the Permanive Fund because once again we 369 00:23:36,920 --> 00:23:39,040 Speaker 8: know that we have saved a considerable amount of money 370 00:23:39,240 --> 00:23:40,399 Speaker 8: for future generations. 371 00:23:41,880 --> 00:23:45,919 Speaker 1: Coming up, the strange twisted tale of TikTok and President 372 00:23:45,920 --> 00:23:49,560 Speaker 1: Trump's version of the art of the deal national security style. 373 00:23:50,160 --> 00:24:02,200 Speaker 1: That's next on Wall Street Week. This is a story 374 00:24:02,240 --> 00:24:06,760 Speaker 1: where let's make a deal meets national security. TikTok has 375 00:24:06,800 --> 00:24:09,600 Speaker 1: been something of a pinata, caught between its appeal to 376 00:24:09,640 --> 00:24:12,600 Speaker 1: some one hundred and seventy million Americans and the US 377 00:24:12,680 --> 00:24:16,199 Speaker 1: government that has founded a national security risk. The question 378 00:24:16,440 --> 00:24:20,280 Speaker 1: is whether President Trump's deal making skills can reconcile the two. 379 00:24:20,520 --> 00:24:23,600 Speaker 1: Richard has A's centerview partner, spent over twenty years as 380 00:24:23,640 --> 00:24:25,879 Speaker 1: head of the Council of Foreign Relations and has seen 381 00:24:26,080 --> 00:24:31,440 Speaker 1: his fair share of wheeling and dealing over national security. 382 00:24:31,920 --> 00:24:34,359 Speaker 1: What is the intersection between national security in one hand 383 00:24:34,680 --> 00:24:37,480 Speaker 1: and commercial transactions such as TikTok on the other. 384 00:24:37,840 --> 00:24:40,800 Speaker 9: Well, TikTok's a special one in part because of the 385 00:24:40,920 --> 00:24:44,040 Speaker 9: data that could be captured and transferred. Also the content. 386 00:24:44,160 --> 00:24:46,760 Speaker 9: I'm always struck by the difference between TikTok China and 387 00:24:46,760 --> 00:24:50,440 Speaker 9: TikTok America. Let me just say, TikTok America is the 388 00:24:50,480 --> 00:24:53,199 Speaker 9: equivalent of drinking several cans of soda to day and 389 00:24:53,240 --> 00:24:55,960 Speaker 9: eating an awful lot of candy, whereas TikTok China is 390 00:24:56,040 --> 00:25:00,320 Speaker 9: much more spinach and educational. Plus is the potential obviously 391 00:25:00,440 --> 00:25:03,840 Speaker 9: for political bias and the rest. So I think that's 392 00:25:04,080 --> 00:25:07,679 Speaker 9: influence of security, both in the data transfer way potentially 393 00:25:07,760 --> 00:25:11,400 Speaker 9: as well as in the content way, and I think 394 00:25:11,400 --> 00:25:14,360 Speaker 9: it makes the larger point than in many cases, economic 395 00:25:14,400 --> 00:25:18,200 Speaker 9: transactions do have a national security dimension, whether it's direct 396 00:25:18,280 --> 00:25:18,800 Speaker 9: or indirectly. 397 00:25:18,880 --> 00:25:23,200 Speaker 1: Given that dimension of national security in normal commercial transactions, 398 00:25:23,520 --> 00:25:25,920 Speaker 1: where should the line be, I mean, how far should 399 00:25:26,000 --> 00:25:28,760 Speaker 1: the government go and really interfering with commerce. 400 00:25:29,280 --> 00:25:31,080 Speaker 9: It's a good question. It's hard to give you a 401 00:25:31,160 --> 00:25:33,440 Speaker 9: rule of thumb that's in every instance, but one auto 402 00:25:33,520 --> 00:25:37,439 Speaker 9: at least assess the national security implications. That's why, for example, 403 00:25:37,480 --> 00:25:40,320 Speaker 9: you have Syphius, the Committee on Foreign Investment in the 404 00:25:40,400 --> 00:25:44,600 Speaker 9: United States that looks at when you have incoming, say investment, 405 00:25:44,920 --> 00:25:47,760 Speaker 9: does that give this party access to something that could 406 00:25:48,280 --> 00:25:52,360 Speaker 9: give them therefore data or information or technologies that either 407 00:25:52,359 --> 00:25:55,399 Speaker 9: could give them a competitive advantage or even a strategic advantage. 408 00:25:55,480 --> 00:25:58,840 Speaker 9: I think that's a legitimate screen to have export controls, 409 00:25:58,920 --> 00:26:02,000 Speaker 9: or a second legitimate scree before we ship something overseas, 410 00:26:02,080 --> 00:26:04,720 Speaker 9: we want to say, again, is this giving someone a 411 00:26:04,760 --> 00:26:08,200 Speaker 9: competitive advantage? Could they take this technology, which almost all 412 00:26:08,280 --> 00:26:11,360 Speaker 9: technology is dual use, and use it either for internal 413 00:26:11,400 --> 00:26:15,000 Speaker 9: repression or could something that's meant for say a civilian airliner, 414 00:26:15,080 --> 00:26:19,439 Speaker 9: end up in the cockpit of a military fighter and 415 00:26:19,480 --> 00:26:21,560 Speaker 9: so forth. So I think the idea of asking those 416 00:26:21,640 --> 00:26:25,280 Speaker 9: questions is healthy. Probably also David, in this day and age, 417 00:26:25,320 --> 00:26:29,320 Speaker 9: it's not just security, but against foreign challenge, because of COVID, 418 00:26:29,680 --> 00:26:33,040 Speaker 9: because of natural disasters. At times, we've got to ask questions, 419 00:26:33,080 --> 00:26:36,560 Speaker 9: what do we need to either have domestically produced home shoring, 420 00:26:37,040 --> 00:26:40,919 Speaker 9: near shoring, friend shoring, when we put together supply change 421 00:26:41,160 --> 00:26:44,000 Speaker 9: of critical materials, and so forth. So I think we 422 00:26:44,160 --> 00:26:47,000 Speaker 9: again we need to ask to what degree are we 423 00:26:47,080 --> 00:26:51,640 Speaker 9: comfortable leaving ourselves somewhat vulnerable or open to the vicissitudes 424 00:26:51,680 --> 00:26:54,120 Speaker 9: of what other governments might do, or just simply what 425 00:26:54,160 --> 00:26:55,080 Speaker 9: may happen out there. 426 00:26:55,359 --> 00:26:59,320 Speaker 1: The specific national security concerns surrounding TikTok range from the 427 00:26:59,400 --> 00:27:02,560 Speaker 1: data les from users in the US to the very 428 00:27:02,640 --> 00:27:07,080 Speaker 1: heart of its secret sauce its algorithm. Jennifer Huddleston is 429 00:27:07,119 --> 00:27:10,600 Speaker 1: a Senior Fellow of Tech Policy at the Cato Institute. 430 00:27:10,920 --> 00:27:13,080 Speaker 10: When we look at some of the concerns around the 431 00:27:13,080 --> 00:27:17,199 Speaker 10: TikTok algorithm, for example, is this actually about TikTok, or 432 00:27:17,280 --> 00:27:20,400 Speaker 10: actually about TikTok's tice to China, or is this about 433 00:27:20,440 --> 00:27:22,840 Speaker 10: the way that we see young people using social media 434 00:27:22,920 --> 00:27:27,200 Speaker 10: more generally that may be causing some discomfort from older generations. 435 00:27:27,480 --> 00:27:30,160 Speaker 10: What the national security interest is is actually a bit 436 00:27:30,160 --> 00:27:32,760 Speaker 10: of a debate. One of the things that has been 437 00:27:32,840 --> 00:27:36,800 Speaker 10: pointed to are questions around the data and particularly how 438 00:27:36,840 --> 00:27:41,480 Speaker 10: it relates to a Chinese national security law, and concerns 439 00:27:41,520 --> 00:27:45,000 Speaker 10: that in a way that the Chinese government could lean 440 00:27:45,160 --> 00:27:48,560 Speaker 10: on TikTok's parent company, that could lean on TikTok and 441 00:27:48,680 --> 00:27:51,760 Speaker 10: Singapore that could lean on TikTok us, that could force 442 00:27:51,840 --> 00:27:55,399 Speaker 10: the data on the American users to be given to 443 00:27:55,520 --> 00:27:59,160 Speaker 10: the Chinese Communist Party. But we've also heard it concerns 444 00:27:59,160 --> 00:28:02,720 Speaker 10: expressed more or around the TikTok algorithm or around the 445 00:28:02,760 --> 00:28:07,320 Speaker 10: specific speech on TikTok that some policymakers are considering to 446 00:28:07,359 --> 00:28:11,359 Speaker 10: be propaganda. And the question here then that is raised 447 00:28:11,760 --> 00:28:15,480 Speaker 10: is how do we balance potential concerns about national security, 448 00:28:15,840 --> 00:28:20,880 Speaker 10: particularly related to the data elements, with concerns around free speech, 449 00:28:21,200 --> 00:28:23,840 Speaker 10: Because it's important to remember that not only are we 450 00:28:23,880 --> 00:28:28,360 Speaker 10: talking about TikTok and TikTok's expression rights, we're talking about 451 00:28:28,400 --> 00:28:31,040 Speaker 10: the expression rights of the millions of American users. 452 00:28:31,280 --> 00:28:34,080 Speaker 1: If those are the potential national security interests the data 453 00:28:34,440 --> 00:28:38,280 Speaker 1: and the algorithm, can we in the United States protect 454 00:28:38,520 --> 00:28:41,920 Speaker 1: those national security interests if Byiteden still has any control, 455 00:28:42,000 --> 00:28:45,560 Speaker 1: any ownership at all, of the algorithm or the data. 456 00:28:45,680 --> 00:28:48,240 Speaker 10: This has been one of the important elements of the debate. 457 00:28:48,360 --> 00:28:52,120 Speaker 10: Are there less restrictive means that could address the potential 458 00:28:52,240 --> 00:28:56,200 Speaker 10: national security concerns while not having as significant of an 459 00:28:56,280 --> 00:29:00,360 Speaker 10: impact on the speech, particularly of the American US of 460 00:29:00,400 --> 00:29:02,680 Speaker 10: this platform. So some of the things that have been 461 00:29:02,720 --> 00:29:07,280 Speaker 10: proposed include things like banning TikTok from government devices. This 462 00:29:07,360 --> 00:29:09,440 Speaker 10: is something we've seen done at both a state and 463 00:29:09,480 --> 00:29:12,880 Speaker 10: federal level that has largely been upheld to ensure that 464 00:29:12,880 --> 00:29:17,080 Speaker 10: that data perhaps is more secure. There's also been conversations 465 00:29:17,120 --> 00:29:21,080 Speaker 10: around what was called Project Texas, where TikTok offered to 466 00:29:21,200 --> 00:29:25,080 Speaker 10: localize the American data on Oracle servers in Texas and 467 00:29:25,160 --> 00:29:29,320 Speaker 10: allow the US government additional oversight over that data. The 468 00:29:29,360 --> 00:29:32,480 Speaker 10: other question about the data is is this data actually 469 00:29:32,520 --> 00:29:35,760 Speaker 10: any Is this a particular risk when it comes to 470 00:29:35,840 --> 00:29:39,400 Speaker 10: TikTok's data. Much of this data is already available on 471 00:29:39,480 --> 00:29:42,440 Speaker 10: the market from data brokers. We've also seen that the 472 00:29:42,520 --> 00:29:46,360 Speaker 10: Chinese have engaged in numerous hacks to obtain American data. 473 00:29:46,520 --> 00:29:49,360 Speaker 10: So is the risk of TikTok any bigger than the 474 00:29:49,480 --> 00:29:53,120 Speaker 10: data privacy or data security risk out there more generally? 475 00:29:53,520 --> 00:29:56,000 Speaker 10: And is this something that instead of talking about TikTok, 476 00:29:56,240 --> 00:29:59,040 Speaker 10: we should be talking about data security and data privacy 477 00:29:59,120 --> 00:29:59,800 Speaker 10: more broadly. 478 00:30:00,120 --> 00:30:02,360 Speaker 1: The focus is very much on the administration of President 479 00:30:02,400 --> 00:30:06,120 Speaker 1: Trump right now. But the statute came from Congress. Does 480 00:30:06,200 --> 00:30:11,200 Speaker 1: the Congressional statute have a threshold ownership that if you 481 00:30:11,240 --> 00:30:13,800 Speaker 1: get it down to a certain number, a certain percentage, 482 00:30:13,880 --> 00:30:14,600 Speaker 1: then it's okay. 483 00:30:15,840 --> 00:30:19,040 Speaker 10: So there are percentages in the Congressional Statute. But I 484 00:30:19,040 --> 00:30:22,080 Speaker 10: think what's more interesting is this question of what does 485 00:30:22,080 --> 00:30:25,760 Speaker 10: a qualified divestiture look like? Because the law from Congress 486 00:30:25,840 --> 00:30:29,320 Speaker 10: is very vague on what would actually have to be divested. 487 00:30:29,640 --> 00:30:32,760 Speaker 10: Are we talking about TikTok's brand, Are we talking about 488 00:30:32,760 --> 00:30:36,479 Speaker 10: TikTok's algorithm? Are we talking about the data itself? Because 489 00:30:36,560 --> 00:30:39,680 Speaker 10: this national security concern has also been rather vague. 490 00:30:39,760 --> 00:30:42,840 Speaker 1: Does the president have the ability to extend seventy five days? 491 00:30:43,240 --> 00:30:45,960 Speaker 1: The statute had an initial extension, but I don't remember 492 00:30:46,000 --> 00:30:48,440 Speaker 1: a second extension, So this has. 493 00:30:48,360 --> 00:30:51,719 Speaker 10: Been a really good question. Because the statute had a 494 00:30:51,960 --> 00:30:55,240 Speaker 10: ninety day extension. There were also actions from the Department 495 00:30:55,280 --> 00:30:57,760 Speaker 10: of Justice and a letter sent to some of the 496 00:30:57,760 --> 00:31:00,600 Speaker 10: American companies that could have been subject to the penalties. 497 00:31:00,880 --> 00:31:04,040 Speaker 10: That seems to have been around the potential non enforcement 498 00:31:04,480 --> 00:31:08,080 Speaker 10: of those penalties, ensuring that the app was still available 499 00:31:08,160 --> 00:31:11,760 Speaker 10: to the Americans who have used it for expression. But 500 00:31:11,920 --> 00:31:14,600 Speaker 10: as you mentioned, we've seen this done by executive order 501 00:31:14,640 --> 00:31:17,080 Speaker 10: and executive order kind of like hitting the snooze button 502 00:31:17,160 --> 00:31:20,640 Speaker 10: again and again, which doesn't actually get to that underlying 503 00:31:20,760 --> 00:31:23,520 Speaker 10: question and those underlying issues that are so important to 504 00:31:23,560 --> 00:31:27,040 Speaker 10: this debate. Regardless of what happens to TikTok, at the 505 00:31:27,080 --> 00:31:29,520 Speaker 10: heart of this law is the question of how do 506 00:31:29,560 --> 00:31:33,240 Speaker 10: we balance potential national security concerns with the speech rights 507 00:31:33,240 --> 00:31:37,280 Speaker 10: of millions of Americans, particularly on a popular social media app. 508 00:31:37,520 --> 00:31:40,640 Speaker 10: But more generally, what sort of authority do we allow 509 00:31:40,840 --> 00:31:44,600 Speaker 10: the executive to have to intervene into the app store market, 510 00:31:44,640 --> 00:31:48,920 Speaker 10: to intervene potentially into the speech rights of millions of Americans. 511 00:31:49,480 --> 00:31:52,480 Speaker 10: Even if this continues to be done by executive order, 512 00:31:52,640 --> 00:31:55,400 Speaker 10: even if TikTok lives to see the day, we haven't 513 00:31:55,440 --> 00:31:57,520 Speaker 10: necessarily settled that important debate. 514 00:31:57,640 --> 00:31:59,880 Speaker 9: There is, in principle a deal. Clearly by the way 515 00:32:00,200 --> 00:32:03,200 Speaker 9: President Trump wants a deal for whatever set of reasons. 516 00:32:03,640 --> 00:32:06,040 Speaker 9: I tend not to be in the business of ascribing motives, 517 00:32:06,240 --> 00:32:08,479 Speaker 9: but he is clearly anxious to have a deal. He 518 00:32:08,560 --> 00:32:12,720 Speaker 9: keeps kicking down the stream, down the road, the deadline here, 519 00:32:13,080 --> 00:32:15,520 Speaker 9: But I would just say, whatever the details are at 520 00:32:15,520 --> 00:32:17,560 Speaker 9: the end of the day. In terms of data and content, 521 00:32:17,880 --> 00:32:22,080 Speaker 9: I would also love to see reciprocity, though if we 522 00:32:22,120 --> 00:32:24,360 Speaker 9: do end up with control over both data and content 523 00:32:24,600 --> 00:32:27,560 Speaker 9: then we don't need it. Then essentially we set up 524 00:32:27,560 --> 00:32:29,080 Speaker 9: a parallel situation with China. 525 00:32:29,440 --> 00:32:31,760 Speaker 1: Though everyone is focused on the effect of the ban 526 00:32:31,920 --> 00:32:36,000 Speaker 1: on TikTok, the statute itself is directed not at TikTok 527 00:32:36,360 --> 00:32:39,520 Speaker 1: but at US companies. Including access to the social media 528 00:32:39,600 --> 00:32:41,080 Speaker 1: site over their products. 529 00:32:41,560 --> 00:32:43,720 Speaker 10: I think it's important to also remember when we're talking 530 00:32:43,720 --> 00:32:46,800 Speaker 10: about this particular law, that the burden of the law 531 00:32:46,960 --> 00:32:50,560 Speaker 10: actually falls on American companies. The law says that TikTok 532 00:32:50,680 --> 00:32:53,560 Speaker 10: must divest from its parent company by dance or it 533 00:32:53,640 --> 00:32:57,520 Speaker 10: otherwise bans the distribution, maintenance, or updating of the app. 534 00:32:57,880 --> 00:33:01,000 Speaker 10: That means those that are actually facing penalties are not 535 00:33:01,160 --> 00:33:05,160 Speaker 10: TikTok itself, but our companies like Apple and Google, who 536 00:33:05,200 --> 00:33:07,959 Speaker 10: if they continued to host the app, would be the 537 00:33:07,960 --> 00:33:10,760 Speaker 10: ones that would potentially be facing penalties that have up 538 00:33:10,760 --> 00:33:13,880 Speaker 10: to a five year statute of limitations that could extend 539 00:33:13,920 --> 00:33:15,400 Speaker 10: beyond this current administration. 540 00:33:15,840 --> 00:33:19,520 Speaker 1: And the TikTok case raises some big questions about reciprocity, 541 00:33:19,720 --> 00:33:22,440 Speaker 1: both in the way that China treats US social media 542 00:33:22,480 --> 00:33:25,520 Speaker 1: companies and in what other countries might do to regulate 543 00:33:25,720 --> 00:33:26,560 Speaker 1: US companies. 544 00:33:27,080 --> 00:33:30,240 Speaker 9: It's not like we American social media companies have accessed 545 00:33:30,280 --> 00:33:33,120 Speaker 9: to China in terms of asking them to transfer data 546 00:33:33,240 --> 00:33:37,040 Speaker 9: or allowing us to control content. So this is incredibly 547 00:33:37,080 --> 00:33:37,880 Speaker 9: one side. 548 00:33:37,800 --> 00:33:40,320 Speaker 1: You raise the reciprocity issue going back and forth between 549 00:33:40,400 --> 00:33:43,120 Speaker 1: US and China. Are we opening up the door potentially 550 00:33:43,200 --> 00:33:45,640 Speaker 1: to other countries saying way a second, we don't want 551 00:33:45,680 --> 00:33:48,600 Speaker 1: you to own the data, the algorithm when you're coming 552 00:33:48,600 --> 00:33:49,360 Speaker 1: into our country. 553 00:33:49,600 --> 00:33:51,800 Speaker 9: Quite possibly, And I think the fact that the United 554 00:33:51,840 --> 00:33:56,520 Speaker 9: States has been adopting a more nationalist position, more unilateralist 555 00:33:56,560 --> 00:34:01,200 Speaker 9: position on tariffs and many other aspects of policy on 556 00:34:01,320 --> 00:34:05,440 Speaker 9: America first approach, the Europeans clearly do not feel special 557 00:34:05,760 --> 00:34:08,600 Speaker 9: to say the least. So yes, I think we have 558 00:34:08,680 --> 00:34:11,000 Speaker 9: to expect that we're going to move into a world now, 559 00:34:11,000 --> 00:34:15,960 Speaker 9: we're moving towards a world where alliances and partnerships count 560 00:34:16,000 --> 00:34:18,560 Speaker 9: for less, and others are going to treat us more 561 00:34:18,880 --> 00:34:21,440 Speaker 9: at arm's length and set up the kind of rules 562 00:34:21,440 --> 00:34:24,080 Speaker 9: of visa v the United States that we're increasingly setting 563 00:34:24,160 --> 00:34:24,680 Speaker 9: up Visa VI. 564 00:34:24,760 --> 00:34:29,840 Speaker 1: Them coming up. We've all been caught in those maddening 565 00:34:29,920 --> 00:34:33,239 Speaker 1: flight delays. Is there any way we can save all 566 00:34:33,280 --> 00:34:36,479 Speaker 1: of us some of that time and aggravation. We bring 567 00:34:36,480 --> 00:34:51,640 Speaker 1: you several possible alternatives. Next on Wall Street Week, this 568 00:34:51,719 --> 00:34:54,400 Speaker 1: is a story about kicking the can down the road. 569 00:34:55,080 --> 00:34:58,879 Speaker 1: Big changes in big systems are never easy, and when 570 00:34:58,920 --> 00:35:01,239 Speaker 1: it comes to the way we met manage our airspace, 571 00:35:01,480 --> 00:35:04,839 Speaker 1: one thing is certain. The system is understrained and has 572 00:35:05,000 --> 00:35:08,600 Speaker 1: long needed and overhaul, but for the past thirty years 573 00:35:08,719 --> 00:35:11,640 Speaker 1: it has been easier to kick that can down the road. 574 00:35:12,040 --> 00:35:15,840 Speaker 5: Global tech outages linked to Microsoft and CrowdStrike causing widespread 575 00:35:15,920 --> 00:35:17,640 Speaker 5: business disruptions. 576 00:35:17,040 --> 00:35:20,279 Speaker 11: Thousands of flights being delayed or canceled. I mean this 577 00:35:20,400 --> 00:35:22,240 Speaker 11: is an industry that has had a lot of post 578 00:35:22,280 --> 00:35:25,160 Speaker 11: COVID issues and a lot of issues with investing into 579 00:35:25,160 --> 00:35:26,759 Speaker 11: this exact type of infrastructure. 580 00:35:27,600 --> 00:35:30,920 Speaker 1: In twenty twenty four, airlines reported four hundred and thirty 581 00:35:31,000 --> 00:35:34,680 Speaker 1: seven tarmac delays of more than three hours on domestic flights, 582 00:35:35,000 --> 00:35:38,520 Speaker 1: up from two hundred and eighty nine in twenty twenty three. 583 00:35:38,560 --> 00:35:41,560 Speaker 1: Of all flights last year, more than five percent were 584 00:35:41,560 --> 00:35:45,800 Speaker 1: delayed because of national aviation system issues. Safety, of course, 585 00:35:45,880 --> 00:35:49,319 Speaker 1: is the top priority in regulating flights, and sadly this 586 00:35:49,440 --> 00:35:52,400 Speaker 1: year airline safety has been in the news too often. 587 00:35:52,840 --> 00:35:56,360 Speaker 1: A passenger play and has collided with a military helicopter 588 00:35:56,480 --> 00:35:58,360 Speaker 1: midair in Washington, DC. 589 00:35:58,680 --> 00:36:01,160 Speaker 11: You know that sixty four were on that American Airlines 590 00:36:01,200 --> 00:36:05,520 Speaker 11: commercial flight and three were on that US Army Blackhawk helicopter. 591 00:36:06,360 --> 00:36:09,840 Speaker 1: But despite some recent incidents, flying within the United States 592 00:36:09,960 --> 00:36:14,719 Speaker 1: is remarkably safe. Elaine Chow was the Transportation Secretary under 593 00:36:14,719 --> 00:36:17,000 Speaker 1: President Trump during his first term. 594 00:36:17,520 --> 00:36:19,480 Speaker 11: Well, I think it's important for people to know that 595 00:36:19,560 --> 00:36:22,480 Speaker 11: we have literally the safest system in the world and 596 00:36:22,520 --> 00:36:26,320 Speaker 11: that the United States is still considered basically the gold standard, 597 00:36:26,920 --> 00:36:32,440 Speaker 11: but clearly technology changes and maintenance and repairs need to 598 00:36:32,520 --> 00:36:33,120 Speaker 11: keep up. 599 00:36:34,080 --> 00:36:36,840 Speaker 1: Edward Bollen agree is that the system is safe, but 600 00:36:36,960 --> 00:36:39,799 Speaker 1: that we need to make some investments. He's the head 601 00:36:39,800 --> 00:36:43,080 Speaker 1: of the association representing the private business side of the 602 00:36:43,120 --> 00:36:44,960 Speaker 1: aviation industry. 603 00:36:45,320 --> 00:36:49,440 Speaker 12: We know definitively that is the safest, the most efficient, 604 00:36:50,280 --> 00:36:54,600 Speaker 12: the largest, and the most diverse air transportation system in 605 00:36:54,680 --> 00:36:57,920 Speaker 12: the world by a lot. But we need to be 606 00:36:58,000 --> 00:37:01,799 Speaker 12: investing in the people, the facility, and the equipment to 607 00:37:01,920 --> 00:37:05,880 Speaker 12: make sure that we are able to continue to respond 608 00:37:06,080 --> 00:37:07,279 Speaker 12: in a dynamic way. 609 00:37:08,200 --> 00:37:11,360 Speaker 1: Federal air traffic control in the US began in nineteen 610 00:37:11,520 --> 00:37:15,120 Speaker 1: forty one, and computer technology was added to radars in 611 00:37:15,160 --> 00:37:20,000 Speaker 1: the nineteen sixties thanks to IBM. In February nineteen eighty two, 612 00:37:20,080 --> 00:37:25,000 Speaker 1: the FAA released its first comprehensive plan for improving ATC services. 613 00:37:26,000 --> 00:37:28,319 Speaker 1: This system has been in place for some time now. 614 00:37:28,840 --> 00:37:30,560 Speaker 1: Was it built for this much load and how much 615 00:37:30,640 --> 00:37:32,440 Speaker 1: more loaders are going to be in the future. 616 00:37:32,840 --> 00:37:35,360 Speaker 11: Well, I think the load is going to continue because 617 00:37:36,320 --> 00:37:40,120 Speaker 11: air travel has become democratized ever since nineteen seventy eight 618 00:37:40,120 --> 00:37:44,799 Speaker 11: with the deregulatory aspects of air traffic, passenger traffic, and 619 00:37:44,880 --> 00:37:46,719 Speaker 11: so it's almost as each is to go on an 620 00:37:46,719 --> 00:37:49,200 Speaker 11: airplane as it would be to let's say, a bus, 621 00:37:49,520 --> 00:37:51,600 Speaker 11: and so more and more people are going and now 622 00:37:51,719 --> 00:37:55,560 Speaker 11: we have over billion passengers, and they're accessing the system 623 00:37:55,600 --> 00:37:59,560 Speaker 11: that clearly was not prepared for even a fraction of 624 00:37:59,600 --> 00:38:00,560 Speaker 11: the current volume. 625 00:38:01,440 --> 00:38:04,839 Speaker 1: According to the FAA's preliminary data, there were sixteen point 626 00:38:04,920 --> 00:38:08,319 Speaker 1: eight million flights in the nation's airspace in twenty twenty four, 627 00:38:08,800 --> 00:38:12,920 Speaker 1: an increase of about five hundred thousand from twenty twenty three. 628 00:38:13,400 --> 00:38:16,600 Speaker 11: It's making air travel much more difficult for the consumer. 629 00:38:17,120 --> 00:38:19,520 Speaker 11: How many of us can say within a month that 630 00:38:19,600 --> 00:38:22,520 Speaker 11: we have never been caught in a delay or some 631 00:38:22,640 --> 00:38:26,120 Speaker 11: kind of cancellation, And this is despite the best efforts 632 00:38:26,600 --> 00:38:30,440 Speaker 11: of air traffic controllers and of airlines who want to 633 00:38:30,760 --> 00:38:34,320 Speaker 11: fly frequently so that they can provide a steady service 634 00:38:34,360 --> 00:38:35,440 Speaker 11: to their passengers. 635 00:38:36,440 --> 00:38:39,440 Speaker 1: It's more than just the inconvenience of all those delays. 636 00:38:39,760 --> 00:38:42,320 Speaker 1: The government has taken a hard look at the existing 637 00:38:42,400 --> 00:38:46,360 Speaker 1: air traffic control system and found it to be unsustainable. 638 00:38:47,040 --> 00:38:51,200 Speaker 13: I faded this risk assessment to understand of the existing systems, 639 00:38:51,480 --> 00:38:55,080 Speaker 13: which ones are unsustainable, which ones might be potentially unsustainable 640 00:38:55,840 --> 00:38:59,560 Speaker 13: and need investments to modernize them. Many of these systems 641 00:38:59,600 --> 00:39:01,920 Speaker 13: are each and face long standing challenges. 642 00:39:02,480 --> 00:39:05,920 Speaker 1: Heather Kraus is the managing director of Physical Infrastructure at 643 00:39:05,920 --> 00:39:09,200 Speaker 1: the GAO, which produced a report on the overall state 644 00:39:09,280 --> 00:39:12,520 Speaker 1: of the air traffic control system in the United States 645 00:39:12,520 --> 00:39:16,880 Speaker 1: in March. She testified before Congress about its findings. 646 00:39:17,000 --> 00:39:20,440 Speaker 13: So around seventeen we found to be somewhat concerning in 647 00:39:20,520 --> 00:39:22,719 Speaker 13: terms of the timelines that they have, as well as 648 00:39:23,080 --> 00:39:25,799 Speaker 13: four of those systems not having baselines, so not knowing 649 00:39:25,840 --> 00:39:29,840 Speaker 13: when those systems will be delivered. So important that FA 650 00:39:29,920 --> 00:39:33,400 Speaker 13: focuses on what are the most critical systems, how are 651 00:39:33,440 --> 00:39:36,399 Speaker 13: they going to mitigate risks in the meantime as they 652 00:39:36,560 --> 00:39:40,319 Speaker 13: are working through the modernization efforts and then delivering on 653 00:39:40,360 --> 00:39:42,240 Speaker 13: those modernization plans. 654 00:39:43,040 --> 00:39:45,640 Speaker 1: Washington has been talking about updating the system for at 655 00:39:45,760 --> 00:39:49,919 Speaker 1: least forty years. It's commonly referred to as next gen 656 00:39:50,360 --> 00:39:52,040 Speaker 1: short for next generation. 657 00:39:52,920 --> 00:39:55,799 Speaker 13: So in terms of next gen it's already being deployed 658 00:39:55,920 --> 00:39:58,359 Speaker 13: in the National Airspace system, and so the ways that 659 00:39:58,400 --> 00:40:02,400 Speaker 13: it's improving operation is through various phases of flight and 660 00:40:02,440 --> 00:40:07,640 Speaker 13: really through kind of some key areas. So improvements in communications, 661 00:40:07,880 --> 00:40:13,040 Speaker 13: so for example, communications between pilots and controllers and digitizing 662 00:40:13,120 --> 00:40:18,440 Speaker 13: some of those communications. Navigation improvements to create more efficient 663 00:40:18,600 --> 00:40:22,360 Speaker 13: routes for airplanes to travel from their arrival to destination, 664 00:40:22,560 --> 00:40:26,080 Speaker 13: which leads to efficiency benefits as well as fuel savings. 665 00:40:26,800 --> 00:40:30,399 Speaker 13: There's things also automations, so there's new automation tools being 666 00:40:30,440 --> 00:40:34,000 Speaker 13: added to the system to support the air traffic controllers 667 00:40:34,080 --> 00:40:37,120 Speaker 13: management again of the efficient and safe operation of the 668 00:40:37,200 --> 00:40:41,239 Speaker 13: national airspace system, as well as surveillance, so having better 669 00:40:41,320 --> 00:40:45,680 Speaker 13: situational awareness and ability to more accurately track where aircrafts 670 00:40:45,719 --> 00:40:48,920 Speaker 13: are at. All of those efforts kind of come together, 671 00:40:49,000 --> 00:40:50,879 Speaker 13: and the real goal of next Gen is to kind 672 00:40:50,880 --> 00:40:54,839 Speaker 13: of get to what's called trajectory based operations. What that 673 00:40:55,000 --> 00:40:57,919 Speaker 13: is is really additional data and tools for the controllers 674 00:40:58,040 --> 00:41:01,840 Speaker 13: to better manage and sequence flights from arrival to departure. 675 00:41:02,680 --> 00:41:08,280 Speaker 13: So again controllers they're managing flights with you know, altitude, longitude, 676 00:41:08,280 --> 00:41:12,360 Speaker 13: and latitude, and these tools offer the additional kind of 677 00:41:12,760 --> 00:41:16,120 Speaker 13: considering time as another element of managing the flight, so 678 00:41:16,360 --> 00:41:19,480 Speaker 13: controllers would have an ability to know where and at 679 00:41:19,520 --> 00:41:22,760 Speaker 13: what time aircraft are at key points in a route, 680 00:41:23,239 --> 00:41:27,480 Speaker 13: taking into consideration conditions and other things even before an 681 00:41:27,520 --> 00:41:28,720 Speaker 13: aircraft takes off. 682 00:41:29,840 --> 00:41:33,240 Speaker 1: The long runway for modernizing our air traffic control system 683 00:41:33,320 --> 00:41:36,720 Speaker 1: is a real problem as technology continues to evolve. 684 00:41:37,560 --> 00:41:39,799 Speaker 11: By the time that the air traffic controllers can get 685 00:41:39,840 --> 00:41:42,600 Speaker 11: a new piece of equipment, it's about seven or eight 686 00:41:42,640 --> 00:41:44,880 Speaker 11: years old. It's not as modern as there should be. 687 00:41:45,239 --> 00:41:48,680 Speaker 11: It took forever for the air traffic control system to 688 00:41:48,760 --> 00:41:50,160 Speaker 11: have a GPS system. 689 00:41:50,719 --> 00:41:53,879 Speaker 1: If everyone agrees that the air traffic control system needs 690 00:41:53,920 --> 00:41:57,040 Speaker 1: to move to the next generation, why has it taken 691 00:41:57,160 --> 00:41:59,400 Speaker 1: four decades to get to where we need to be. 692 00:42:00,239 --> 00:42:03,479 Speaker 1: First of all, it is complex and requires great care 693 00:42:03,600 --> 00:42:05,200 Speaker 1: to make sure we get it right. 694 00:42:06,040 --> 00:42:10,120 Speaker 12: The systems themselves have to be certified, and that means 695 00:42:10,160 --> 00:42:14,200 Speaker 12: they have to have a degree of redundancy and resilience 696 00:42:14,280 --> 00:42:17,120 Speaker 12: that is different than what you would see in a 697 00:42:17,160 --> 00:42:21,640 Speaker 12: lot of off the shelf technologies. It's got to be integrated, 698 00:42:21,960 --> 00:42:24,719 Speaker 12: it's got to be certified. So that's part of it. 699 00:42:25,480 --> 00:42:28,240 Speaker 1: That's part of it. But far from the only part. 700 00:42:28,719 --> 00:42:32,040 Speaker 1: What about the controllers who run the system. There's general 701 00:42:32,080 --> 00:42:35,120 Speaker 1: consensus about their being outstanding professionals. 702 00:42:35,960 --> 00:42:37,880 Speaker 11: It's a tribute to the men and women of the 703 00:42:37,920 --> 00:42:41,239 Speaker 11: air traffic control that they can keep the system kind 704 00:42:41,280 --> 00:42:45,799 Speaker 11: of safe and maintained with their expertise. 705 00:42:46,840 --> 00:42:51,480 Speaker 12: Our air traffic controllers are outstanding. They go through a 706 00:42:51,600 --> 00:42:54,840 Speaker 12: very rigorous training process and it takes years. 707 00:42:55,640 --> 00:42:58,520 Speaker 1: But as good as the controllers are, we need more 708 00:42:58,520 --> 00:43:01,960 Speaker 1: of them. We're air traffic controllers in the United States 709 00:43:02,000 --> 00:43:04,560 Speaker 1: in twenty twenty four than in twenty eleven. 710 00:43:05,600 --> 00:43:08,520 Speaker 12: We need to make sure that we are getting enough 711 00:43:08,760 --> 00:43:13,160 Speaker 12: that are being put into place. Currently we're not where 712 00:43:13,200 --> 00:43:16,120 Speaker 12: we need to be. We're anywhere from twenty to twenty 713 00:43:16,160 --> 00:43:18,840 Speaker 12: five percent behind where we would like to be. 714 00:43:19,920 --> 00:43:23,759 Speaker 11: Some people are saying we should increase the age of 715 00:43:23,800 --> 00:43:27,480 Speaker 11: air traffic controllers. Right now, they're maxed out at fifty 716 00:43:27,520 --> 00:43:30,160 Speaker 11: six years old. You know, at fifty six these days, 717 00:43:30,719 --> 00:43:32,520 Speaker 11: we're in much better health than what we used to 718 00:43:32,560 --> 00:43:36,719 Speaker 11: be a generation ago, and so for those that want 719 00:43:36,719 --> 00:43:39,600 Speaker 11: to work beyond fifty six, we should be able to 720 00:43:39,680 --> 00:43:42,040 Speaker 11: allow them to have that option, and currently they don't. 721 00:43:42,920 --> 00:43:45,759 Speaker 1: Even more than the need for more air traffic controllers. 722 00:43:45,880 --> 00:43:48,760 Speaker 1: Is the need to expedite the procurement process for getting 723 00:43:48,800 --> 00:43:51,520 Speaker 1: them the equipment that they need and get it to 724 00:43:51,600 --> 00:43:52,360 Speaker 1: them faster. 725 00:43:53,520 --> 00:43:58,760 Speaker 12: The procurement is a challenging We get money that needs 726 00:43:58,760 --> 00:44:01,880 Speaker 12: to be spent on an annual basis. We'd like to 727 00:44:01,920 --> 00:44:04,879 Speaker 12: see that be more multi year so that we can 728 00:44:04,920 --> 00:44:07,960 Speaker 12: have more money upfront and be able to carry that 729 00:44:08,040 --> 00:44:10,400 Speaker 12: through in a multi year process. 730 00:44:11,160 --> 00:44:14,200 Speaker 1: Secretary Chow agrees that it takes far too long to 731 00:44:14,239 --> 00:44:17,560 Speaker 1: get the latest equipment purchased and deployed, but that it's 732 00:44:17,600 --> 00:44:21,080 Speaker 1: more than just streamlining things. The problem may be in 733 00:44:21,120 --> 00:44:23,560 Speaker 1: the very structure of the system. 734 00:44:24,040 --> 00:44:27,000 Speaker 11: In twenty seventeen, there was an effort under the first 735 00:44:27,040 --> 00:44:33,240 Speaker 11: Trump administration to reorganize the structure of the air traffic 736 00:44:33,280 --> 00:44:36,680 Speaker 11: control and basically it would take the air traffic control. 737 00:44:36,960 --> 00:44:39,640 Speaker 11: It's not privatizing it because it's being put into a 738 00:44:39,680 --> 00:44:45,040 Speaker 11: nonprofit organization, but rather I call it liberating the FAA 739 00:44:45,600 --> 00:44:49,360 Speaker 11: and the air traffic Control, basically liberating the air traffic 740 00:44:49,360 --> 00:44:54,640 Speaker 11: control from FA and even more succinctly, the federal government, 741 00:44:55,160 --> 00:44:59,520 Speaker 11: so that air traffic control, like many others structured like 742 00:44:59,600 --> 00:45:03,279 Speaker 11: this around the world, would be their own entity. They 743 00:45:03,320 --> 00:45:07,040 Speaker 11: would have their own nonprofit status, they would have their 744 00:45:07,080 --> 00:45:11,319 Speaker 11: own board of directors, but more importantly, they would use 745 00:45:11,480 --> 00:45:15,279 Speaker 11: their own funding of resources and be able to use 746 00:45:15,320 --> 00:45:17,080 Speaker 11: it for long term planning. 747 00:45:18,040 --> 00:45:20,560 Speaker 1: As you look around the world, has anyone done this? 748 00:45:20,680 --> 00:45:22,719 Speaker 1: Can we go to school in any other country in 749 00:45:22,719 --> 00:45:23,360 Speaker 1: the way they've. 750 00:45:23,160 --> 00:45:24,560 Speaker 2: Handled this well. 751 00:45:24,600 --> 00:45:28,960 Speaker 11: Canada is a primary example, Great Britain, Australia. There are 752 00:45:28,960 --> 00:45:33,160 Speaker 11: many other countries who have taken air traffic control out 753 00:45:33,200 --> 00:45:37,359 Speaker 11: of the government process and put it separately in its 754 00:45:37,440 --> 00:45:42,839 Speaker 11: own nonprofit organization. And by doing that it allows this 755 00:45:42,960 --> 00:45:48,120 Speaker 11: nonprofit air traffic control system to plan ahead, have control 756 00:45:48,160 --> 00:45:52,160 Speaker 11: over one hundred percent of its budget, and be able 757 00:45:52,200 --> 00:45:56,200 Speaker 11: to purchase equipment at a very timely rate and very 758 00:45:56,239 --> 00:45:57,279 Speaker 11: efficiently as well. 759 00:45:58,120 --> 00:46:02,720 Speaker 1: Not everyone agrees with Secretary about splitting the safety responsibilities 760 00:46:02,760 --> 00:46:05,680 Speaker 1: from the day to day operations and taking the latter 761 00:46:05,960 --> 00:46:07,640 Speaker 1: out of the government altogether. 762 00:46:08,400 --> 00:46:11,000 Speaker 12: What we want to do is make sure the United 763 00:46:11,000 --> 00:46:14,560 Speaker 12: States stays the world leader. We can do that by 764 00:46:14,640 --> 00:46:17,279 Speaker 12: looking at what they're doing in other countries and what 765 00:46:17,440 --> 00:46:21,239 Speaker 12: has candidly not worked well. So when we look at 766 00:46:21,480 --> 00:46:26,080 Speaker 12: countries around the world like Canada, the United Kingdom, Australia, 767 00:46:26,280 --> 00:46:30,240 Speaker 12: New Zealand that have privatized their air traffic control system, 768 00:46:30,600 --> 00:46:33,560 Speaker 12: we see a number of challenges in terms of their 769 00:46:33,640 --> 00:46:39,120 Speaker 12: air traffic controllers, their technology, their delays, and most importantly, 770 00:46:39,400 --> 00:46:40,280 Speaker 12: safety issues. 771 00:46:41,239 --> 00:46:43,880 Speaker 1: Whatever the changes, no one seems to doubt that they 772 00:46:43,920 --> 00:46:46,600 Speaker 1: need to come and need to come sooner rather than 773 00:46:46,680 --> 00:46:50,239 Speaker 1: later for the sake of the airline business, the convenience 774 00:46:50,280 --> 00:46:53,400 Speaker 1: of all of us flying, and ultimately to make sure 775 00:46:53,440 --> 00:46:55,760 Speaker 1: the US maintains its safety record. 776 00:46:56,560 --> 00:46:59,279 Speaker 12: It is key at all of the different parts of 777 00:46:59,320 --> 00:47:02,799 Speaker 12: the aviation system have really come together and sending a 778 00:47:02,840 --> 00:47:06,920 Speaker 12: message to Capitol Hill about what we can do to 779 00:47:07,080 --> 00:47:11,160 Speaker 12: advance our air transportation system. It's not enough to be 780 00:47:11,280 --> 00:47:14,279 Speaker 12: the safest and the most efficient, the largest, and the 781 00:47:14,320 --> 00:47:15,680 Speaker 12: most diverse in the world. 782 00:47:16,360 --> 00:47:20,480 Speaker 13: It is still safe to fly. That said, continued reliance 783 00:47:20,520 --> 00:47:24,080 Speaker 13: on aging systems does diminish the margin of safety and 784 00:47:24,160 --> 00:47:28,000 Speaker 13: adds additional stress to the national airspace system, which is 785 00:47:28,000 --> 00:47:31,480 Speaker 13: really why it's important that FAA improve the management and 786 00:47:31,520 --> 00:47:33,760 Speaker 13: oversight of its modernization efforts. 787 00:47:36,560 --> 00:47:38,359 Speaker 1: That does it for us. Here at Wall Street Week, 788 00:47:38,520 --> 00:47:41,359 Speaker 1: I'm David Weston. This is Bloomberg. See you next week 789 00:47:41,400 --> 00:47:55,520 Speaker 1: for more stories of capitalism.