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Trump Vows To Escalate Attacks on Iran; GOP Releases Spending Blueprint · Balance of Power

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Speaker 2: The intelligence that surrounding the war in Iran is something
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Speaker 2: that the President was presented with in the situation room
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Speaker 2: once again yesterday. It was a room full as he
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Speaker 2: considers options for what might come next, with full on
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Speaker 2: war being one of them, and as the President made
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Speaker 2: clear in an interview on Fox News Kayley, civilian targets, infrastructure,
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Speaker 2: power plants, etc.
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Speaker 3: Are still on the table and could be.
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Speaker 2: Attacked as soon as next week.
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Speaker 4: Listen, I'll save the energy targets for last, but ultimately
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Speaker 4: we'll hit energy targets. Yeah, but we're going to hit
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Speaker 4: them very hard tonight, We're going to hit them very hard.
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Speaker 4: Tomorrow night, we're going to hit him very hard the
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Speaker 4: night after. And then next week it gets really bad
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Speaker 4: for them because next week comes the power plants, next
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Speaker 4: week comes the bridges.
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Speaker 5: So let's get more into this now as to whether
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Speaker 5: or not this threat is real or just attempt by
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Speaker 5: the President to get Iran back to the table in
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Speaker 5: a more meaningful way. As we turn to Chris Kennedy
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Speaker 5: of Bloomberg Economics, who's here with us in our Washington,
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Speaker 5: d C.
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Speaker 3: Studio.
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Speaker 5: So, Chris, when we consider this threat once again to
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Speaker 5: go after infrastructure, which we have heard from the President
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Speaker 5: before only for him to back off, is it more
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Speaker 5: real this time now that he's proved willing to resume
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Speaker 5: strikes against Iran and the absence of real deal making.
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Speaker 6: Well, we never know with the President, but clearly he's
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Speaker 6: following through on the threats to continue strikes on Iran.
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Speaker 6: We're seeing those strikes continue through today, We're seeing retaliatory
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Speaker 6: strikes from Iran. And I think the broader point is
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Speaker 6: that we're at a very precarious.
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Speaker 3: Moment in this conflict.
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Speaker 6: There's a real risk of further escalation that could cause
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Speaker 6: lasting damage to Gulf energy infrastructure, for instance, or there's
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Speaker 6: threatens threats to open the conflict on other fronts, including
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Speaker 6: in the Red Sea, which would cause further disruption.
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Speaker 2: So what would that mean for Iran's neighbors, if you will,
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Speaker 2: If President Trump followed through with civilian targeting, obviously Iran
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Speaker 2: would have some sort of response, whether that was asymmetric,
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Speaker 2: what would it mean for Kuwait, for Jordan we saw targeted,
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Speaker 2: or even Israel.
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Speaker 6: Yeah, so far, over the past few days, Iran has
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Speaker 6: primarily been limiting its targeting to either vessels or to
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Speaker 6: US military installations in some of these countries. I think
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Speaker 6: you would imagine that if the US does actively target
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Speaker 6: civilian infrastructure in Iran, you would see a similar response
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Speaker 6: from Iran on some of its regional neighbors. Now, whether
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Speaker 6: all of them or certain elements, I think it's to
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Speaker 6: be seen, but clearly the risk of escalation is there.
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Speaker 6: Water desalination plants are particularly sensitive type of infrastructure in
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Speaker 6: the region. But you know, energy export facilities, if they're targeted,
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Speaker 6: it could take quite some time to bring those supplies
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Speaker 6: back online, especially some of these LNG facilities like we
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Speaker 6: saw targeted in the early stages of the war.
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Speaker 5: Well, and if we were to see that, or even
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Speaker 5: with just what we are already seeing, would you assume, Chris,
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Speaker 5: that the trajectory of oil prices is going to be
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Speaker 5: one that continues higher for the time being.
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Speaker 6: I think for the time being, I mean the market
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Speaker 6: is digesting what's happening right now. We just had some
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Speaker 6: new releases from US information on oil supplies. I think
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Speaker 6: markets responded positively in the sense that oil prices tamped
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Speaker 6: down a little bit based on that. But yes, I
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Speaker 6: think if things stay where they are, even if they
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Speaker 6: don't escalate, we're going to be entering another uncertain time.
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Speaker 6: We've seen emergency releases are continuing for now, but those
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Speaker 6: will only last for so long. Probably by mid October
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Speaker 6: we'll start to see those taper off. And then China
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Speaker 6: is a big wild card. They've really cut down their
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Speaker 6: imports over the past couple of months. How long will
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Speaker 6: that last?
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Speaker 2: Interesting Golden Sacks that they warning of a rise back
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Speaker 2: above one hundred dollars a barrow after Iran targeted a
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Speaker 2: couple of UAE tankers. Chris Kennedy, we'd love to pull
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Speaker 2: you into the conversation around defense spending today because we've
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Speaker 2: got a couple of events we're looking at. We just
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Speaker 2: heard from Tyler at this Pennsylvania event that Senator McCormick
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Speaker 2: is running. The Aspen Security Forum is happening simultaneously, and
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Speaker 2: the President is asking Congress for a trillion and a
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Speaker 2: half dollars. You specialize in economic statecraft, and we can
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Speaker 2: bend that in a couple of different ways. But when
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Speaker 2: you consider the big stick here, the president's mantra has
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Speaker 2: been this is how you avoid forever wars is by
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Speaker 2: having an even bigger military. Will he get that money
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Speaker 2: and what will it mean in terms of psychological impact globally,
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Speaker 2: That's a great question.
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Speaker 6: I think it faces an uphill battle on the hill
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Speaker 6: right now. The president, you know, he's facing a lot
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Speaker 6: of challenges I think from both his party and of
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Speaker 6: course Democrats on the hill. There are a lot of
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Speaker 6: questions over this war. I think Congress wants to have
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Speaker 6: more of a say in some of these interventions that
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Speaker 6: we've seen the president undertake over the past several months,
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Speaker 6: but also before. So I think it's going to be difficult.
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Speaker 6: But of course the thesis, yes, of course the US
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Speaker 6: is still the most powerful military in the world. But
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Speaker 6: we're seeing the limits right now, and I think the
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Speaker 6: entire world is seeing the limits.
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Speaker 5: I also want to ask you as we consider whether
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Speaker 5: or not he's going to get what he wants in
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Speaker 5: terms of defense spending from Congress, whether or not sanctions
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Speaker 5: tighter sanctions related to Russia will be getting through Congress.
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Speaker 5: Is there's now a renewed push for this in the
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Speaker 5: Senate in the aftermath of the death of Senator Lindsay Graham,
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Speaker 5: of course, was spearheading this effort. This package, as we understand,
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Speaker 5: it wouldn't mandate the President to do anything, but it
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Speaker 5: would give him optionality in terms of people who consume
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Speaker 5: Russian energy products being able to impose one hundred percent.
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Speaker 3: Care of that.
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Speaker 5: Right, there is very real economic statecraft. Is that something
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Speaker 5: that could be effective and potentially turn the tide of
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Speaker 5: Russia's war with Ukraine?
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Speaker 3: That's a great question.
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Speaker 6: So, I mean, the bill is interesting because, of course,
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Speaker 6: the president, before his tariffs were thrown out by the
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Speaker 6: Supreme Court in February, was imposing these secondary tariffs, tariffs
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Speaker 6: on countries doing business with you know, Venezuela or in
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Speaker 6: any case he's done this. Now he doesn't have that
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Speaker 6: tool because of the Supreme Court. This bill would for
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Speaker 6: the first time, delegate this secondary tariff authority to the president.
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Speaker 6: I would find it hard to believe the President would
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Speaker 6: want to accept the bill as it's written, because it
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Speaker 6: does sort of lock him in.
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Speaker 3: But I could imagine now.
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Speaker 6: You know that he doesn't have this i EVA tool,
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Speaker 6: that he would like some sort of congressional legislation that
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Speaker 6: would allow him to again use his favorite tool, which
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Speaker 6: is tariffs, in more creative ways.
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Speaker 2: You know, he said yesterday Kaylee, and you probably heard
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Speaker 2: this when he was in the Oval, he'd like to
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Speaker 2: add Iran and Hesbelah to that legislation. Is that realistic
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Speaker 2: or Chris, does that slow it down?
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Speaker 6: I mean, we imagine there would be some additional markup
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Speaker 6: on this bill. I'm sure the president would like to
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Speaker 6: have as much flexibility as he could possibly get out
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Speaker 6: of this legislation.
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Speaker 7: Really, whether or.
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Speaker 3: Not as realistic.
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Speaker 6: I think there are many on the Hill that are
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Speaker 6: skeptical of the way in which President Trump has deployed tariffs.
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Speaker 6: Whether they want to give him this tool at this point,
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Speaker 6: we'll have to see.
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Speaker 2: He's on one of the best teams we have at
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Speaker 2: Bloomberg Economics. Chris Kennedy leads our coverage of economic statecraft.
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Speaker 2: That is great to have you with us. As always, Chris,
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Speaker 2: stay with us on Balance of Power. We'll have much
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Speaker 2: more coming up after this.
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7:53
Speaker 2: Thanks for being with us on the Wednesday edition. We've
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Speaker 2: got our eyes, of course, on Pennsylvania, where President Trump
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Speaker 2: is going to be tracked todays, taking part in a
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Speaker 2: roundtable discussion at the Carlisle, Pennsylvania Defense Summit, where we
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Speaker 2: heard earlier this hour from Bloomberg's Tyler Kendall. President's there
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Speaker 2: along with a number of luminaries from industry. Jamie Diamond
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Speaker 2: is there, and it's a big conversation about not only
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Speaker 2: how much we're spending, Kayley, but what we're spending it on.
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Speaker 2: Drone companies, for instance, are expected to be a big
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Speaker 2: player in this conversation today, with some deals expected to
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Speaker 2: be announced when the President talks later.
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Speaker 5: Yeah, and of course, drones at top of mind for
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Speaker 5: many in the community defense community right now and for
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Speaker 5: this president, given what has been happening in the Middle
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Speaker 5: East over the last several months, in the aftermath of
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Speaker 5: Operation Epic Fury, which I don't know if we're saying
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Speaker 5: Operation Epic Fury is back on or this is just
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Speaker 5: a restart.
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Speaker 7: I think that's right.
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Speaker 5: Some operations is of course. The President earlier this week
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Speaker 5: notified Congress that the war with Iron had resumed, trying
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Speaker 5: to restart that sixty day clock for war powers. As
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Speaker 5: we're seeing today a fifth day of Sikes daylight stripes
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Speaker 5: in fact announced by Central Command, which we haven't seen
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Speaker 5: in some time. These usually happen over the evening. Of course,
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Speaker 5: President Trump, in an interview on Fox News yesterday, suggested
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Speaker 5: that the strikes could escalate next week if Ron doesn't
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Speaker 5: come back to the negotiating table once again renewing his
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Speaker 5: threats against energy infrastructure and civilian infrastructure like bridges and
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Speaker 5: power plants. So we want to get into this now
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Speaker 5: with our political panel, as Bloomberg Politics contributors Rick Davis
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Speaker 5: and Jeanie Shanzo join us. Rick, of course, as a
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Speaker 5: Stone Cord Capital partner and Republican strategist. Genie are democratic
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Speaker 5: analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick,
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Speaker 5: just to begin with you, this is not a unique
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Speaker 5: or a novel threat made by President Trump. He has
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Speaker 5: threatened this infrastructure repeatedly in the past, only to back down.
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Speaker 7: Do you have the sense that this time would be different?
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Speaker 3: Hard to tell.
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Speaker 8: I think the level of frustration is higher than it's
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Speaker 8: been in the past. I think President Trump thought that
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Speaker 8: he could cow the Iranians into not only completing the
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Speaker 8: negotiations that had already started, but coming out with a deal.
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Speaker 8: And the fact that the Iranians have slipped out of
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Speaker 8: that noose and now continue to harass US assets and
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Speaker 8: maritime assets in the Gulf, I can't imagine how much
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Speaker 8: more frustrated he must be. So we know this isn't
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Speaker 8: a president that tends to govern through emotion. And I'd
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Speaker 8: love to have been a fly on the wall in
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Speaker 8: the meeting that he had on Tuesday at the White
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Speaker 8: House to talk about options, because I'm sure he was
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Speaker 8: pushing our national security team to be.
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Speaker 3: Ever more aggressive.
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Speaker 8: So yes, I think there could be some especially symbolic
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Speaker 8: hits against civilian targets that may be dual use bridges,
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Speaker 8: things like that, that the President will instruct in order
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Speaker 8: to make a point. The question is, does any of
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Speaker 8: this really have an effect on Iran? And we have
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Speaker 8: not seen anything to date that the President's done that
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Speaker 8: has that has cowed that leadership, you know.
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Speaker 2: And that same Fox interview Genie where the President talked
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Speaker 2: about power plants and bridges. Next week, he was asked
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Speaker 2: about Pickaxe Mountain, which is something that he discussed on
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Speaker 2: the Hugh Hewitt program a day earlier. He said US
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Speaker 2: bunker busters can go deep, but claimed nobody knows if
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Speaker 2: they can reach Pickaxe Mountain, where the US is monitoring
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Speaker 2: suspicious Iranian activity. They think that's where they want to
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Speaker 2: shelter the nuclear program from airstrikes. That the kind of
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Speaker 2: conversation that should be had publicly like this in the media.
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Speaker 9: No, it's not, but of course that's in keeping with
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Speaker 9: the way President Trump governs. He says everything presumably publicly.
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Speaker 9: And I think where we are today is we just
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Speaker 9: have to look back at the June seventeenth MoU. We
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Speaker 9: signed that MoU because Iran backed us into a corner,
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Speaker 9: and we signed it because we had no military strategy
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Speaker 9: to defeat a And then once it was signed, we
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Speaker 9: tried to open this separate o'manni channel in the Persian Gulf.
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Speaker 9: Iran was having none of it, saw it as a
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Speaker 9: violation of the MoU which it was, and we are
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Speaker 9: back now to this tit for tat and these constant
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Speaker 9: going back and.
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Speaker 7: Forth trading strikes.
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Speaker 9: But the problem for the president and by extension, the
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Speaker 9: United States, is that nothing about this has changed, and
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Speaker 9: the President does not have a clear winning strategy here.
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Speaker 9: He's got a lot of you know, bombastic threatening comments
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Speaker 9: to make online and publicly, but beyond that, what is
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Speaker 9: the strategy to defeat Iran? There is no military strategy,
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Speaker 9: and you can't bomb somebody back to the negotiating table.
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Speaker 9: And that's the dilemma we've been in, and that's the
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Speaker 9: dilemma we continue to be in. I do think there
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Speaker 9: are great people in the State Department with good ideas
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Speaker 9: about how to move forward, but Donald Trump doesn't seem
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Speaker 9: to be listening to them. He's listening to people like
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Speaker 9: Steve Whitcoff and Jared push No Crew. For all of
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Speaker 9: the things that they have to offer, foreign policy negotiations
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Speaker 9: are not amongst them. And so that's where we sit today.
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Speaker 5: Well, you have to wonder to what extent the president
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Speaker 5: will listen to financial markets as well. As he previously
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Speaker 5: said he went for the memorandum of understanding, whether an
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Speaker 5: all out resumption of the war against Iron because it
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Speaker 5: risked economic catastrophe if the Strait of Hormuz remains closed
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Speaker 5: and energy.
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Speaker 7: Prices remained at the levels where they were.
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Speaker 5: Of course, there's a lot of consternation around energy prices,
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Speaker 5: and it isn't just affected by policy in the Middle East.
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Speaker 5: It's also affected by policy here at home, and it's
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Speaker 5: at the very heart of the debate around data centers
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Speaker 5: in particular. We of course saw action in New York
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Speaker 5: yesterday as the Governor Kathy Hochlel announced a one year
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Speaker 5: moratorium on data center construction in that state, and she
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Speaker 5: talked about it on Bloomberg's Odd Lost, Odd Lots podcast
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Speaker 5: with Joe Eisenthal and Tracy Alloway.
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Speaker 10: Listen, I want to make sure that we take the
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Speaker 10: time to have a community investment framework to give to localities.
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Speaker 10: But also you have to be able to power yourselves,
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Speaker 10: either bring your own power source or you have to
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Speaker 10: pay a premium to use our grid. And those are
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Speaker 10: the basic foundations of what we're doing with this moratorium.
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Speaker 5: And this moratorium is not sitting well with President Trump,
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Speaker 5: who took to True Social today to criticize Hochel and
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Speaker 5: the State of New York, saying, in part, New York
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Speaker 5: State has made a terrible decision, going on to say
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Speaker 5: it should change its policy immediately, quote the radical left Democrats. Democrats,
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Speaker 5: he says must not be allowed to cause us to
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Speaker 5: lose data centers AI and all of this incredible new
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Speaker 5: technology to China and other countries.
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Speaker 7: Rick, I would love your thoughts on.
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Speaker 5: This first, this notion of a data center moratorium in
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Speaker 5: the first place, and whether or not it could be
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Speaker 5: spreading throughout the country to other states, not just New York,
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Speaker 5: and if that might ultimately include red states not just
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Speaker 5: blue states that are easy for the president to attack over.
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Speaker 8: Yeah, I think that there are two separate issues here.
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Speaker 8: One is states are start you set standards by which
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Speaker 8: they will allow data centers to come into their state,
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Speaker 8: and Kathy Hochel, governor of New York, just said, here
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Speaker 8: are my standards, and it included you've got to bring
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Speaker 8: your own power. But then to apply a moratorium on
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Speaker 8: top of that doesn't really make much sense. Here's what
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Speaker 8: you got to do to be able to come into
15:16
Speaker 8: my state. But I'm not going to allow you to
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Speaker 8: do that for a while until we really study this thoroughly.
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Speaker 8: There is a race to deploy capital, there is a
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Speaker 8: race to build infrastructure and capacity, and I think the
15:28
Speaker 8: kind of approach that Kathy Hockel's taken and some other
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Speaker 8: governors around the country are basically keeping their states from
15:35
Speaker 8: benefiting from this immense amount of infrastructure development that's going
15:40
Speaker 8: on in the country right now. So yes, I think
15:42
Speaker 8: that there are going to be states because to have
15:47
Speaker 8: more terms, because they will follow the political crowd, right
15:50
Speaker 8: They'll read the polls, say people, even though it doesn't
15:53
Speaker 8: affect them directly right now. Boy, they're afraid of it
15:55
Speaker 8: because of what they read. But I think leadership is
15:58
Speaker 8: what makes the difference there, and giving standards to companies
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Speaker 8: to do business in their state is perfectly acceptable. Why
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Speaker 8: I have a moratorium? So where are we going here?
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Speaker 2: Genie? The analysis at Bloomberg Intelligence says it all. New
16:12
Speaker 2: York state wide Data center ban is first likely not last.
16:16
Speaker 2: As we write, hyperscalers like Alphabet, Amazon and Microsoft, as
16:20
Speaker 2: well as developers like Equinics and Digital Realty Trust, all
16:24
Speaker 2: of course deeply invested in this infrastructure faced increased policy risk.
16:29
Speaker 2: BI is putting an eighty percent likelihood of comparable data
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Speaker 2: center rules elsewhere. Is this just the beginning.
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Speaker 9: I think it is just the beginning. I have to
16:38
Speaker 9: tell you both. I have been stunned by the number
16:41
Speaker 9: of young people who, without me even raising this issue
16:46
Speaker 9: at universities and colleges, have expressed that their families are
16:51
Speaker 9: concerned about these data centers cropping up, and not just
16:55
Speaker 9: in New York but around the country. Because it's not
16:58
Speaker 9: something I think any of us thought about, you know,
17:01
Speaker 9: a year or two ago, three years ago, But boy,
17:04
Speaker 9: is it a big issue. We saw it in Virginia
17:06
Speaker 9: with energy crisis, New Jersey and recent elections. Now here
17:10
Speaker 9: in New York, I think it spreads around. Holes on
17:12
Speaker 9: this are very difficult to sort of tease out. But
17:16
Speaker 9: Americans are concerned about the impact on their cost for
17:20
Speaker 9: them for their electricity. They believe that they're already paying
17:24
Speaker 9: a good about now they're going to pay more. They're
17:27
Speaker 9: concerned about the impact on water usage. It's they don't
17:30
Speaker 9: want them in their neighborhood. We may all want to
17:33
Speaker 9: use these online, these this as we go online, but
17:36
Speaker 9: we don't want them in our neighborhoods. So I think
17:39
Speaker 9: this is going to be a growing issue. I think
17:41
Speaker 9: a lot of education has to be has to be
17:45
Speaker 9: done here to help people understand the impact. And also
17:49
Speaker 9: Joe and Kayley, I think we're going to see a
17:51
Speaker 9: lot more movement of attempts put data centers in space,
17:54
Speaker 9: and that has an impact as well.
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Speaker 2: They go into space or under the ocean. I still
17:58
Speaker 2: haven't figure that out.
18:00
Speaker 5: Says they're going to space even though SpaceX Yeah, drop
18:03
Speaker 5: below the IPO price.
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Speaker 7: Yeah, give me a not a lot of people buying
18:06
Speaker 7: that theory right.
18:07
Speaker 2: Now, more than thirty three dollars I think last time
18:09
Speaker 2: I looked Rick Davis, Genie Shanzino. Thank you our great
18:11
Speaker 2: panel Bloomberg Politics contributors.
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Speaker 5: Bloomberg Politics contributor and former Chair of the House Financial
18:34
Speaker 5: Service Committee, also former Speaker pro ten Patrick McHenry, who
18:38
Speaker 5: was back with us on Bloomberg TV and radio.
18:40
Speaker 7: Mister Chairman, good to have you. As always.
18:43
Speaker 5: Your former colleague Warren Davidson is pointing to the lack
18:46
Speaker 5: of offsets in particular and saying therefore that this is
18:49
Speaker 5: going to be a no go. Does this ninety five
18:52
Speaker 5: billion dollar package have a chance at getting through?
18:57
Speaker 11: It has a chance, But this is really a test
18:59
Speaker 11: of political wills on Capitol Hill. You have fractist majorities
19:05
Speaker 11: in the House and the Senate that are really tight
19:08
Speaker 11: for Republicans. The House is particularly challenged at passing legislation.
19:15
Speaker 11: Over the last month have been locked down over debate
19:18
Speaker 11: on immigration. It appears that House Republicans have a plan
19:22
Speaker 11: forward for reconciliation of partisan package that will not need
19:27
Speaker 11: Democratic votes in the US Senate to get enacted. It
19:31
Speaker 11: totals nearly one hundred billion dollars. Some of this deals
19:34
Speaker 11: with election security voter ID and immigration issues domestically that
19:39
Speaker 11: can help sweeten the pond, as well as these important
19:42
Speaker 11: defense priorities.
19:43
Speaker 3: What this means is House Republicans are.
19:46
Speaker 11: Trying to go around Democratic opposition to this president and
19:52
Speaker 11: this president's intervention in Iran and ensure that Democrats won't
19:58
Speaker 11: have a point of leverage to in their spending policies
20:02
Speaker 11: and priorities and other domestic priorities into the debate.
20:07
Speaker 3: So Therefore the package is smaller.
20:10
Speaker 11: They're saying to fellow Republicans, this package is smaller than
20:15
Speaker 11: the deal they would have to do with Democrats necessary
20:18
Speaker 11: to get their support in their votes. So, in that way,
20:21
Speaker 11: Congressman Davidson is exactly right, this is an expensive package.
20:25
Speaker 11: But the alternative here is a more expensive package done
20:28
Speaker 11: with the sport of Democratic lawmakers. That's really the narrow
20:33
Speaker 11: scope of the narrow range of scope and debate they're
20:37
Speaker 11: having on Capitol Hill in order to get this package
20:40
Speaker 11: done and over the next couple of days. Tomorrow will
20:43
Speaker 11: be a crucial day for House Republicans and getting that
20:46
Speaker 11: bill through the Budget Committee.
20:48
Speaker 2: Yeah, all right, So let's say Speaker Johnson, mister Chairman,
20:51
Speaker 2: pulls a rabbit out of a hat, and he's done it.
20:53
Speaker 2: Before this thing actually comes out of committee and it
20:55
Speaker 2: passes the House, what happens next door in the Senate?
21:00
Speaker 11: Well, the Senate, look, we have the timely passing of
21:04
Speaker 11: Cenator Lindsay Graham and his sister's quick appointment to that seat.
21:09
Speaker 11: We have Mitch McConnell, who is ailing, and so you
21:13
Speaker 11: have an attendance problem in the US Senate, and you
21:15
Speaker 11: have a disagreement on the approach as well on immigration
21:20
Speaker 11: and these domestic priorities on voter ID. So this is
21:24
Speaker 11: going to be a second, very very narrow path through
21:30
Speaker 11: the US Senate. But as you said, Speaker Johnson has
21:32
Speaker 11: pulled a rabbit out of the hat before with help
21:34
Speaker 11: of President Trump, and I think likewise Leader Thoon will
21:37
Speaker 11: be able to get this packaged through if it's able
21:40
Speaker 11: to get out of the US House, which then unlocks
21:44
Speaker 11: a second a second process once you have a budget resolution.
21:48
Speaker 11: That is just the opening act for them to actually
21:50
Speaker 11: write this policy and to pull that rabbit out of
21:53
Speaker 11: that hat is a second sort of tricky, tricky set
21:59
Speaker 11: of things that need to happen. This is a lot
22:02
Speaker 11: to do, and in July of a midterm election year,
22:06
Speaker 11: but necessary priority for the President to see this through
22:09
Speaker 11: the Congress.
22:11
Speaker 5: I'd like to ask you about something else the President
22:14
Speaker 5: has called a priority. In fact, he mentioned that this
22:17
Speaker 5: should be passed in honor of the legacy of Senator
22:20
Speaker 5: Lindsay Graham after his passing which you mentioned, which is
22:22
Speaker 5: the Clarity Act, which it's not clear that Senator Graham
22:25
Speaker 5: was particularly passionate about crypto market structure in particular, but
22:30
Speaker 5: there are many that are in Politico as reporting that
22:32
Speaker 5: tomorrow at the White House a group of Senators will
22:34
Speaker 5: be meeting with the President about the path forward for
22:38
Speaker 5: this legislation. Mister chairman, are they going to have to
22:41
Speaker 5: tell the president if he wants to see this done,
22:43
Speaker 5: he's going to have to agree to restrictions on the
22:45
Speaker 5: actions of him and his family in the crypto space.
22:49
Speaker 11: Well, that's certainly what the Democratic senators are saying is
22:52
Speaker 11: their objection to passing clarity. Look, this path to getting
22:58
Speaker 11: clear law on crypto is really the ethics issue for
23:04
Speaker 11: elected officials and for the private sector. Frankly, we need
23:07
Speaker 11: to define what is a digital asset and its means
23:09
Speaker 11: of exchange. We currently don't have any federal law dictating
23:14
Speaker 11: those two things on a very important, very large market
23:18
Speaker 11: that now traditional finance is getting heavily engaged in. So frankly,
23:23
Speaker 11: the pitch here is that ethics is downstream of us
23:27
Speaker 11: actually having sound law and a clear set of rules
23:30
Speaker 11: and regulations at the federal level.
23:32
Speaker 3: That's what clarity will bring.
23:33
Speaker 11: The opposition by Democratic lawmakers here, I think, is really
23:37
Speaker 11: trying to bring this into the political debate about the President.
23:40
Speaker 11: The president's financial disclosure statement and his engagement across financial
23:48
Speaker 11: markets and investment activities, business activities for he and his family.
23:52
Speaker 11: That is a separate issue than having sound law on crypto,
23:57
Speaker 11: which is what the Clarity Act would bring about. It's
24:01
Speaker 11: really an open question whether or not the Democrats and
24:03
Speaker 11: the Senate will stay infirm and opposition unless we have
24:07
Speaker 11: some additional ethics language here for government officials, most specifically
24:12
Speaker 11: the President and Vice President. A lot's going to be
24:15
Speaker 11: writing on this test vote the Senate will have on Clarity,
24:19
Speaker 11: hopefully next week or the following week.
24:23
Speaker 2: Thirty thousand foot view, Mister Chairman, there are real concerns
24:27
Speaker 2: about whether anything is going to get out of this
24:29
Speaker 2: Congress between now and the lame duck. Sarah Chamberlain from
24:32
Speaker 2: the Republican Main Street Partnership said in our studio yesterday
24:36
Speaker 2: that the store is basically closed. We'd be lucky to
24:40
Speaker 2: get a cr right now, and she expects the government
24:42
Speaker 2: likely will shut down for some period of time and
24:45
Speaker 2: could in fact be a lengthy one following the end
24:48
Speaker 2: of September.
24:49
Speaker 11: How about you, well, I think a government shutdown is
24:53
Speaker 11: more likely than not on September thirtieth and that's because
24:56
Speaker 11: we saw the Democratic Party pay no price for the
24:59
Speaker 11: law longest government shutdown in American history, led by Democratic
25:03
Speaker 11: Senate opposition, and so because they didn't pay a political price,
25:07
Speaker 11: then they believe they're unlikely to.
25:10
Speaker 3: Pay a political price this fall.
25:13
Speaker 11: I think that is a really tricky thing for the
25:16
Speaker 11: Congress to negotiate. That is also why they're pushing this
25:20
Speaker 11: Reconciliation three point zero so intently. Defense supplementals have always
25:25
Speaker 11: been bipartisan over the last decades, and now you see
25:30
Speaker 11: Republicans facing unified Democratic opposition to replenishing our stocks and
25:35
Speaker 11: supplies of weaponry. That's why they're going this partisan path.
25:41
Speaker 11: That doesn't make a government shutdown more likely. It probably sorry,
25:46
Speaker 11: it doesn't make a government shutdown less likely. It probably
25:48
Speaker 11: makes it more likely in the fall. But time will tell,
25:53
Speaker 11: and politics, especially these days, is quite fickle day to
25:57
Speaker 11: day and week to week.
26:00
Speaker 6: And that's the truth.
26:00
Speaker 2: We're always lucky to have you walk us through at
26:02
Speaker 2: Patrick McHenry, Bloomberg Politics contributor, former Congressman, of course, Republican,
26:07
Speaker 2: former Speaker pro tem. He actually held the gavel for
26:10
Speaker 2: some time, and I feel like he's still really glad
26:11
Speaker 2: that he's not doing that anymore.
26:13
Speaker 5: Yeah, although I wonder if you missed share in the
26:15
Speaker 5: Financial Services Committee, which had the chance to question the
26:17
Speaker 5: new Chair of the Federal Reserve, Kevin worsh this week.
26:20
Speaker 2: Fair enough, Friendschill had pretty efficient process today. I will say,
26:25
Speaker 2: stay with.
26:25
Speaker 3: Us on Balance of Power.
26:26
Speaker 2: We'll have much more coming up after this.
26:31
Speaker 1: You're listening to the Bloomberg Balance of Power podcast ketch
26:34
Speaker 1: us live weekdays at noon and five pm Eastern on
26:38
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26:41
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Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
26:50
Speaker 2: The Aspen Security Forum underway, where they're talking about strategy
26:54
Speaker 2: and spending, is a big part of the conversation at
26:56
Speaker 2: the Pennsylvania Defense and Innovation Summit that's getting way under
27:00
Speaker 2: way today as well, with the help of Senator David McCormick,
27:03
Speaker 2: who is running this bringing together, as he says, defense
27:06
Speaker 2: and tech leaders, including senior military commanders, industry CEOs. Also
27:10
Speaker 2: a President of the United States, Donald Trump, will be
27:12
Speaker 2: there a little bit later on today to take part
27:14
Speaker 2: in a roundtable in Bloomberg's Washington correspondent, Tyler Kendall has
27:17
Speaker 2: made her way to Carlisle to be part of this conversation,
27:20
Speaker 2: traveling with the President and joins us right now with
27:23
Speaker 2: a special guest, Tyler, take it away.
27:27
Speaker 12: Thanks so much, Joe. As you mentioned, I am joined
27:29
Speaker 12: by a special guest, the Chair and President of the
27:31
Speaker 12: US Export Import Bank, John Yovanovitch. John, it is so
27:35
Speaker 12: nice to see you again here at the summit where
27:37
Speaker 12: we are talking about bolstering of the US defense industrial base.
27:41
Speaker 12: So let's just start broadly, how can export financing for commercial,
27:46
Speaker 12: dual use domestic defense manufacturers help when it comes towards
27:51
Speaker 12: needing that supply that our allies are looking at? And
27:54
Speaker 12: how are you thinking about replenishing stockpiles, even if it's indirectly.
27:58
Speaker 13: So one of the best things about revitalizing XM has
28:01
Speaker 13: been figuring out ways where our financial tools can help
28:05
Speaker 13: bring about not just supply chain security, energy security domestically
28:09
Speaker 13: for everyday Americans, but how we can be great partners
28:12
Speaker 13: with our allies all around the world. So really came
28:14
Speaker 13: down to it is President Franklin Roosevelt started XM in
28:17
Speaker 13: nineteen thirty four and the reasons he founded the bank
28:20
Speaker 13: then rhyme with all the challenges that we're trying to
28:23
Speaker 13: be today. So Number one, how do we help American
28:25
Speaker 13: companies win all around the globe? And I can tell
28:27
Speaker 13: you right now we've never had more demand to partner
28:31
Speaker 13: with US technology to get US industry involved in every
28:35
Speaker 13: single bit of growth projects all around the planet. Number
28:38
Speaker 13: two energy security, How can we help bring American energy
28:41
Speaker 13: molecules and technologies to every corner of the globe. Three
28:44
Speaker 13: Supply chain security, things like Project Vault, supply chain resiliency
28:48
Speaker 13: make more in America. These are things that are become
28:51
Speaker 13: so foundational to economic and national security. And last, but
28:54
Speaker 13: not least, you may not think about a ninety two
28:57
Speaker 13: year old, sleepy institution like xm IS being focused on
29:01
Speaker 13: winning in the industries in the future. But when it
29:03
Speaker 13: comes to global AI exports, dual use technologies, which we're
29:07
Speaker 13: talking a lot about here today, advanced mobility, these are
29:10
Speaker 13: areas what we're trying to help ensure that we can
29:12
Speaker 13: not just innovate in America, but that we can iterate,
29:15
Speaker 13: manufacture and deliver.
29:16
Speaker 12: Part of what's adding to the urgency is, of course,
29:19
Speaker 12: the conflict in Iran, and yesterday we saw President Trump
29:22
Speaker 12: move off of a threat for a twenty percent reimbursement
29:25
Speaker 12: fee and instead says that regional allies are going to
29:29
Speaker 12: invest in the US when it comes to trade and
29:32
Speaker 12: financing deals. I'm curious, can you give us any context
29:35
Speaker 12: here are these new investments or building on commitments that
29:39
Speaker 12: we've already gone.
29:40
Speaker 13: Look with the President's doing in Iran as a long overdue.
29:43
Speaker 13: What I can tell you about exim's role is that
29:45
Speaker 13: we're focused on delivering energy dominance, which involves not just
29:49
Speaker 13: energy security all across America. Because I'll tell you what,
29:53
Speaker 13: if you are a state in America like Pennsylvania, like Texas,
29:56
Speaker 13: like Louisiana that enjoys a lot of energy exports, you
29:59
Speaker 13: also have low cost of electricity for all of your residents.
30:03
Speaker 13: It's also about bringing about energy technology that we have
30:06
Speaker 13: to every point of the globe. And so it's just
30:08
Speaker 13: it's more than energy security, though, when you think about
30:11
Speaker 13: what it takes to respond to a global environment like
30:14
Speaker 13: the one we're in today, it's also about fostering next
30:18
Speaker 13: generation innovation like we have here today. It's about supply
30:21
Speaker 13: chain security because no matter what you're trying to build
30:24
Speaker 13: and deliver. Having the foundational building blocks in terms of
30:27
Speaker 13: critical raw materials is absolutely central, and that's why what
30:30
Speaker 13: Dave and Diana McCormick have done here convene capital providers, innovators,
30:35
Speaker 13: some of the largest companies, but also those who really
30:38
Speaker 13: are bringing and infusing innovation into the equation. That's what's
30:42
Speaker 13: most important, and that's where XM is found new life
30:45
Speaker 13: in our revitalization.
30:46
Speaker 12: Well, how has the conflict in Iran perhaps mobilized capital
30:49
Speaker 12: to regional partners who may be thinking a little bit
30:51
Speaker 12: differently now about a reliance on the straight of hermoves
30:54
Speaker 12: or their own defense capabilities and nobles within them.
30:57
Speaker 13: It's funny. What we've seen is a continueuation of what
31:00
Speaker 13: we experienced even before the conflict broke out, which was
31:04
Speaker 13: people coming to us at XM and saying, we want
31:07
Speaker 13: to partner with American energy technology, We want to procure
31:11
Speaker 13: American energy molecules, understanding that that's the best way to
31:15
Speaker 13: build a long term strategic relationship. We want nuclear technology
31:19
Speaker 13: to be front and center. We want to partner with
31:21
Speaker 13: American SMRs or American large scale reactors. And what it
31:25
Speaker 13: comes down to is that buying American is a good
31:28
Speaker 13: bet for building your future. And so what we want
31:31
Speaker 13: to do is allow every day working class Americans staff
31:35
Speaker 13: more well paying jobs to have the opportunity to continue
31:38
Speaker 13: to flourish all the while we deliver American goods, services,
31:41
Speaker 13: and technologies to every corner.
31:43
Speaker 9: Of the globe.
31:43
Speaker 12: And part of this is the evolving nature of technology
31:46
Speaker 12: and AI. It's my understanding that you've just launched an
31:49
Speaker 12: initiative that would essentially help to fast track these tech exports.
31:52
Speaker 12: Can you talk to me about what the demand has
31:54
Speaker 12: been like.
31:55
Speaker 13: Absolutely so. Thanks to the President's leadership, he issued a
31:59
Speaker 13: global AI export plan, which the Expert Import Bank we're
32:02
Speaker 13: very proud to be a part of. Now, I will
32:04
Speaker 13: say that we were the first federal agency named in
32:07
Speaker 13: the executive Order that's delivered right. So we've revamped an
32:10
Speaker 13: entirely new export program specifically tailored to the AI tech stack,
32:15
Speaker 13: and we've learned our lesson from five G from the
32:18
Speaker 13: telecom space only a few years ago to understand that
32:21
Speaker 13: we needed to pivot and innovate right before we had
32:26
Speaker 13: this onslaught of demand. Because what I can tell you
32:28
Speaker 13: is every country that comes and meet with us, every
32:31
Speaker 13: company from around the world one of the first things
32:33
Speaker 13: they ask is how can we partner with American AI.
32:36
Speaker 13: They're not just asking the President, they're asking us too,
32:38
Speaker 13: And so we want to be a frontline economic tool
32:41
Speaker 13: that allows the American technology stack to win and to
32:44
Speaker 13: be brought to every corner of the globe, because it's
32:46
Speaker 13: not just AI. AI is going to be a foundational
32:49
Speaker 13: part of every single industry, and we want to make
32:51
Speaker 13: sure American companies win.
32:53
Speaker 12: I understand the demand, but we're also seeing in some
32:56
Speaker 12: ways grown concern from European allies about being too reliant
32:59
Speaker 12: on USA tech, perhaps highlighted by the fact that the
33:01
Speaker 12: US Commerce Department imposed and then lifted those export controls
33:05
Speaker 12: related to Anthropics most Advanced Technology. I was just speaking
33:09
Speaker 12: with the Paleers CTO about how the French government moved
33:13
Speaker 12: to cut ties with that company in a bid to
33:15
Speaker 12: bolster their own technology. I'm wondering how you're thinking about
33:18
Speaker 12: financing technology that could be restricted overnight.
33:21
Speaker 13: Well, what I can tell you is that we are
33:24
Speaker 13: inundated with demand for American technology partnerships. But also if
33:29
Speaker 13: you think about what it takes to deliver on the
33:31
Speaker 13: promise of AI, it's a brick and mortar process. Right,
33:36
Speaker 13: it requires molecules, it requires processing, it requires infrastructure, and
33:40
Speaker 13: so all of those things are traditionally things that XM
33:44
Speaker 13: has focused on. And so from our perspective, we want
33:46
Speaker 13: American companies to win. We want us to be able
33:49
Speaker 13: to deliver a promise because delivering an AI future is
33:54
Speaker 13: one that you and I want to be comfortable with.
33:56
Speaker 13: Is going to ensure that these industries thrive for a
33:58
Speaker 13: number of years.
33:59
Speaker 12: Ago, final few minutes, I have you just quickly first
34:02
Speaker 12: on Project Vaults, which you did mention at the top.
34:05
Speaker 12: Can you give us an update on how that is
34:08
Speaker 12: going when it comes to building up that critical minerals stockpile,
34:11
Speaker 12: any sort of update that the market could be looking for.
34:14
Speaker 3: Yeah, it's great.
34:14
Speaker 13: So so Project Bault, for your viewers at home, was
34:17
Speaker 13: actually an initiative that President Trump announced in early February
34:20
Speaker 13: where the Export Import Bank partnered with the private sector
34:24
Speaker 13: to be able to bring about a strategic reserve for
34:27
Speaker 13: critical raw materials. And so we're very pleased to say
34:31
Speaker 13: that it's being operationalized. Project Vault has executive leadership in place.
34:36
Speaker 13: Brett Lambert, someone who's a career veteran dedicated his entire
34:40
Speaker 13: careers supply chain, security and resiliency, and so we're making
34:43
Speaker 13: great strives there.
34:45
Speaker 12: And then final final question, can you just talk to
34:47
Speaker 12: me about how you're thinking about institutional independence because there
34:51
Speaker 12: have been some questions raised, including by Senator Elizabeth Warren
34:55
Speaker 12: about one financing deal that has alleged ties to the
34:58
Speaker 12: Trump family.
34:59
Speaker 3: How do you and institutional.
35:00
Speaker 13: Independence process is key at XMON. Every single applicant that
35:05
Speaker 13: comes through the door has the exact same process, and
35:08
Speaker 13: what we can tell you is that we're wide open
35:10
Speaker 13: for business.
35:10
Speaker 7: But the bottom line is that.
35:11
Speaker 13: The foundational elements of every deal have to pass muster
35:15
Speaker 13: and we're very, very comfortable with what we do all day,
35:18
Speaker 13: every night.
35:19
Speaker 12: All right. The President and Chairman of the US Export
35:21
Speaker 12: Import Bank, John Yavanovich, thank you so much for joining
35:24
Speaker 12: us here live on Bloomberg Television and Radio. Joe and Kayley.
35:27
Speaker 12: This has been a conversation on the sidelines of the
35:29
Speaker 12: Pennsylvania Devent Summit, and I'll send it back to you, all.
35:34
Speaker 7: Right, Great work Bloomberg. Tyler Kendall, thank you so much,
35:36
Speaker 7: and we'll be checking it back in.
35:37
Speaker 5: With Tyler throughout the day here.
35:46
Speaker 2: Thanks for listening to the Balance of Power podcast. Make
35:49
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36:00
Speaker 12: Jah