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Senate Confirmation Hearings · Bloomberg Intelligence

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Speaker 2: Haynes provides perspective now with peenjea policy definitive on LinkedIn
0:33
Speaker 2: with good good summaries of what's going on in Washington. Terry,
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Speaker 2: I think we clearly saw these confirmation hearings are different
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Speaker 2: with the protests. How different are they when they finally
0:45
Speaker 2: get down.
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Speaker 3: To a vote?
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Speaker 4: They're not very different at all. You know what I
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Speaker 4: would take from the hegseeth statement to illustrate this, frankly,
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Speaker 4: is him stressing his partnership with the Arm Services Committee
1:00
Speaker 4: and with the Senate broadly, because, as you and David
1:03
Speaker 4: were pointing out in the previous hour, you're going to
1:06
Speaker 4: have a defense budget that increases substantially under Trump. From
1:11
Speaker 4: I think you all said eight hundred and fifty billion
1:13
Speaker 4: to possibly do a trillion, and I've been predicting that
1:18
Speaker 4: for quite some time. You know, the question is his
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Speaker 4: ability to partner His question the question is beyond that,
1:27
Speaker 4: isn't really so much about his prior life peccadillos or
1:30
Speaker 4: anything like that. Is he wants to be a change agent,
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Speaker 4: But how does the change agent brief stack up again
1:36
Speaker 4: in a time where readiness in a multi front conflict?
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Speaker 4: Is the mission an immediate readiness? And that's really what
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Speaker 4: I think is going to get probed here more than
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Speaker 4: anything else today.
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Speaker 2: And David jules that earlier.
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Speaker 5: Yeah, and Terry, I'm very curious about the picture of
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Speaker 5: the Pentagon at this nominee is painting. So he talked
1:54
Speaker 5: about readiness. He talked about the Defense Department's budget, the
1:57
Speaker 5: need to implement all kinds of forms. How salient are
2:01
Speaker 5: those criticism? How important is it to execute that? When
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Speaker 5: you look at the state of the Pentagon today, is
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Speaker 5: it suffering from difficulty recruiting? Is it suffering from a
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Speaker 5: budget that's not big enough in light of the numbers
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Speaker 5: that you just cited a moment ago.
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Speaker 4: David, that's a really smart question, and not because that's
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Speaker 4: what interviewees say when they're treading water. I'm not treading
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Speaker 4: water here, and I say, my impression is I'm not
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Speaker 4: going to be an expert on the view of the forces.
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Speaker 4: But my impression from talking to a lot of people
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Speaker 4: who are in and around the forces is that the
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Speaker 4: first couple of paragraphs of hexcess statement are designed to
2:39
Speaker 4: appeal directly to those folks, the in service people, the
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Speaker 4: people that actually do have dust on their boots. There
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Speaker 4: is great concern beyond recruitment about the mission, about what
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Speaker 4: the priorities are. And you know whether or not, for example,
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Speaker 4: you know, other considerations including diversity, equity and all the rest,
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Speaker 4: while important, have subsumed the basic purpose of the fighting forces.
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Speaker 4: And that's what Hagsa's really trying to get at. So
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Speaker 4: you know, like it or hate it, you know there's
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Speaker 4: it's not coded at all. It's right there on the
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Speaker 4: front with.
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Speaker 2: Us Terry Haynes. And we continue with mister Haynes with
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Speaker 2: Pangaea Policy, a special edition of Bloomberg Surveillance David Gurra
3:24
Speaker 2: and Tom Keane centering on economics, the finance, the investment.
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Speaker 2: The market open now with the Dow up one hundred
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Speaker 2: and ninety three points for Global Wall Street. I note
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Speaker 2: the ten year real yield, the inflation adjusted yield is
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Speaker 2: enjoying two point three three percent. That is a lofty level.
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Speaker 2: We continue with David Gura in.
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Speaker 5: Mister Haynes Terry, I'm looking at how this hearing is
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Speaker 5: being conducted, and there's some bickering back and forth now
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Speaker 5: between the chair and the ranking member of this committee.
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Speaker 5: Senator Reid of Rhode Island wanted to have multiple rounds
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Speaker 5: of questions, Senator Wicker denying that request from his counterpart
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Speaker 5: on the dais There have been some criticisms here of
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Speaker 5: the deepness or thoroughness of the FBI investigation into the
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Speaker 5: nominee into Pete Hegseath. Talk a bit, if you would,
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Speaker 5: about how this hearing is colored by the majority of
4:12
Speaker 5: the Republicans now have in the Senate and how we're
4:15
Speaker 5: likely to see a response to that from from Democrats
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Speaker 5: on this committee and Democrats in the Senate more broadly.
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Speaker 4: Well, two things. Let me let me talk about the
4:22
Speaker 4: process first, and then the substance the Uh, the process
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Speaker 4: I think is is kind of standardized.
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Speaker 6: Now.
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Speaker 4: This is the first hearing in the new Congress with
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Speaker 4: the new Republican majority. You know, Wicker and Read are
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Speaker 4: both pros. Uh. These are not people who have just
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Speaker 4: you know, just come to power, just come to chairmanships.
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Speaker 4: And uh, and you know, Wicker and Reader bickering about
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Speaker 4: the process and about how things are going to work.
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Speaker 4: My understanding of this is based on what I've heard,
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Speaker 4: which may be a little bit less than you've heard,
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Speaker 4: is that the price, you know, is that he's trying
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Speaker 4: to establish he Wicker is trying to establish standard process.
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Speaker 4: And you know, the the tradition is you start with
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Speaker 4: the chair and the senior member of the minority and
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Speaker 4: then you work down the work down the datus on
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Speaker 4: both sides. You know, on the substance, I think the
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Speaker 4: Senate has insisted upon a pretty standard bureau process all along.
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Speaker 4: There is a wrinkle here where the chairman and the
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Speaker 4: ranker have are getting to look at more of the
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Speaker 4: FBI files than the rank and file and the Senate.
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Speaker 4: I think that'll be a little bit controversial with the
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Speaker 4: rank and file, but frankly, the reason why that happens
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Speaker 4: is to protect against leaks. So I think that's a
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Speaker 4: minor wrinkle here. Generally speaking, this is all being done
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Speaker 4: by the book terry.
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Speaker 5: As you talk to clients, what are they asking you
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Speaker 5: about the direction of this pentagon? What that direction would
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Speaker 5: be under a secretary? Hegseeth We heard him talking a
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Speaker 5: few moments ago about what seems like something we've heard
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Speaker 5: in the past, a pivot to China, a new focus
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Speaker 5: on potential conflict there, that adversary, potential adversary halfway around
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Speaker 5: the world. What do we know about the direction of
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Speaker 5: the Pentagon, the direction of military strategy, what that would
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Speaker 5: be like under a secretary Hegseth.
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Speaker 4: Well, I think two things. One is I think the
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Speaker 4: I think markets are not quite ready for the degree
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Speaker 4: of refocused from Biden to Trump on geopolitics. The last
6:21
Speaker 4: few years, geopolitics from Washington has been soft pedaled a
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Speaker 4: little bit, and I think that's going to change greatly
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Speaker 4: starting next Monday, and markets should, I think, are ill
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Speaker 4: prepared for that. So that's first. Second, I don't think
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Speaker 4: we yet know, frankly, and aren't going to know from
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Speaker 4: Hegseeth exactly what new forms, the doctrine and the strategies
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Speaker 4: are going to take. You know, I think that's frankly,
6:49
Speaker 4: because that's largely up in the air. And what these
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Speaker 4: folks need to do is get their feet under them
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Speaker 4: and get their briefings under them, because they're not fully
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Speaker 4: read in. It won't be until next week.
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Speaker 2: Terry Ayins I talked to earlier about what President Trump's comments,
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Speaker 2: and I'm speaking in a broad sense of his upset
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Speaker 2: over generals and admirals at the Pentagon, and I think
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Speaker 2: mister Hegseth alluded to that in his opening comments, from
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Speaker 2: where you sit, what is the divide between the brass
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Speaker 2: of the Pentagon and the enlisted troops? Discuss that divide.
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Speaker 4: A lot of what you're hearing, a lot of what
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Speaker 4: you hear from from the people below the brass, frankly
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Speaker 4: is is concerned about mission and focus. Uh and concerned
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Speaker 4: that the brass are being pushed too much to be
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Speaker 4: to be politicized, uh fair or not. And uh, but
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Speaker 4: that is a that is a real thing out there
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Speaker 4: and uh. And what a lot of what Hegseeth is
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Speaker 4: saying this morning initially is that he intends to kind
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Speaker 4: of get back to basics on that and remove a
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Speaker 4: lot of those political filters. So that will be by
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Speaker 4: and large, I think thought of very well by a
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Speaker 4: group that the enlisted group and beyond who thinks let
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Speaker 4: the brass and are concerned about, you know, the politicization.
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Speaker 2: If we David wants to get in here, I'm going
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Speaker 2: to be quick on this, Terry Aanes. If we go
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Speaker 2: from eight hundred billion up over a trillion in Pentagon spending,
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Speaker 2: what will the new money be spent on.
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Speaker 4: I think it's going to be spent on two things,
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Speaker 4: more of the same firstly, and secondly on a I
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Speaker 4: think on three things really. Secondly, on a crash basis,
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Speaker 4: I think you're going to see kind of additional drones
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Speaker 4: and an unconventional warfare. And thirdly, I think you're going
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Speaker 4: to see new weapons systems go through the process much
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Speaker 4: more quickly than the current very drawn out process that
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Speaker 4: really is a relic of the Cold War.
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Speaker 5: You're listening to special coverage on Bloomberg surveillance of the
8:59
Speaker 5: confirmation hearing for Pete hegg Seth, the nominee to be
9:01
Speaker 5: the next Secretary of Defense. Terry Haynes is with us
9:03
Speaker 5: and Tery I want to ask you, were I Telsea
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Speaker 5: Gabbard or Congressman Doug Collins, who was supposed to testify
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Speaker 5: today that hearing has been moved. What am I watching for?
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Speaker 5: What does this hearing tell me about the approach from yes, Democrats,
9:18
Speaker 5: but Republicans as well to the President of X nominees.
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Speaker 4: I think what it. What it really comes down to, David,
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Speaker 4: is a test of seriousness. I think there's bipartisan concern, frankly,
9:30
Speaker 4: under underneath the kind of partisanship or you know Senator Wicker,
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Speaker 4: Senator Wicker's support of heg Seth, for example, there's bipartisan
9:38
Speaker 4: concern about the ability of the Trump nominees frankly to
9:42
Speaker 4: handle the magnitude of the responsibilities that are in front
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Speaker 4: of them. That that is not a that's not a
9:48
Speaker 4: dissing of basic competence. What that is is a concern
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Speaker 4: that their backgrounds don't haven't yet prepared them for the
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Speaker 4: for the depth and breadth of these sorts of job,
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Speaker 4: and may undermine the seriousness of what Trump's proposing on
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Speaker 4: a defense and national security basis. So you know, these
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Speaker 4: are these are hearings that I think are even more serious,
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Speaker 4: uh for future direction of the United States national security
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Speaker 4: and defense than you might think otherwise.
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Speaker 5: I am will just ask you here where you see
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Speaker 5: this leading after the Tom and I we were talking
10:23
Speaker 5: about when the vote is going to take place. I
10:24
Speaker 5: gather it's been scheduled for Monday. Describe the importance of
10:28
Speaker 5: this role, yes, to our government, but to the present
10:30
Speaker 5: life to get Pete Hegseth confirmed. What that means to
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Speaker 5: to Donald Trump?
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Speaker 4: You know, I think hag Seth. The conventional Washington answer
10:39
Speaker 4: about this is that, you know, all nominees are very important,
10:43
Speaker 4: so on and so forth. My sense of Trump is
10:46
Speaker 4: is different. My sense of Trump generally is that, uh,
10:50
Speaker 4: you know, Plan A doesn't work, then we'll do Plan B,
10:52
Speaker 4: and there will be a Plan B. And you can look, no,
10:55
Speaker 4: you can look into his first term for this, but
10:57
Speaker 4: you can look no farther than how quick League Gates
11:00
Speaker 4: was discarded and how quickly the new nominee was was
11:04
Speaker 4: put into place, and how much better everybody felt about
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Speaker 4: the new nominee. Uh, you know, they've they've committed to
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Speaker 4: hag Seth. Hegg Seth hasn't disqualified himself over the last
11:15
Speaker 4: two months. That's important, and that's positive for hag Seth frankly.
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Speaker 4: But you know, if hagg Seth is confirmed, and my
11:22
Speaker 4: sense is this is very much a roll of the dice.
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Speaker 4: If he's confirmed, he's confirmed barely and maybe with a
11:30
Speaker 4: Republican dissenters or two. And you know what that means
11:35
Speaker 4: for Defense and for you know, other contentious nominees like
11:38
Speaker 4: Gabbard and maybe Kennedy isn't good. But for the rest
11:41
Speaker 4: of the nominees, I don't think it matters a lot.
11:43
Speaker 4: Then they proceed to fail on their own merits.
11:46
Speaker 2: Terry, thank you so much. Can't say enough about his
11:48
Speaker 2: coverage and particularly for us. Go out to LinkedIn and
11:50
Speaker 2: see his complete notes. Agree or disagree, just always with
11:55
Speaker 2: terrific perspective. Mister Haynes, with a bit of experience in Washington.
12:04
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12:17
Speaker 2: My knowledge of the cabinet centers around the modern presidency
12:21
Speaker 2: of Abraham Lincoln. Of course team of rivals, the political
12:24
Speaker 2: genius of Abraham Lincoln. Doris Karines Goodwin is iconic and
12:29
Speaker 2: with picking presidents, got Amcondo, got a Maconda looks at
12:34
Speaker 2: picking cabinets, got him. How original would this cabinet be?
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Speaker 7: It would be original, as with everything Trump, completely unlike
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Speaker 7: anything we've seen before. It's just thinking back the history
12:48
Speaker 7: of the secondary defense, which goes back to the nineteen
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Speaker 7: forty seven National Defense Act. I cannot think of a
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Speaker 7: Secretary Defense who is remotely as unqualified as pet Exit.
12:56
Speaker 7: There's not even anyone in the same.
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Speaker 5: Universe baring that in mind, describe the mammoth undertaking he
13:03
Speaker 5: would face if he is he is confirmed. So we
13:06
Speaker 5: talk about his unqualifications, and in broad strokes here as
13:09
Speaker 5: you bring them up, we see Republicans casting him as
13:12
Speaker 5: kind of a change agent in the mold of the
13:13
Speaker 5: man who appointed him to this job. What does he
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Speaker 5: face as he walks into the Pentagon in day one
13:19
Speaker 5: should he be confirmed?
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Speaker 6: Yeah, a change agent is desperately needed.
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Speaker 7: The you know, the Pentagon needs to change more than
13:27
Speaker 7: just about any other government agency. The problem is, as
13:30
Speaker 7: we all know, not all changes are for the better,
13:32
Speaker 7: and so that's the concern here. But for what he
13:34
Speaker 7: wants to do, At a most basic level, the US
13:37
Speaker 7: military has to reorient itself, not just from switching from
13:41
Speaker 7: focusing on fighting insurgencies in the Middle East to a
13:43
Speaker 7: high intensity warfare, the old school World War two style
13:47
Speaker 7: high intensity warfare. It also needs to reorient its geographic
13:50
Speaker 7: focus to where we're fighting, essentially in Asia as opposed
13:53
Speaker 7: to Europe or the Middle East, although obviously Russia's sol
13:56
Speaker 7: a threat we need to think about and warfare like
13:59
Speaker 7: anything else. Away games are a lot harder than home games. Well,
14:03
Speaker 7: if we worked, you know, God forbid, if we were
14:05
Speaker 7: to fight a conflict with China over Taiwan, we would
14:08
Speaker 7: be doing it in their backyard.
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Speaker 6: They would have every conceivable advantage.
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Speaker 7: And so it takes a very very differently structured defense
14:16
Speaker 7: establishment to make that work. And we have not made
14:18
Speaker 7: that transition. We have not even come close to making
14:20
Speaker 7: that transition yet.
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Speaker 5: We have heard for decades and decades this call to
14:24
Speaker 5: audit the Pentagon. It is an impossible task for anyone
14:28
Speaker 5: to undertake. But I bring it up with some seriousness
14:30
Speaker 5: here because when we talk about reform of the Pentagon,
14:32
Speaker 5: it's something that looms large. There is a lot of
14:35
Speaker 5: ability for us to kind of pillory the department for
14:37
Speaker 5: how it spends money and how it contracts. How difficult
14:41
Speaker 5: would it be to change the day to day of
14:43
Speaker 5: the Pentagon.
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Speaker 6: You know, extraordinarily difficult.
14:47
Speaker 7: Many people have tried, and you know, essentially no one
14:49
Speaker 7: has succeeded in the largest extent. When I was in
14:52
Speaker 7: the Pagon, we're advising the Navy. I remember I used
14:55
Speaker 7: to walk around and I in the Army section. That
14:57
Speaker 7: was a big sign op saying this was while we
14:59
Speaker 7: were in a Amistan in Iraq.
15:01
Speaker 6: We are an army at war.
15:03
Speaker 7: And I thought this was the most devastating sign you
15:05
Speaker 7: could possibly put up, because what it meant was that
15:07
Speaker 7: you felt that people in the Pentagon had to be reminded, right,
15:11
Speaker 7: that's how different you are, how distant you are, and
15:13
Speaker 7: how insulated the Pentagon bureaucracy can be the change that
15:18
Speaker 7: we're talking about. The Pentagon has more than two million employees.
15:22
Speaker 7: It has a budget, if you roll in sort of
15:24
Speaker 7: you know affiliated cost of that, approaching a trillion dollars.
15:28
Speaker 6: It covers the entire planet.
15:30
Speaker 7: No other institution in the world covers the planet the
15:32
Speaker 7: way the US Defense Department does, and it has a
15:36
Speaker 7: civilian side sort of defense expertise that has really been eroded.
15:41
Speaker 7: One of the central reasons why contracting procurement Indiana in
15:45
Speaker 7: the Defense Department is such a catastrophe is that the
15:48
Speaker 7: program management skills that used to be part of the
15:51
Speaker 7: Senior Executive Service were essentially driven out of the government
15:55
Speaker 7: over a couple of generations, where we'd shifted that burden
15:59
Speaker 7: onto the defense con tractors who ran wild with it.
16:02
Speaker 6: The biggest failure.
16:03
Speaker 7: Was a thing called concurrence where we saw the catastrophe
16:06
Speaker 7: of the F thirty five and the new aircraft carrier program,
16:10
Speaker 7: where they were built at the same time that they
16:13
Speaker 7: were essentially tested, and of course when they failed the tests,
16:16
Speaker 7: all that building had done and.
16:18
Speaker 2: Got something like that just as one story. Do you
16:22
Speaker 2: look at that as asymmetric and that it was a
16:24
Speaker 2: Republican failure or a democratic failure or is that just
16:28
Speaker 2: an institutional failure.
16:30
Speaker 6: It is an institutional failure.
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Speaker 7: The two sides have failed in different and complementary and
16:35
Speaker 7: disastrous ways. Republicans have failed because they did not value
16:38
Speaker 7: expertise and they kept slashing away at the civilian at
16:41
Speaker 7: the sort of the civilian expertise on contracting, and relied
16:45
Speaker 7: on the on and relied on the contractors. Democrats have
16:49
Speaker 7: flipped on the other side when Barack Obama was When
16:53
Speaker 7: Barack Obama was president in I says, you know, he
16:55
Speaker 7: could have made Richard Danzig Sectary of Defense.
16:57
Speaker 6: He could have put a real reformer in and he
16:59
Speaker 6: did not chew to do that.
17:00
Speaker 7: Right like there was a lot of the Defense Department
17:03
Speaker 7: just isn't what we pay attention to.
17:04
Speaker 6: It's not what we're going to focus on.
17:06
Speaker 7: We're gonna let it kind of do its thing without
17:08
Speaker 7: going in and getting into the details.
17:10
Speaker 5: Senator Shaheen questioning that the nominee now on comments he's
17:13
Speaker 5: made in the past, but women in combat. Pete hegxs
17:17
Speaker 5: is saying that his main concern here is readiness on
17:20
Speaker 5: the battlefield. When you look at all of the things
17:22
Speaker 5: that are dogging him or could be potential hurdles to
17:24
Speaker 5: him being confirmed, Your god him, how much does this
17:27
Speaker 5: loom large? There are many members of this committee women
17:29
Speaker 5: who did, in fact serve in the military.
17:32
Speaker 6: It's a big one. I feel like Pete Hegsett's.
17:35
Speaker 7: The issue with Pete Hegsuth is there are so many
17:37
Speaker 7: different issues with him, each one of which is individually
17:40
Speaker 7: completely disqualifying, that they're kind of blocking each other, right, Like,
17:44
Speaker 7: you don't want someone who has a huge drinking problem.
17:46
Speaker 7: You don't want someone who doesn't like women in the military.
17:49
Speaker 7: You don't like there's everything compounding all at once. I
17:52
Speaker 7: wonder if people were sort of are unsure where to
17:55
Speaker 7: target their fire. But if you were a woman in
17:58
Speaker 7: the military. Surely having a separate AVENSIS says you shouldn't
18:01
Speaker 7: be there seems like a big problem.
18:03
Speaker 2: Got him. We're gonna have to leave it there because
18:05
Speaker 2: we've got to do a market over here. Thank you
18:07
Speaker 2: so much for perspective. I can't say enough about the
18:09
Speaker 2: book picking President's got a mccunda Yale University. Thank you
18:13
Speaker 2: so much for that.
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18:36
Speaker 5: Christopher Smart just a moment to go, a former special
18:38
Speaker 5: assistant to the President who's served from twenty thirteen to
18:41
Speaker 5: twenty fifteen, now with the Arbirth Group, and mister Smart,
18:44
Speaker 5: great to have you with us, and I'd love to
18:46
Speaker 5: just get your thoughts on, yes, how this particular hearing
18:49
Speaker 5: has unfolded, but what it tells us about public service
18:53
Speaker 5: in this Washington at a moment of transition, The way
18:55
Speaker 5: that this nominee has been treated as being treated and
18:58
Speaker 5: the way that the President elect transition team are approaching
19:01
Speaker 5: this process of advice and consent.
19:05
Speaker 3: Well, I think at every new transition, every president faces
19:09
Speaker 3: a different environment and a different approach to this advice
19:15
Speaker 3: and consent process. I do think, you know, looking at
19:19
Speaker 3: this particular nominee, you know, and remembering all the way
19:22
Speaker 3: back to when President George H. W. Bush nominated Senator
19:26
Speaker 3: John Tower, defense expert and veteran who famously was rejected
19:31
Speaker 3: because of accusations over his alcoholism. And again what in
19:36
Speaker 3: the day we used to call or was called womanizing.
19:39
Speaker 3: This is a nominee, clearly, I think when we saw
19:43
Speaker 3: the first opening statement from Senator Ernst who seems to
19:47
Speaker 3: be sailing his way through to confirmation, and it's hard
19:51
Speaker 3: to see what is going to stand in his way
19:52
Speaker 3: right now in spite of what are likely to be
19:55
Speaker 3: continued set of short questions and the Democrats.
19:57
Speaker 2: Christopher Smart, you're one of the most qual people. I mean,
20:01
Speaker 2: the title here is former Special Assistant to the President
20:03
Speaker 2: for International Economics, but you've got a sense of geopolitics
20:07
Speaker 2: and the defense extension of America with your decades at Bearings.
20:12
Speaker 2: And I'm not going to mince words, doctor Smart. It's
20:15
Speaker 2: just as simple as this, will the generals and animals
20:19
Speaker 2: rally around this secretary of Defense? Oh?
20:24
Speaker 3: I think they will. I think most of them, you know,
20:26
Speaker 3: wish that these political side shows would go away so
20:29
Speaker 3: that they could get on with the business of defending
20:32
Speaker 3: our country and ensuring a national security as they have
20:35
Speaker 3: always done through one secretary of Defense after another. I mean,
20:38
Speaker 3: I think the real secret here is that no single
20:44
Speaker 3: secretary of Defense is going to inflict significant change on
20:50
Speaker 3: the behemoth that is the Pentagon. One secretary aft another
20:54
Speaker 3: has tried to make it more efficient, to make it
20:56
Speaker 3: more transparent, to get that audit right. It is not
21:02
Speaker 3: an easy and no single person's going.
21:03
Speaker 2: To be Chris Wright nails this, David Girl. This is
21:06
Speaker 2: the heart of the matter. The fact is the president
21:09
Speaker 2: elect feels he can change the Pentagon.
21:12
Speaker 5: That's a fact he does. I think the open question is,
21:15
Speaker 5: and I'd love for Christopher Smart to chime in here,
21:17
Speaker 5: how much does he plan to change it or think
21:19
Speaker 5: it can be changed, or force change on it? All
21:23
Speaker 5: through the morning, Chris, we've been talking about the degree
21:26
Speaker 5: to which there's sort of a script here for this nominee.
21:28
Speaker 5: Should he be confirmed to manage this huge institution. Do
21:32
Speaker 5: we have a sense from him, from the President elect
21:34
Speaker 5: about what actually, notionally would change at the Pentagon were
21:37
Speaker 5: he to be confirmed.
21:38
Speaker 3: I think that's a very good question. I'm not sure
21:40
Speaker 3: we've had anything other than we're going to make it
21:42
Speaker 3: better from the president at this stage, or from the
21:45
Speaker 3: nominee to be Secretary of Defense. You know, the in finance,
21:50
Speaker 3: you know, the most powerful force in nature is compound interest.
21:55
Speaker 3: In Washington, the most powerful force in nature is bureaucratic inertia.
22:01
Speaker 3: And I think it's very, very hard for a single
22:03
Speaker 3: person at the top to change that without real legislation
22:06
Speaker 3: and a thoughtful plan about how we're going to do
22:08
Speaker 3: these things differently, how we're going to allocate money differently.
22:11
Speaker 3: When everybody wants to have a finger in the pot
22:13
Speaker 3: and everybody wants to have a hand.
22:14
Speaker 5: On the lever, we're back to where we were a
22:18
Speaker 5: few years ago. That is, looking at social media for
22:21
Speaker 5: indications from the President elect about what he might do.
22:24
Speaker 5: A lot of it is bomb basted, some of it
22:26
Speaker 5: are policy pronouncements. Today, he indicates that he wants to
22:30
Speaker 5: create an external revenue service, as he puts it, to
22:33
Speaker 5: collect our tariff's duties and all revenue that come from
22:35
Speaker 5: foreign sources. We've been charging those that make money off
22:38
Speaker 5: us with trade, and they will start paying finally their
22:41
Speaker 5: fair share. Drawing from your experience at the Treasury Department,
22:47
Speaker 5: we've talked a lot about the Defense Department, the direction
22:49
Speaker 5: that it might take. Your sense of what that looks
22:52
Speaker 5: like under a Scott Bess and should he be confirmed
22:53
Speaker 5: here a little later in the week. I'm struck by
22:57
Speaker 5: how motley a crue it is when you look at
22:58
Speaker 5: the economic team that the President elect has put together,
23:01
Speaker 5: your sense of the direction when it comes to yes,
23:03
Speaker 5: the irs, perhaps the External Revenue Service, should it be
23:06
Speaker 5: created here by this President elect and the Treasury Department
23:09
Speaker 5: More broadly, well.
23:12
Speaker 3: The Treasury Department, as you may know, used to be
23:15
Speaker 3: in charge of the coast Guard, because the coast Guard
23:17
Speaker 3: would collect a lot of these tariffs as ships would
23:21
Speaker 3: come into our ports, and tariffs were a more important
23:25
Speaker 3: part of our revenue mix. I don't think anybody who
23:27
Speaker 3: seriously looks at this issue believes that tariffs are going
23:30
Speaker 3: to represent a large part of our new revenue stream
23:33
Speaker 3: to cover any deficits that we have. First of all,
23:36
Speaker 3: if there is a tariff that is inflicted, that is
23:39
Speaker 3: imposed on a particular good people are going to find
23:41
Speaker 3: ways to find an alternative. And so, you know, I'm
23:45
Speaker 3: not sure what the President elect has in mind by
23:47
Speaker 3: creating this new service. Whatever it is, probably isn't going
23:50
Speaker 3: to move the needle very much.
23:52
Speaker 2: Christopher Smart, you have parchment in history from yl I
23:56
Speaker 2: assume you had the honor of lectures with Jonathan Spence
23:59
Speaker 2: that Giana, China and then a Columbia.
24:02
Speaker 3: I had the book right behind me, one of his.
24:04
Speaker 2: Yeah, I'm sure one of him, and you're the only
24:06
Speaker 2: person you know. I had the honor of interviewing him
24:09
Speaker 2: once with Orbal's Shell years ago, and I said to him,
24:13
Speaker 2: I said, I've actually read the book cover to cover,
24:15
Speaker 2: and he said, there's only like twelve people that have
24:18
Speaker 2: it was like eight hundred and fifty books. This is
24:20
Speaker 2: the giant Jonathan Spence on China. Christopher Smart, is Nick
24:25
Speaker 2: Burns steps aside as ambassador in China, your thoughts and
24:31
Speaker 2: how President Trump must address Beijing.
24:36
Speaker 3: Well must or what he will do or it's hard
24:39
Speaker 3: to kind of differentiate between the two. I mean, I
24:41
Speaker 3: think we in the United States and the Chinese government
24:46
Speaker 3: clearly have to figure out a new kind of rule,
24:50
Speaker 3: set of rules for this super pile rivalry that is
24:53
Speaker 3: not going to go away anytime soon. And sort of
24:55
Speaker 3: as the you, as the United States and the Soviet
24:57
Speaker 3: Union did over the course of several decks, there were
25:01
Speaker 3: kind of rules of engagement, things we would argue about,
25:03
Speaker 3: things we would not argue about. That we haven't really
25:06
Speaker 3: set forth with the Chinese government yet. Unfortunately, it's not
25:10
Speaker 3: clear from the current incoming administration what kind of a
25:14
Speaker 3: relationship they want. I mean, appears to be very confrontational,
25:18
Speaker 3: and yet there's this personal wooing of Jijinping that Presidentyle
25:21
Speaker 3: like Trump seems in you to pursue. So I'm not
25:25
Speaker 3: sure what they have in mind. As a country, we're
25:27
Speaker 3: still in a stage of really wanting to kind of
25:29
Speaker 3: wrap the Chinese on the nose with a newspaper and
25:31
Speaker 3: hoping they'll change their ways. What we really need to
25:34
Speaker 3: accept is that they're going to have a big part
25:37
Speaker 3: to play in our new global system, and we have
25:40
Speaker 3: to figure out ways to work with that.
25:43
Speaker 2: We've got to get you back on, Christopher Smart. It has
25:45
Speaker 2: been way too Thank you. Thank you so much for
25:47
Speaker 2: joining a special edition of Bloomberg Surveillance.
25:51
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