Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Balance of Power podcast. Catch Just Live weekdays at
Speaker 1: noon Eastern on Apple car Play and then Roud Otto
Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 2: Here in Washington, where we find a number of Cabinet
Speaker 2: nominee spending time today. The visits continue in the Senate
Speaker 2: on Capitol Hill for a number of designates for secretary positions,
Speaker 2: including as we mentioned, Scott Bessant holding his first round
Speaker 2: of talks today, but more controversial nominees as well, including
Speaker 2: Pete Hegseth, the nominee for Secretary of Defense. He had
Speaker 2: an interesting and arguably important meeting today Joe with the
Speaker 2: Senator from Maine, Susan Collins, who is well understood to
Speaker 2: be one of the most moderate Republicans in the Chamber
Speaker 2: given the state that she represents, And after that meeting,
Speaker 2: Seth said he hopes to earn Collins's support, So trying
Speaker 2: to speak positively about this, but this one's still a
Speaker 2: question mark.
Speaker 3: Well, yeah, positive to a point, that's far from an endorsement.
Speaker 3: You know, you compare that to what we've heard from
Speaker 3: Jony Ernst, Susan Collins today, Lisa Murkowski yesterday, the Republican
Speaker 3: from Alaska also to your point, having some issues with
Speaker 3: some of the allegations that have been levied against Pete Hegseth,
Speaker 3: all of which he denies, of course, sexual assault allegations,
Speaker 3: questions about his alcohol use seem to be fading the
Speaker 3: more he meets with senators here, and a lot of
Speaker 3: it has to do with, based on our reporting at Bloomberg,
Speaker 3: a pressure campaign, Susan Collins, Lisa Murkowski getting a real
Speaker 3: earful from Republicans who want to see Donald Trump's nominees
Speaker 3: be confirmed.
Speaker 2: Yeah, the question is really going to be for the
Speaker 2: senators who have reelection fights coming up just two years
Speaker 2: from now. Twenty twenty six is not all that far
Speaker 2: away politically. Do you want to risk getting a challenge
Speaker 2: from the right and your entire political future, arguably over
Speaker 2: a no vote on one of the presidental ecnomics.
Speaker 3: Let's get into it with our panel. Genie Schanzeno is
Speaker 3: with US Democratic analyst, Bloomberg Politics contributor and political science
Speaker 3: professor at Ioni University alongside Republican strategist Lester Munson from
Speaker 3: the International practice at BGR Group. Great to see you both. Lester,
Speaker 3: your thoughts on the pressure campaign. We've been hearing more
Speaker 3: about it than really any confirmation process we've seen in
Speaker 3: recent memory. Are these phone calls and meetings par for
Speaker 3: the course in a Trump world?
Speaker 4: I suppose these are? You know, some of these groups
Speaker 4: that are that are active making calls and kind of
Speaker 4: generating some constituent interest have been in this role before,
Speaker 4: putting pressure inside the Republican Party on kind of from
Speaker 4: the right towards the middle. So this is this is
Speaker 4: not unusual. This at the end of the day, are
Speaker 4: these senators. Are these sitting senators going to read that
Speaker 4: threat as credible or not? You wisely pointed out, They're
Speaker 4: thinking about their re election chances and how this will play.
Speaker 4: That's how the system works. Can they get through the
Speaker 4: primary to a general? You know, the constituency in the
Speaker 4: primary maybe very different than the general election, so they
Speaker 4: have to worry about both of those, which means they
Speaker 4: could be threading a pretty tight needle here on this vote.
Speaker 4: And the delay we're seeing is as important as anything.
Speaker 4: So the longer Hegseth can stay as the nominee without
Speaker 4: having to withdraw, I think probably the better it is
Speaker 4: for him as these some of the allegations maybe get
Speaker 4: put in perspective or toned down or just not seen
Speaker 4: as serious. Perhaps. Nevertheless, it does highlight the thing we
Speaker 4: talked about a couple segments ago that Republicans may have
Speaker 4: a little bit of a woman problem here. There's no
Speaker 4: women in the leadership in committee leadership on the House side,
Speaker 4: and now we're dealing with some tough personal behavior with
Speaker 4: a nominee here. So there's some bigger issues to think
Speaker 4: about as well.
Speaker 2: So as we consider this question around a primary challenge
Speaker 2: for some of these individuals, Genie, I do wonder what
Speaker 2: Senator Tim Scott must think about this as the incoming
Speaker 2: chair of the NRSC, who is essentially his job is
Speaker 2: to make sure Republicans either stay in the Senate or
Speaker 2: get elected to it. And on the flip side of that,
Speaker 2: is it the best news possible for Democrats if some
Speaker 2: of these people decide to vote no on a Trump
Speaker 2: nominee and potentially not only keep that nominee from getting confirmed,
Speaker 2: but potentially open up opportunity if there is a far
Speaker 2: right challenge for a pickup in states like North Carolina
Speaker 2: or Maine in the midterms.
Speaker 1: Yeah.
Speaker 5: Absolutely, It's one of the benefits of being in the minority.
Speaker 5: You could sort of sit back and watch this play
Speaker 5: itself out. You know. I think we also, though, have
Speaker 5: to consider the facts. I looked up today the incumbency
Speaker 5: reelection rate in the Senate. Now, these are real threats,
Speaker 5: but the reality is in twenty twenty four, the incumbency
Speaker 5: reelection rate was ninety one percent. In twenty twenty t
Speaker 5: it was a whopping one hundred percent. So absolutely, there
Speaker 5: can be primary challenges. But if there's one thing our
Speaker 5: incumbent senators do well, it is get re elected. So
Speaker 5: this is a real threat, but one that they are
Speaker 5: perfectly situated to combat. And the other side of that is,
Speaker 5: you know, you look at somebody like Susan Collins, and
Speaker 5: you know, I couldn't agree more with Lester about the
Speaker 5: issue of women in the Republican Party. But you look
Speaker 5: at Susan Collins, the reality is she's a little bit
Speaker 5: like a Joe Manchin on the other side Republicans to
Speaker 5: your point, Kaylee, you know, you look at Scott they
Speaker 5: have to be very, very careful because they don't want
Speaker 5: to lose this seat to a Democrat, and in fact,
Speaker 5: her voting against one or more of these Republican Trump
Speaker 5: nominees may actually help her in a state like Maine.
Speaker 5: So there's a lot of nuances as you look at
Speaker 5: this on a state by state basis. So these threats
Speaker 5: are real, but they may not be impactful in two years.
Speaker 3: We were talking earlier this about a piece in the
Speaker 3: Washington Post today, Lester pointing out some of the tough
Speaker 3: rhetoric that we've heard from these nominees, specifically Tulsey Gabbard
Speaker 3: and Kaylee RFK Junior was part of this conversation. Comments
Speaker 3: about Donald Trump that have been made in fairly recent history,
Speaker 3: some of these I can't read on the air. Gabbard
Speaker 3: has accused Donald Trump of turning the US into Saudi
Speaker 3: Arabia's a word that rhymes with rich twice, compared him
Speaker 3: to a pimp, called him a self serving politician, unfit
Speaker 3: to serve as president, and commander in chief, said he
Speaker 3: has the blood of Kurds on his hands. I can
Speaker 3: keep going here. I mean, it's quite the gallery of language. Again,
Speaker 3: some of it I can't repeat. Does any of it matter?
Speaker 3: She's talking about senators here as well, calling Roger Wicker insane,
Speaker 3: a sociopath or a sadist. How does that play in
Speaker 3: a hearing?
Speaker 4: Well, probably not well. She's a terrific subplot to this
Speaker 4: larger narrative. I think the question is going to be
Speaker 4: does she get canceled after a couple of episodes or
Speaker 4: she going to make it all the way through the season.
Speaker 4: There's a lot of personality here, a lot of a
Speaker 4: lot of drama. Her nomination maybe end up being the
Speaker 4: one that's most most like a roller coaster. We'll see
Speaker 4: how long it lasts. I think if in all seriousness,
Speaker 4: she's got some constituencies out there that are very concerned
Speaker 4: about her nomination, constituencies that matter, if she can go
Speaker 4: make peace with them, she might survive this process. If
Speaker 4: she's not willing to do that, if she continues to
Speaker 4: have some of these frankly very outside the mainstream views
Speaker 4: on foreign policy issues, I think she's not going to
Speaker 4: make it all the way through.
Speaker 2: Well, as we consider this notion that Donald Trump is
Speaker 2: by and large picking people who are loyal to him now,
Speaker 2: even if they weren't always, Genie, I do want to
Speaker 2: get your take on what we learned yesterday his nomination
Speaker 2: for ambassador to Greece Kimberly Gilfoyle, who least was engaged
Speaker 2: to his son Don Junior. There's a lot of reporting
Speaker 2: that suggests perhaps that engagement is off now, but it's
Speaker 2: just another example of someone who is actually, at least
Speaker 2: potentially by marriage or intended to by marriage, be part
Speaker 2: of the President of X family serving in his administration.
Speaker 5: Yeah. Absolutely. You know, it's not unusual, as we all know,
Speaker 5: for presidents to appoint ambassadors for various reasons. You know,
Speaker 5: I'm a big New York Posts Page six fan Kayley,
Speaker 5: so I read it a lot, so I'm all up
Speaker 5: to date on what they're saying about the what was
Speaker 5: I guess an engagement and may or may not be
Speaker 5: on right now. You know, the reality is this is
Speaker 5: pretty common practice. It was one of the things that
Speaker 5: Joe Biden actually tried to put a halt to, saying
Speaker 5: you need people with more serious foreign policy credentials in
Speaker 5: the ambassador role. Obviously, this comes back with the Trump administration,
Speaker 5: and you know, it's something that we've long seen in
Speaker 5: the US, and I think it is going to raise
Speaker 5: some concern But if the engagement is off. Maybe this
Speaker 5: is best for Don Junior if she's over in Greece.
Speaker 5: I don't know.
Speaker 3: Wow, there's so much I have to learn about still
Speaker 3: the engagements. I don't know about any of the stuff.
Speaker 2: Well, that's unconfirmed by Bloomberg. Okay, you know, check the
Speaker 2: internet and see what you find.
Speaker 1: I've got.
Speaker 3: It's all there. Great panel, Jeanie Shanze know Lester months
Speaker 3: and you never know what you're going to learn around here.
Speaker 3: Important conversation, though, as we continue to follow what's happening
Speaker 3: with regard to this transition, we'll have a lot more
Speaker 3: for you as these meetings occur and we get closer
Speaker 3: to actual hearings. Coming up, an important interview today in Washington,
Speaker 3: Kayley exclusive here on Bloomberg with Jenna Allen, the Treasury
Speaker 3: Secretary sitting down with David Girl. Will have a taste
Speaker 3: of that coming up.
Speaker 2: Yeah, and we'll have reaction to that conversation from economist
Speaker 2: Lindsay Owens of the Groundwork Collaborative. So stick with us
Speaker 2: here on Bloomberg TV and radio.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Kens
Speaker 1: Just Live weekdays at noon Eastern on Apple car Play
Speaker 1: and then Ronoo with the Blue Birth Business Act. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station, Just Say Alexa play Bloomberg eleven thirty.
Speaker 2: Thank you for joining us on this Wednesday edition. It
Speaker 2: just happens to be Wednesday, December eleventh, and that reminds
Speaker 2: me that we haven't mentioned the countdown clock yet. That's
Speaker 2: right this hour, Joe, nine days to go until government
Speaker 2: funding expires. No one is expecting that there will be
Speaker 2: a shutdown. There's going to be a solution of some kind,
Speaker 2: very likely a continuing resolution that will go till mid March,
Speaker 2: when we're all be roughly halfway through the fiscal year
Speaker 2: that this budget was supposed to be addressing. Putting a
Speaker 2: spotlight on the shall we say, difficult fiscal picture of
Speaker 2: the United States.
Speaker 3: Well, look, how many economists have we talked to you
Speaker 3: on this program about the impact of extending or making
Speaker 3: permanent the Trump tax cuts combined with tariffs when there
Speaker 3: is no obvious way to pay for it. It turns
Speaker 3: our attention to ballooning deficits, and something that can came
Speaker 3: up today with some parting remarks from Janet Yellen, who
Speaker 3: sat down exclusively with Bloomberg's David Gore.
Speaker 6: Here, she is, well, I am concerned about the fiscal outlook,
Speaker 6: and I believe the deficit reduction is necessary to keep
Speaker 6: us on a sustainable fiscal course.
Speaker 2: Now.
Speaker 6: President Biden signed into law a trillion dollars of deficit
Speaker 6: reduction over the next ten years. He did that in
Speaker 6: the agreement to raise the debt ceiling. And our budget
Speaker 6: proposes an additional three trillion dollars of deficit reduction over
Speaker 6: ten years, and I think that's necessary to make sure
Speaker 6: that our fiscal path is sustainable. Now, Congress hasn't really
Speaker 6: done anything to, you know, beyond what I've mentioned, to
Speaker 6: improve the fiscal outlook, and I think that's a shame.
Speaker 6: I'm disappointed in that, and I think Congress needs to
Speaker 6: work hard on that. There is a threat going forward
Speaker 6: that many of the provisions on the individual tax side
Speaker 6: of the Jobs, Job Cuts and Tax Act JCTA enacted
Speaker 6: by the Trump administration in Congress in twenty seventeen, they
Speaker 6: will sunset at the end of next year, and many
Speaker 6: Republicans have expressed a desire to keep all those provisions
Speaker 6: in place. Cbo said that will cost five trillion dollars
Speaker 6: over ten years. So that really is and so that
Speaker 6: would be a blow in a situation where I believe
Speaker 6: an additional three trillion, that not doing the five trillion
Speaker 6: and three trillion more is necessary, and if the provisions
Speaker 6: are just extended, this will be a serious blow without
Speaker 6: finding ways to pay for them. We proposed a lot
Speaker 6: of pay fors that we think would fairly ask corporations,
Speaker 6: wealthy individuals to pay their fair share. We've negotiated an
Speaker 6: international tax agreement that would create a level playing field
Speaker 6: worldwide for multinationals. The United States has not yet joined,
Speaker 6: although many other countries have, and that would be a
Speaker 6: revenue raising measure that I think would be very valuable,
Speaker 6: and there is certainly more so I do hope that
Speaker 6: the new administration and Congress will, if they extend features
Speaker 6: of JCTA, find ways to pay for what they do
Speaker 6: and also make sure that the benefits go not to
Speaker 6: the wealthiest individuals but to middle class families.
Speaker 3: The Treasury Secretary, at least for a few more weeks,
Speaker 3: Jennet Yellen speaking exclusively with Bloomberg. She talked about a
Speaker 3: lot more as well, including the notion of a shadow
Speaker 3: fed chair and you can find the full conversation on
Speaker 3: the terminal and will be posted on the Big Take
Speaker 3: podcast when that drops tomorrow. David Gerro was speaking for
Speaker 3: Bloomberg TV as well as the podcast Bloomberg Radio. They
Speaker 3: covered a lot of ground.
Speaker 2: Kellie, Yeah, but this deficit conversation is important one to
Speaker 2: consider as we look forward to this new administration that
Speaker 2: will be coming in. Scott Bessen of course, will be
Speaker 2: taking over Janet Allen's current role, and Donald Trump will
Speaker 2: be President of the United States pushing for a long
Speaker 2: list of tax cuts in addition to the extension of
Speaker 2: his twenty seventeen tax package. So for more on this,
Speaker 2: we turned to Lindsay Owen. She is from the Groundwork Collaborative,
Speaker 2: where she is executive director. She's also a former senior
Speaker 2: economic policy advisor to Democratic Senator Elizabeth Warren. Lindsay, welcome
Speaker 2: back to balance of power. When we consider these kind
Speaker 2: of tax oriented questions which we know we will be
Speaker 2: dealing with next year, to what extent is this about
Speaker 2: considering a medium to long term impact, which is obviously
Speaker 2: a higher United States deficit versus the near one, The
Speaker 2: near term one that Republicans and the Trump incoming Trump
Speaker 2: administration argue will mean higher growth and more money in
Speaker 2: the pockets of American people.
Speaker 7: Yeah, if you're a top concern around the American economy
Speaker 7: is fiscal sustainability. If you're worried about the debt or
Speaker 7: the deficit, you are in for a root awakening next
Speaker 7: year because Donald Trump and Congressional Republicans are already hard
Speaker 7: at work in the tax writing committees working on a
Speaker 7: budget but sting tax package of additional cuts, tax cuts
Speaker 7: for the wealthy and possibly even more for corporations. You know,
Speaker 7: as Yellen said, we know because the Congressional Budget Office
Speaker 7: has already weighed in just extending the status quo, the
Speaker 7: tax cuts that Trump passed in twenty seventeen that are
Speaker 7: slated to sunset and expire at the end of next year.
Speaker 7: Merely extending those for the next ten years is going
Speaker 7: to cost nearly five trillion dollars. So we are definitely
Speaker 7: not headed to a better place from a fiscal sustainability perspective.
Speaker 7: But this isn't really that surprising. When we get a
Speaker 7: Republican trifecta, we get tax cuts and we get budget deficits.
Speaker 7: That's what happened when President Trump took office in seventeen.
Speaker 7: That's what we saw with Bush and the Bush tax cuts.
Speaker 7: So I think we've seen this movie before. We know
Speaker 7: what to expect next year. You know, we absolutely should
Speaker 7: be in a position to let those tax cuts expire
Speaker 7: on schedule if our focus is budget deficits. I mean,
Speaker 7: there are also other good reasons to let those tax
Speaker 7: cuts expire, including it would decrease income and equality in
Speaker 7: this country. But that's obviously not where we're headed. You know,
Speaker 7: if congressional Republicans are able to move through their planned
Speaker 7: tax cuts.
Speaker 3: Well, of course we've talked about this idea of the
Speaker 3: tax cuts combined with the tariffs becoming something even greater.
Speaker 3: Scott Bessen has talked to us about it here at
Speaker 3: the table, suggesting you cannot take one element of the
Speaker 3: plan in a vacuum. You have to put it all together.
Speaker 3: They also point, Lindsey, as you well know, to rising
Speaker 3: revenues following the Trump tax cuts when they were first
Speaker 3: implemented in twenty seventeen, suggesting that COVID got in the way,
Speaker 3: that the pandemic distorted what came next. How do you
Speaker 3: respond to that?
Speaker 7: Yeah, I mean there's there were a lot of promises
Speaker 7: made in twenty seventeen about the long term outlook of
Speaker 7: the tax cuts. One of the promises made was that
Speaker 7: the tax cuts would pay for themselves. Obviously that was
Speaker 7: not born out. You know, we know that the tax
Speaker 7: cuts cost one point nine trillion dollars when all this
Speaker 7: said and done. You know, there was a peereriod of
Speaker 7: time when the Trump administration was also promising that every
Speaker 7: family would see a four thousand dollars increase in their
Speaker 7: wages because of the tax cuts, and that also didn't
Speaker 7: come true. So I'm not holding my breath for you
Speaker 7: know more kind of mythical supply side economics, you know,
Speaker 7: results from tax cuts. You know the data then on this,
Speaker 7: we have legions of academic research that shows that these
Speaker 7: tax cuts won't pay for themselves. What they will do
Speaker 7: is boost the bottom lines for shareholders who will see big,
Speaker 7: you know, big benefits.
Speaker 2: Well, there's also the question of the impact both the
Speaker 2: tax and tariff side of the equation that Joe was
Speaker 2: referencing will have on inflation. When the Fed is trying
Speaker 2: to get closer to declaring outright victory on that, lindsay,
Speaker 2: we've course got CPI this morning, for the fourth month
Speaker 2: in a row, a three tenth of a percent rise
Speaker 2: in core CPI xing out food and energy. Is this
Speaker 2: all the justification necessary for a FED cut next week
Speaker 2: for now? And then what happens once we get into
Speaker 2: twenty twenty five.
Speaker 5: Yeah?
Speaker 7: I think CPI came in today sort of right on schedule,
Speaker 7: right in line with expectations, and as a result, I
Speaker 7: do anticipate the Fed will move forward with their planned
Speaker 7: cut next week, you know, headed into next year is
Speaker 7: a really interesting question. I do think if what we
Speaker 7: see in terms of economic policy in Washington is tax
Speaker 7: cuts for the wealthy and higher prices for everyone else,
Speaker 7: the inflation outlook will deteriorate considerably. So that's obviously something
Speaker 7: that we're concerned about and watching closely. But as it
Speaker 7: stands right now, you know, inflation is still, you know,
Speaker 7: off of its peak. We're in a reasonably good place
Speaker 7: inflation wise, and I think the FED is in a
Speaker 7: reasonably good place as well.
Speaker 3: Interesting statement from Lale Brainers coming out of the White
Speaker 3: House for four months in a row now, she writes,
Speaker 3: inflation has been close to the level right before the pandemic.
Speaker 3: It's almost like an almost mission accomplished sign they almost
Speaker 3: made it. Lindsay, how would you describe the job done here?
Speaker 3: I know we get one more data point before they
Speaker 3: leave office, but the job done and beating inflation.
Speaker 7: Yeah, Look, I mean, I think the Biden administration has
Speaker 7: a lot to be pretty proud of. You know, they
Speaker 7: came in during an incredibly tumultuous economic period and a
Speaker 7: tumultuous period for the country more broadly, right, we were
Speaker 7: in the throes of a devastating, once in a century pandemic.
Speaker 7: The unemployment rate had come up above six percent, and
Speaker 7: then you know, shortly thereafter we started to see the
Speaker 7: surgeon inflation and late twenty twenty one, and you know,
Speaker 7: they leave office more or less having taken care of
Speaker 7: all of those issues. Right, the pandemic has subsided. Unemployment
Speaker 7: is back down to pre pandemic levels, Job growth is nice,
Speaker 7: wages are beating prices, household incomes are looking nice, and
Speaker 7: inflation as inched down to close to that pre pandemic
Speaker 7: level and very near the FEDS two percent target. So
Speaker 7: they have a lot to be proud of. Obviously. You know,
Speaker 7: the sort of electoral benefits of that work, you know,
Speaker 7: are are sort of vexing and frustrating to them. But
Speaker 7: I think you know, just on the numbers calling balls
Speaker 7: and strikes here, you know, they've done a really nice
Speaker 7: job with the economy, and I think it is really
Speaker 7: a testament to their approach, which was to center increasing
Speaker 7: worker power, to center making federal investments in in markets
Speaker 7: and the economy so that we could have those good
Speaker 7: paying jobs that have been powering that record job growth
Speaker 7: month over month. And then also they've done a really
Speaker 7: exceptional job in curbing the worst excesses of corporate power
Speaker 7: we saw just yesterday the court agreed with the Federal
Speaker 7: Trade Commission to block the merger of Kroger and Albertson's.
Speaker 7: I mean, that's certainly something that would have resulted in
Speaker 7: a spike and grocery prices for families. Obviously, we have
Speaker 7: you know, web dot storm for now.
Speaker 3: Lindsay gets great to have you back, Lindsay Owens with
Speaker 3: the Groundwork Collaborative, where she's executive director, former senior economic
Speaker 3: policy advisor to Senator Elizabeth Warren. It's great to have
Speaker 3: you back here. On this day, we spend some time
Speaker 3: with Janet Yellen and the incoming likely Treasury Secretary is
Speaker 3: making rounds today on Capitol Hill. That FTC appointment, by
Speaker 3: the way, awfully interesting because it's someone we actually know about,
Speaker 3: a Republican member of the Commission with a track record.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
Speaker 1: us live weekdays at noon Eastern on Applecarplay and Enrounoto
Speaker 1: with the Bloomberg Business app Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 3: I'm Joe, Matthew and Washington. As we turn to animal spirits,
Speaker 3: you can't get to this without talking about the next
Speaker 3: at least Donald Trump hopes will be the next head
Speaker 3: of the FTC. This is one that broke yesterday here
Speaker 3: Andrew Ferguson to replace Lena Kahn. Now I get back
Speaker 3: to this idea of animal spirits is partly why we've
Speaker 3: seen the markets on a tear since the election, the
Speaker 3: idea that we're unlocking more m and a opportunity that
Speaker 3: we'll see a revival maybe in the IPO market. A
Speaker 3: lot more where that came from, as we heard earlier
Speaker 3: today from Goldbensachs CFO Dennis Coleman, a new direction to
Speaker 3: the FTC with this Trump let's listen.
Speaker 8: With Fergin's nominee, there could be a new direction at
Speaker 8: the FTC. Obviously, as a sitting commissioner dissented with the
Speaker 8: current leadership on a number of cases, and so we
Speaker 8: could see a more favorable environment heading into twenty twenty
Speaker 8: five that could actually spur more by way of CEO
Speaker 8: confidence and in turn unlocking more investment, more activity, and
Speaker 8: provide a more favorable strategic backdrop.
Speaker 3: Let's bring in an expert on this, Jennifer Ree all
Speaker 3: things Anti trust and FTC. Turn to Jenry, a Bloomberg
Speaker 3: Intelligence where she is senior litigation analyst. Great to see you, Jen,
Speaker 3: Welcome back to Balance of Power. Your thoughts on this
Speaker 3: pick and how it could change the trajectory for mergers
Speaker 3: and acquisitions. I ask you that knowing we have a
Speaker 3: Republican member of the Commission here who has a track record.
Speaker 9: Yeah, thanks for having me, Joe. I appreciate it, you know,
Speaker 9: I think it will change things, and I think flip
Speaker 9: what we've seen to be many abandoned deals under the
Speaker 9: Biden administration, as well as challenge deals in court, to
Speaker 9: a much longer list of deals that actually get closed
Speaker 9: with a settlement. I think to some extent, we're going
Speaker 9: to go back to the way things were before even
Speaker 9: the first Trump administration, when we tended to see very
Speaker 9: few deals challenged each year. Still investigations, you know, three
Speaker 9: to four percent of the deals that filed will probably
Speaker 9: get in depth investigations, because that's been pretty steady and
Speaker 9: constant across most administrations. But I think more deals will
Speaker 9: close and if they're problematic with the settlement than we've
Speaker 9: seen in several years now.
Speaker 3: All Right, So, based on the resume here, I just
Speaker 3: want to talk about what we know about Andrew Ferguson.
Speaker 3: He descended from several of Lena Khan's rule making efforts,
Speaker 3: as Bloomberg points out, including a ban on non compete
Speaker 3: clauses that was a big story we covered this year,
Speaker 3: and rules to make it easier to cancel subscriptions. How
Speaker 3: do you read into those in terms of what he
Speaker 3: might do as the boss.
Speaker 9: Well, I think he'll start pulling all of these things
Speaker 9: back or not fight the litigation. This non compete rule
Speaker 9: is in litigation now, and of course the FTC can
Speaker 9: simply withdraw that litigation. He did think that that was
Speaker 9: overreaching by the agency, and now he's going to be
Speaker 9: running policy. This will be up to him. He will
Speaker 9: have a majority as soon as Mark Meeterer, who is
Speaker 9: the other person that President Elect Trump has nominated to
Speaker 9: the FTC, replaces Lena Khan, which could take a few months,
Speaker 9: but it'll be pretty fast, I think. And so once
Speaker 9: he has that majority, he'll be able to go forward
Speaker 9: and do things withdraw some of the rules. I think
Speaker 9: he will also change the merger guidelines that were issued
Speaker 9: in twenty twenty three by this FTC in this DOJ
Speaker 9: that made it more made it so that the FTC
Speaker 9: could more easily challenge deals. I think he'll pull those
Speaker 9: back as well.
Speaker 3: Goldben Sachs has been on a tear. You're not surprised
Speaker 3: to see this. I'm guessing, right, what does this mean
Speaker 3: for the investment banking world, for those who are actually
Speaker 3: laying out underwriting mergers and acquisitions? Maybe in this new year.
Speaker 9: Listen, I think we're going to see a real flurry
Speaker 9: of merger and acquisition activity, of course, which is great
Speaker 9: for the investment banks. You know, any companies that we're
Speaker 9: thinking about doing a deal that they think may have
Speaker 9: raised some scrutiny or some anti trust issues with the
Speaker 9: FTC and DJ probably waited right, and they'll get those
Speaker 9: deals filed now, or they'll get those deals filed in
Speaker 9: the new year. I think we'll see a lot of
Speaker 9: activity because there is hope that we will go back
Speaker 9: to a time in which these deals can get done
Speaker 9: and if they're problematic, they can get done with a
Speaker 9: reasonable settlement, and if they're not problematic, can get done
Speaker 9: more quickly without a long term investigation in eight or
Speaker 9: nine months or ten months, and millions of dollars put
Speaker 9: in before the deal actually it gets cleared and closes.
Speaker 3: Jenniferree has been working for a long time on this
Speaker 3: Kroger Albertson's deal. We've talked about it here before. And
Speaker 3: look at that Jenna federal judge blocking the acquisition is
Speaker 3: a twenty five billion dollar deal, almost basically putting the
Speaker 3: nail in the coffin here. Is this the last vestige
Speaker 3: of Lena Cohn's FTC?
Speaker 9: I think so, you know, she just had two wins.
Speaker 9: She also won when they challenged the Tapestry Coupre deal,
Speaker 9: so she does kind of go out with a bang.
Speaker 9: That was a difficult challenge and they won, and now
Speaker 9: they won this one. I think This one was probably
Speaker 9: a little bit easier because I think the extent of
Speaker 9: competition between these two companies and a consumer facing sensitive
Speaker 9: industry was pretty obvious. And the FTC did a really
Speaker 9: good job at trial showing that in thousands of local
Speaker 9: regions in the United States this would cause concentration in
Speaker 9: a grocery store market, and that the remedy that was
Speaker 9: proposed by the companies was probably insufficient to really ameliorate
Speaker 9: that problem, and you'd end up with increased prices and
Speaker 9: reduce choice or reduced quality.
Speaker 3: What's Lena Kang going to do in our remaining moment,
Speaker 3: to go make money or go to academia. What happens
Speaker 3: from here?
Speaker 9: You know, I suspect she'll go back to academia. You know,
Speaker 9: that was really her life, that theoretical world. I think,
Speaker 9: where she really thrives, she may go back to Colombia,
Speaker 9: you know, you know, because she really made her name
Speaker 9: right in Academiica when she wrote an article about Amazon
Speaker 9: and the fact that she viewed Amazon as a company
Speaker 9: that was engaging in monopolistic conduct that really kind of,
Speaker 9: you know, put her in the front line of what's
Speaker 9: called the neo Brandisian movement in antitrust, and I think
Speaker 9: she'll go back to that.
Speaker 3: Just who I wanted to talk to you today, Jennifer
Speaker 3: Read Bloomberg Intelligence senior litigation analysts. Yeah, I want to
Speaker 3: go back to my theoretical world. Where is that? Thanks
Speaker 3: for listening to the Balance of Power podcast. Make sure
Speaker 3: to subscribe if you haven't already, at Apple, Spotify, or
Speaker 3: wherever you get your podcasts, and you can find us
Speaker 3: live every weekday from Washington, DC at noontime Eastern at
Speaker 3: Bloomberg dot com.