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Trump Challenges AI Guardrails, Canadian PM Carney on AI and US Trade · Balance of Power

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 2: Podcasts. Radio.
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  Speaker 3: News.
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  Speaker 4: You're listening to the Bloomberg Balance of Power podcast. Catch
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  Speaker 5: All right, Charlie Pellett in New York, I myself in Washington.
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  Speaker 5: And one story that is bridging that divide today, though
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  Speaker 5: many of them do, and we talk about them often
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  Speaker 5: here on Balance of Power, is the conversation around regulating
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  Speaker 5: artificial intelligence. In case you missed it this weekend, there
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  Speaker 5: was a lot of action as the CEO of Anthropic,
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  Speaker 5: Dario Amadei, posted an open letter calling for pacing the frontier,
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  Speaker 5: a three-step plan he outlined in order to do so
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  Speaker 5: for the sake of humanity. A post that he made
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  Speaker 5: was then retweeted by both Elon Musk and and OpenAI's
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  Speaker 5: Sam Altman, characters who, of course, aren't frequently in agreement
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  Speaker 5: with Dario necessarily, but they both say in this instance
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  Speaker 5: he is right. President Trump, however, doesn't think so. He
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  Speaker 5: took to True Social today suggesting that the only control
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  Speaker 5: or guardrails that AI needs is a strong and smart president.
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  Speaker 6: It's a quote from him.
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  Speaker 5: Of course, we heard similar pushback to the idea of
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  Speaker 5: slowing down the frontier from the president over the weekend
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  Speaker 5: when he was in Ireland for a golf tournament at
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  Speaker 5: one of his properties.
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  Speaker 3: Listen.
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  Speaker 7: We're leading China in AI. We're the most sophisticated.
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  Speaker 8: Country in the world.
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  Speaker 7: And frankly, I want to keep it that way because
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  Speaker 7: whoever wins, AI wins. And we can put guardrails, we
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  Speaker 7: can do this and that. But I think you have
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  Speaker 7: a lot of negative forces that are bringing it up
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  Speaker 7: that shouldn't be bringing it up.
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  Speaker 5: So let's get more on this now as we turn
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  Speaker 5: to Jeff Mason, Bloomberg White House and Washington correspondent who
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  Speaker 5: was here with me in the D.C. studio yesterday. So, Jeff,
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  Speaker 5: we've heard this from the president before. He does not
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  Speaker 5: want to see China win this race that he thinks
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  Speaker 5: the U.S. is leading right now. But is this in
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  Speaker 5: political alignment with the American electorate?
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  Speaker 9: Well, not if people start getting really freaked out about
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  Speaker 9: these warnings. And I think people are getting there. And
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  Speaker 9: certainly you've seen that in terms of a reaction in
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  Speaker 9: Washington from some of the lawmakers who are talking about
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  Speaker 9: wanting to do more regulation issues. clearly the industry is
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  Speaker 9: signaling some concerns, some pretty major concerns. When you start
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  Speaker 9: hearing about phrases like human extinction, that's very dramatic. And
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  Speaker 9: yet President Trump, if you stand back a little bit
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  Speaker 9: and think about how he thinks, he thinks about winning, right?
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  Speaker 9: Both as a businessman and as.
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  Speaker 1: A politician and certainly as a president.
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  Speaker 9: And he sees this really as a competition with China,
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  Speaker 9: which he said, He said that to me actually last Thursday.
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  Speaker 9: I asked him about it on the tarmac in Dallas
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  Speaker 9: in the early hours after these warnings started coming out,
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  Speaker 9: and he said he was not worried about these warnings.
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  Speaker 9: And he's just doubled down on that, both in Ireland
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  Speaker 9: and in the Truth Social Post today.
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  Speaker 5: And of course, him suggesting that AI needs a lighter
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  Speaker 5: regulatory touch than some are pushing for would be in
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  Speaker 5: keeping with one of the things that he campaigned on
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  Speaker 5: when running for re-election again, which was deregulation, not imposing
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  Speaker 5: more of it.
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  Speaker 10: Right.
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  Speaker 9: He's not into regulation generally, whether it's on AI or
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  Speaker 9: whether it's on climate change or whether it's on anything
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  Speaker 9: else that affects business. And that you're spot on to
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  Speaker 9: say is consistent with who he is as a in
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  Speaker 9: terms of the policies that he cares about. This may
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  Speaker 9: be a much different thing, though, for him politically, because, again,
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  Speaker 9: if the electorate starts getting worried and it ends up
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  Speaker 9: becoming a bifurcated approach between the Democrats and the Republicans,
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  Speaker 9: and they're not there yet, but it could get there
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  Speaker 9: if he ends up saying, no, Republicans are anti-regulation, we're
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  Speaker 9: not going to step in on this.
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  Speaker 1: If you see alone, you see the.
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  Speaker 9: Response to data centers becoming a huge political topic. Danger
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  Speaker 9: is also one that is likely to have an impact.
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  Speaker 5: Well, and then there's the wider issue of affordability, which
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  Speaker 5: the president has suggested time and again is fake. He
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  Speaker 5: did so on the stage in Dallas just last week.
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  Speaker 5: And he took to True Social to talk about that
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  Speaker 5: in the last hour as well, Jeff, saying he hopes
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  Speaker 5: everyone realizes that price increases throughout America were caused by
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  Speaker 5: sleepy Joe Biden and the Biden administration. which, of course,
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  Speaker 5: hasn't been in place in almost two years since Trump
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  Speaker 5: took office in January of last year. But he points
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  Speaker 5: specifically to oil and says once again, he's said this
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  Speaker 5: many times, that oil prices will come down sharply as
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  Speaker 5: soon as the military conflict with Iran is over.
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  Speaker 6: And yet it clearly is not yet over.
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  Speaker 5: We're seeing a ramping up in hostilities in the Middle
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  Speaker 5: East with the Houthis as well. Saudi Arabia's east-west pipeline
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  Speaker 5: getting hit by a drone and shutting it down over
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  Speaker 5: the weekend. And oil prices are on the march higher.
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  Speaker 5: Could that potentially bring Trump around to the idea of
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  Speaker 5: a deal with Iran?
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  Speaker 6: Are we not there yet?
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  Speaker 9: Well, it's just so hard to say with him and
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  Speaker 9: with this conflict. Certainly, he's very sensitive to the high
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  Speaker 9: cost of oil. and the high cost of gasoline, and
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  Speaker 9: the high cost of diesel. And you're seeing that sensitivity
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  Speaker 9: in his true social posts today, for sure. But he
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  Speaker 9: is making promises about prices coming down that he has
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  Speaker 9: not demonstrated that he can keep. And that is reflected
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  Speaker 9: in the fact that this war has gone on much
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  Speaker 9: longer than he suggested it would at the very beginning.
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  Speaker 9: He said it would be a four to six week conflict.
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  Speaker 9: He's gone back and forth on whether he wants a deal,
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  Speaker 9: on whether Iran wants a deal. And now he's trying
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  Speaker 9: to blame the previous administration for the high prices, which,
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  Speaker 9: let's be clear, inflation was absolutely an issue under Joe Biden.
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  Speaker 1: It was.
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  Speaker 9: But it was coming down at the end of his term.
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  Speaker 9: And this is demonstrably President Donald Trump's economy right now.
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  Speaker 9: You've got both the war and the tariffs having inflationary impacts.
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  Speaker 9: And you can't just wish that away politically, even if
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  Speaker 9: that's what the president is trying to do.
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  Speaker 5: Well, and you mentioned his sensitivity to diesel prices in particular,
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  Speaker 5: which of course hit a record. He says in large
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  Speaker 5: part that actually is due to the war between Russia
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  Speaker 5: and Ukraine and Ukraine going after Russian refineries. He said
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  Speaker 5: this in Ireland and doubled down on it today. Let's
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  Speaker 5: listen first to what the president said about the necessity
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  Speaker 5: of Ukraine stopping those attacks over the weekend.
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  Speaker 11: Mr.
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  Speaker 7: Zelensky, if it weren't, he has to stop knocking out
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  Speaker 7: diesel fuel in Russia. Let him go after targets, but
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  Speaker 7: not diesel fuel because he's causing a shortage of diesel.
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  Speaker 7: This isn't done by the Middle East. This is done
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  Speaker 7: by what's happening with Russia and Ukraine.
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  Speaker 10: So we spoke to Mr.
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  Speaker 7: Zelensky about it.
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  Speaker 8: There are plenty of other targets.
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  Speaker 7: Don't hit diesel fuel because that's hurting the world.
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  Speaker 5: Fast forward to this morning, Jeff and the president post
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  Speaker 5: on True Social that Ukraine has agreed not to hit
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  Speaker 5: Russian energy targets and Russia has agreed to do likewise.
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  Speaker 6: Do we take that at face value?
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  Speaker 9: Well, I'm waiting to hear the two of them say that,
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  Speaker 9: number one. And number two, I think another way that
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  Speaker 9: you could hear the president's comments is what's happening with
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  Speaker 9: regard to diesel is happening in a conflict that I
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  Speaker 9: didn't start. So don't blame me. Either way, the The
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  Speaker 9: impact on diesel prices, certainly from Iran, but perhaps because
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  Speaker 9: of Russia, Ukraine as well, is hurting him politically because
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  Speaker 9: of the squeeze that is putting on so many aspects
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  Speaker 9: of the U.S. economy and the global economy for that matter.
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  Speaker 9: So he's, again, going to go back to the word sensitive.
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  Speaker 9: It's tricky for him to just kind of blow off
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  Speaker 9: and explain away.
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  Speaker 6: All right.
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  Speaker 5: Jeff Mason covering the White House for us here at
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  Speaker 5: Bloomberg and here with me in our Washington, D.C.
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  Speaker 12: Studio.
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  Speaker 6: Thank you so much.
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  Speaker 5: I would point out that we did get a post
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  Speaker 5: on X from the Ukrainian president, Volodymyr Zelensky. Maybe a confirmation,
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  Speaker 5: but with a caveat saying, if our partners are ready
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  Speaker 5: to ensure that Russia genuinely refrains from striking our electricity system,
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  Speaker 5: other energy facilities, critical infrastructure, and food supply routes, then,
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  Speaker 5: of course, we are ready to ensure a corresponding halt
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  Speaker 5: to our strikes.
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  Speaker 1: But again.
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  Speaker 5: something needs to happen for that to happen, apparently. So
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  Speaker 5: let's get into all of this now and the impact
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  Speaker 5: it's having on prices here at home as we turn
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  Speaker 5: to our political panel. Bloomberg Politics contributors Adam Hodge and
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  Speaker 5: Rick Davis are with me. Adam, Democratic strategist and managing
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  Speaker 5: partner at Bully Pulpit International. Rick, Republican strategist and partner
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  Speaker 5: at Stonecourt Capital. Adam, you, of course, had experience on
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  Speaker 5: the National Security Council in the last administration. I just
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  Speaker 5: wonder what your reaction is, keeping in mind the political
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  Speaker 5: sensitivity of high gasoline and diesel prices here here at
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  Speaker 5: home to the president openly suggesting that one of the
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  Speaker 5: tactics Ukraine is using to try to advance its interest
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  Speaker 5: in the war is not worth the cost that Americans
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  Speaker 5: have to pay at home.
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  Speaker 6: Is that a winning argument?
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  Speaker 1: It's not because I think it's not backed up by
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  Speaker 1: the facts.
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  Speaker 13: I mean, look at where the price of diesel was
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  Speaker 13: before the president started the war and where it is today.
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  Speaker 13: We're above six bucks a gallon. And that is coming
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  Speaker 13: at a terrible political time for the president. When you've
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  Speaker 13: got farmers in key states, key battleground states like Iowa, Nebraska, Ohio,
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  Speaker 13: going to get their crops out of the field and
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  Speaker 13: they're paying six bucks a gallon. And so the president
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  Speaker 13: is trying to cast blame to other areas, but he
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  Speaker 13: owns this.
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  Speaker 1: There's no question about it. This is all on him.
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  Speaker 13: If he had not invaded Iran, we would not be
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  Speaker 13: in the situation right now.
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  Speaker 1: And I think the president's like feeling it. And so
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  Speaker 1: he's trying to cast blame.
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  Speaker 13: I think what the Ukraine should try to do, I mean,
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  Speaker 13: if they're credible, they've said this all along, if Russia
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  Speaker 13: will stop attacking our critical infrastructure, we're willing to talk.
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  Speaker 13: But Russia has obviously shown no signs of doing that. Supposedly,
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  Speaker 13: we're going to stop attacking civilian buildings, and they keep
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  Speaker 13: sending missiles and drones into apartment buildings. So I don't
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  Speaker 13: think the president can get Russia to the table, despite
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  Speaker 13: his proclamation that he would be able to do so
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  Speaker 13: on day one of his administration.
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  Speaker 1: And so we're going to be in.
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  Speaker 13: This for a little while, and the president really, across
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  Speaker 13: the board, has himself to blame for the situation he
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  Speaker 13: finds himself in.
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  Speaker 5: Well, so Rick, I'd love for you to weigh in
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  Speaker 5: here as the president specifically once again suggests that oil
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  Speaker 5: prices will come down when the conflict with Iran ends. Obviously,
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  Speaker 5: there is another ongoing hot war to consider. Is he
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  Speaker 5: right to suggest that what needs resolution is just simply Ukraine,
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  Speaker 5: Russia and going after Russian refineries?
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  Speaker 2: You know, it's a bit of a trap that he
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  Speaker 2: set for himself, right? I mean, we remember a year
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  Speaker 2: and a half ago during the inaugural, he was going
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  Speaker 2: to solve this conflict in the first week of his administration.
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  Speaker 2: Then there have been just numerous entreaties between the two
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  Speaker 2: powers to try and find a solution. Every idea of
• 10:44
  Speaker 2: a ceasefire has failed. Every peace plan has failed. And
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  Speaker 2: so it kind of comes back to the White House that, hey,
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  Speaker 2: if you'd solve this conflict, you wouldn't have this problem.
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  Speaker 2: And so it brings up to the American public the
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  Speaker 2: Ukraine-Russia conflict, which is not a positive for this administration.
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  Speaker 2: And they should not be talking this much about it
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  Speaker 2: right in front of a midterm election. It's like, hey,
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  Speaker 2: I'm pointing out one of the failures of my administration's
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  Speaker 2: first two years. I want you to remember that. It's
• 11:16
  Speaker 2: pretty counterproductive politically. I'm sure the president's pollsters are cringing
• 11:20
  Speaker 2: over this idea that we want to throttle our ally
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  Speaker 2: in order for our enemy to sell more diesel fuel.
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  Speaker 2: I mean, it's just like, I'm sorry, that ad just
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  Speaker 2: wrote itself. And so, yeah, it's another problem that the
• 11:37
  Speaker 2: administration has kind of created for themselves because they create
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  Speaker 2: these expectations of early wins, of easy solutions.
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  Speaker 8: That when they don't come, they pay a price for that.
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  Speaker 6: Well, and as you consider the political messaging here, Rick. Yep,
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  Speaker 6: go ahead, Adam.
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  Speaker 1: I was going to say, a Democrat just keeps saying,
• 11:55
  Speaker 1: thank you, may I have another? You know, please keep
• 11:57
  Speaker 1: it on.
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  Speaker 5: Well, and so I love both of your takes on
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  Speaker 5: the other thing we heard from the president on True Social,
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  Speaker 5: which is to suggest that the inflation problem is still
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  Speaker 5: sleepy Joe Biden, to quote the president's problem. The Biden administration,
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  Speaker 5: 20 months since President Trump took office, Rick, and 50
• 12:14
  Speaker 5: days out from a midterm election, a whole election cycle later.
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  Speaker 5: Does that argument work?
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  Speaker 8: You know, I mean, it's interesting.
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  Speaker 2: In the absence of a decent argument for yourself, why
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  Speaker 2: not blame the previous administration? I mean, people do blame
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  Speaker 2: Biden for having high inflation. It's kind of a desperation
• 12:36
  Speaker 2: move to think that somehow the problems you're feeling are
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  Speaker 2: as a result of an administration that left office a
• 12:43
  Speaker 2: year and a half ago. But if you're not going
• 12:47
  Speaker 2: to offer anything on affordability and cost of living, which
• 12:50
  Speaker 2: the president himself has said is a hoax— then you've
• 12:55
  Speaker 2: got to go someplace. And I think that, again, is
• 12:57
  Speaker 2: a bit of a trap. If the administration leaned in
• 13:00
  Speaker 2: and had a progressive agenda for bringing down prices, not
• 13:05
  Speaker 2: just wait until after the election and the price of
• 13:08
  Speaker 2: oil will come down, that's not a real policy.
• 13:10
  Speaker 1: That's a hope.
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  Speaker 8: And so I don't blame.
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  Speaker 2: The president for raising that issue because obviously voters punished
• 13:21
  Speaker 2: Joe Biden for it.
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  Speaker 8: There was proof in that.
• 13:23
  Speaker 2: But times moved on, and this would have been a
• 13:26
  Speaker 2: perfect time to usher out a new administration proposal to
• 13:30
  Speaker 2: attack affordability.
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  Speaker 5: Well, and of course, there is merit to the argument
• 13:36
  Speaker 5: that oil prices were higher during the Biden administration than
• 13:39
  Speaker 5: they are right now, where we saw, of course, back
• 13:41
  Speaker 5: in 2022, it topped 120. But of course, oil prices
• 13:45
  Speaker 5: were significantly lower than that, around $ 80 a barrel when
• 13:48
  Speaker 5: President Trump took office. And now we're back up in
• 13:50
  Speaker 5: triple digits again, as we just check all the facts here.
• 13:54
  Speaker 8: Adam.
• 13:54
  Speaker 5: And yet to Rick's point, obviously, Biden did bear a
• 13:58
  Speaker 5: lot of blame for a sour economy. It was one
• 14:01
  Speaker 5: of the reasons, coupled with his age, that he had
• 14:03
  Speaker 5: to drop his reelection bid. How much is the economy
• 14:07
  Speaker 5: still a defining issue in this midterm and how addressing
• 14:13
  Speaker 5: affordability or not being able to do so? Do you
• 14:16
  Speaker 5: factor into the fact that Congress is only going to
• 14:19
  Speaker 5: be here, at least the House, for this week and
• 14:21
  Speaker 5: then they leave town again?
• 14:24
  Speaker 13: Yeah, but Kayla, you're right to start where on the math.
• 14:27
  Speaker 13: The math has no opinion, right? When President Trump took office,
• 14:30
  Speaker 13: inflation was lower than it is today. So let's just,
• 14:33
  Speaker 13: I mean, math has.
• 14:34
  Speaker 1: No opinion there.
• 14:35
  Speaker 13: I think that the reality is that what you've seen
• 14:38
  Speaker 13: from Democrats, they've tried to attack Across the board, talking
• 14:42
  Speaker 13: to Hakeem Jeffries' team, they're focused and laser-focused.
• 14:45
  Speaker 1: On affordability, right?
• 14:46
  Speaker 13: Gas prices, housing prices, the cost of food and groceries,
• 14:51
  Speaker 13: coupled with healthcare, and proposing that they're going to take
• 14:55
  Speaker 13: those things on as soon as they get into office
• 14:57
  Speaker 13: if you put your trust in the Democrats. Again, that's
• 15:01
  Speaker 13: maybe a little bit light on some of the specifics
• 15:03
  Speaker 13: of what policies would be, but you're going to have
• 15:05
  Speaker 13: to negotiate with the White House and with the Trump administration.
• 15:10
  Speaker 13: I think that is what you're going to see candidates
• 15:12
  Speaker 13: across the board from Maine, Ohio, Iowa, even.
• 15:16
  Speaker 1: Down in Texas. I can't believe we're talking about Texas, Rick.
• 15:20
  Speaker 1: But with real, and that is an.
• 15:23
  Speaker 13: Issue that Democrats are clearly laser focused on because they
• 15:27
  Speaker 13: think it is a winning issue. And the president does
• 15:29
  Speaker 13: not have a real solution to address the issue. And
• 15:32
  Speaker 13: his candidates are then trying to defend his tariffs or
• 15:34
  Speaker 13: trying to defend his Middle East policy that are only
• 15:37
  Speaker 13: making costs go up for the American people.
• 15:40
  Speaker 6: Just quickly, Rick, we have 30 seconds left.
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  Speaker 5: I just got back from Texas where Republicans just had
• 15:45
  Speaker 5: their first ever midterms convention. Are they in any better
• 15:48
  Speaker 5: of a position as we come into this week post-convention
• 15:51
  Speaker 5: ahead of the midterms than they were before they threw
• 15:52
  Speaker 5: the whole party?
• 15:54
  Speaker 2: Yeah, it's hard to see anything coming out of Dallas
• 15:57
  Speaker 2: last week other than the heat as being impressive to people.
• 16:00
  Speaker 2: You know, you didn't hear much about it over the weekend.
• 16:02
  Speaker 2: It kind of like came and went Wednesday and Thursday.
• 16:05
  Speaker 2: So I wouldn't put a lot of cachet.
• 16:07
  Speaker 8: Into the political impact of a two day Trump fest.
• 16:13
  Speaker 5: All right, Rick Davis and Adam Hodge, both of them
• 16:15
  Speaker 5: Bloomberg politics contributors in our political panel on this Monday.
• 16:19
  Speaker 5: Thank you so much for joining me. And there's more
• 16:21
  Speaker 5: here ahead on Balance of Power. You'll hear part of
• 16:23
  Speaker 5: the conversation between Bloomberg's Brian Platt and the Canadian Prime
• 16:26
  Speaker 5: Minister Mark Carney. That's straight ahead here on Bloomberg TV
• 16:30
  Speaker 5: and radio.
• 16:31
  Speaker 8: Stay with us on Balance of Power. We'll have much
• 16:33
  Speaker 8: more coming up after this.
• 16:38
  Speaker 4: You're listening to the Bloomberg Balance of Power podcast. Catch
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  Speaker 4: us live weekdays at noon and 5 p.m. Eastern on
• 16:44
  Speaker 4: Apple CarPlay and Android Auto with the Bloomberg Business app.
• 16:48
  Speaker 4: You can also listen live on Amazon Alexa from our
• 16:51
  Speaker 4: flagship New York station. Just say Alexa, play Bloomberg 1130.
• 16:57
  Speaker 5: I'm Kayleigh Lyons here in Washington, which, of course, President
• 16:59
  Speaker 5: Trump has returned to after his weekend travels to Ireland,
• 17:03
  Speaker 5: where he attended a golf tournament being played at his
• 17:05
  Speaker 5: property in Doonbeg. You might have seen he called for
• 17:08
  Speaker 5: the reunification of Ireland and Northern Ireland. We could probably
• 17:13
  Speaker 5: do a whole history lesson on the troubles and. Expand that,
• 17:17
  Speaker 5: but we'll have that conversation another time because he also
• 17:20
  Speaker 5: talked about a number of other subjects as he spoke
• 17:22
  Speaker 5: with reporters in Ireland, including the ongoing trade war between
• 17:26
  Speaker 5: the U.S.
• 17:26
  Speaker 6: And Canada.
• 17:28
  Speaker 5: The president telling reporters that you'll probably see a deal
• 17:31
  Speaker 5: with Canada fairly soon. The question, of course, is whether
• 17:35
  Speaker 5: Canada feels the same way as there are two parties
• 17:39
  Speaker 5: in this conversation. And to answer that question, Bloomberg's Brian
• 17:42
  Speaker 5: Platt sat down today with Canadian Prime Minister Mark Carney
• 17:46
  Speaker 5: about trade and the overall relationship with the United States.
• 17:50
  Speaker 6: Here's what Carney told him.
• 17:51
  Speaker 3: There's not a pride thing from our perspective. We're practical people.
• 17:57
  Speaker 3: that know what our bottom lines are, what our red
• 17:59
  Speaker 3: lines are for sovereignty, for culture, not being restricted on
• 18:03
  Speaker 3: our ability to sign other trade deals. I referenced, you know,
• 18:06
  Speaker 3: we are on a path to double our trade access
• 18:08
  Speaker 3: to 3 billion consumers around the world.
• 18:11
  Speaker 10: We are not going to slow down on that.
• 18:13
  Speaker 3: But with understanding those, and I think our American colleagues
• 18:18
  Speaker 3: perhaps understand those red lines a little more clearly now,
• 18:21
  Speaker 3: given what's happened, we're ready to sit down.
• 18:23
  Speaker 10: There's no pride in this. We'll do what's right for
• 18:26
  Speaker 10: the Canadian people.
• 18:27
  Speaker 1: This did, over the past few weeks, get a little bit.
• 18:29
  Speaker 10: ugly even, this trade fight.
• 18:31
  Speaker 12: You had Trump cabinet members kind of mocking and trolling
• 18:34
  Speaker 12: Canada at times. Do you expect that's going to affect
• 18:36
  Speaker 12: the atmosphere at the summit here, the sort of nastiness
• 18:40
  Speaker 12: that happened once trade talks broke down with the U.S.? No.
• 18:44
  Speaker 10: Short answer, no. These are all professionals.
• 18:46
  Speaker 3: I mean, one of the things at the summit, which
• 18:49
  Speaker 3: is why it's important, is it's not just the headline
• 18:53
  Speaker 3: assets that are managed by these institutions, the $ 120 trillion
• 18:57
  Speaker 3: Canadian assets. that are managed, but it's the fact that
• 19:00
  Speaker 3: it's the decision makers who are coming to the summit.
• 19:03
  Speaker 10: And they know their responsibilities.
• 19:06
  Speaker 3: In many cases, they're managing money for Doctors, nurses, firefighters,
• 19:13
  Speaker 3: their pensioners, families, future generations in their countries, they take
• 19:17
  Speaker 3: these decisions very clearly.
• 19:19
  Speaker 10: And look, I.
• 19:20
  Speaker 3: Think you can see how I hope the federal government
• 19:25
  Speaker 3: has reacted to this, calm, professional. We're looking in terms
• 19:30
  Speaker 3: of the best interests of Canada. As I just said,
• 19:33
  Speaker 3: we'll sit down when it makes sense.
• 19:35
  Speaker 10: Canada and the U.S. have a very long relationship.
• 19:37
  Speaker 3: We sometimes go through periods where there are tensions in
• 19:40
  Speaker 3: that relationship. Provided we continue this approach, we'll come to some.
• 19:48
  Speaker 10: Agreement at some point.
• 19:51
  Speaker 5: At some point, of course, the operative phrase there, perhaps.
• 19:54
  Speaker 5: Let's get more on this as we turn to Brian Platt,
• 19:56
  Speaker 5: Bloomberg News Ottawa Bureau Chief, who, of course, sat down
• 19:59
  Speaker 5: with Carney for that interview. Brian, it was a great conversation,
• 20:03
  Speaker 5: and thank you for joining us to talk about it.
• 20:05
  Speaker 5: Did you walk away with the sense that Carney is
• 20:08
  Speaker 5: on the cusp of making a deal with Trump here?
• 20:12
  Speaker 5: Does he seem ready to rush back to the negotiating table?
• 20:16
  Speaker 12: The short answer, to paraphrase or to repeat what he said,
• 20:20
  Speaker 12: is no. I don't think that they're on the cusp
• 20:23
  Speaker 12: of a deal here. Carney said he welcomed the president's
• 20:26
  Speaker 12: comments that a deal is close. I don't have any
• 20:28
  Speaker 12: sense that the two sides are actually anywhere on the
• 20:32
  Speaker 12: cusp of sitting back down at a table with the
• 20:34
  Speaker 12: trade negotiators, you know, hashing out details. There seems to
• 20:38
  Speaker 12: be some sort of ongoing communication back and forth between
• 20:41
  Speaker 12: some of the trade officials, phone calls and text messages,
• 20:44
  Speaker 12: that sort of thing. As far as I can tell, though,
• 20:47
  Speaker 12: we are not on the verge of getting back to,
• 20:50
  Speaker 12: you know, the kind of negotiations that you would need
• 20:53
  Speaker 12: to actually get to a trade deal.
• 20:55
  Speaker 5: Well, and of course, in the absence of one, Canada
• 20:57
  Speaker 5: is making some moves of its own to try and
• 21:00
  Speaker 5: insulate itself going forward. Carney is hosting a bunch of
• 21:04
  Speaker 5: major investors in Toronto this week, right, in large part
• 21:08
  Speaker 5: trying to attract investors. them and grow Canada's global exports,
• 21:13
  Speaker 5: lessen the reliability on the U.S.? Just talk to us
• 21:17
  Speaker 5: about that wider strategy and perhaps the reduction in economic
• 21:21
  Speaker 5: leverage that the U.S.
• 21:22
  Speaker 6: Is going to be able to wield over Canada.
• 21:25
  Speaker 12: Well, Carney spent much of the year traveling the world,
• 21:27
  Speaker 12: really working, doing a sort of international roadshow as much
• 21:31
  Speaker 12: as possible. I've been with him on the plane for
• 21:33
  Speaker 12: many of these trips to China and India and the
• 21:36
  Speaker 12: Gulf states, Europe many times, Singapore. And what he's hosting
• 21:41
  Speaker 12: in Toronto right now is what he's dubbed the Canada
• 21:43
  Speaker 12: Investment Summit. And the whole idea here is to get
• 21:46
  Speaker 12: these global investors investing into Canadian projects. Canada still sends
• 21:51
  Speaker 12: about three quarters. It's gone down a little bit because
• 21:54
  Speaker 12: of the trade fight, but Canada sends about three quarters
• 21:56
  Speaker 12: of its exports to the U.S. Carney is trying to
• 21:59
  Speaker 12: change this. No matter what comes out of the trade
• 22:01
  Speaker 12: talks with the U.S., he wants Canada to be less
• 22:04
  Speaker 12: economically dependent on its relationship with the U.S., So, that
• 22:08
  Speaker 12: is absolutely what he's trying to accomplish here. At least,
• 22:12
  Speaker 12: you know, it's not all going to come together today
• 22:13
  Speaker 12: and tomorrow, but this is hopefully what he bills as
• 22:17
  Speaker 12: the start of something where Canada can start to build
• 22:19
  Speaker 12: more export markets overseas.
• 22:23
  Speaker 5: Well, I'd like to ask you as well, aside from
• 22:25
  Speaker 5: trade-related matters, about the other story that is dominating attention
• 22:30
  Speaker 5: here in the U.S. today, and I would imagine that
• 22:32
  Speaker 5: it's breaking through to Canada as well, and that's artificial intelligence.
• 22:35
  Speaker 5: I know you spoke with the prime minister about AI.
• 22:40
  Speaker 5: What is his suggestion on the regulatory guardrails that need
• 22:43
  Speaker 5: to be around it, as President Trump says that they're
• 22:45
  Speaker 5: not necessary?
• 22:47
  Speaker 10: Well, this is where it's.
• 22:47
  Speaker 12: Interesting to have Carney as the Canadian prime minister, because
• 22:51
  Speaker 12: his background is as a central bank governor. And he
• 22:53
  Speaker 12: was the Bank of Canada governor through the global financial crisis.
• 22:57
  Speaker 12: He was the Bank of England governor through Brexit. So,
• 23:00
  Speaker 12: the sort of managing international coordination on these things is
• 23:03
  Speaker 12: something he has a lot of experience with. What he
• 23:06
  Speaker 12: called for with AI is what he termed sort of
• 23:09
  Speaker 12: a technological stability board that which was him suggesting something
• 23:13
  Speaker 12: along the lines of what he used to chair, which
• 23:16
  Speaker 12: was the Financial Stability Board, whose whole job after the
• 23:20
  Speaker 12: global financial crisis was to try to coordinate international action
• 23:23
  Speaker 12: to try to manage things smoothly for the global economy
• 23:27
  Speaker 12: He's calling for some version of that for AI development
• 23:30
  Speaker 12: to try to get some responsible guardrails in place on
• 23:33
  Speaker 12: the Frontier model. So, he welcomed the comments that we've
• 23:36
  Speaker 12: heard from the leaders of Anthropic and OpenAI over the
• 23:39
  Speaker 12: past couple of days.
• 23:40
  Speaker 6: He thinks that's a good direction.
• 23:43
  Speaker 5: Well, and as we're talking about your conversation with Carney
• 23:47
  Speaker 5: on AI, I just want to mention for our audience
• 23:49
  Speaker 5: here on Bloomberg TV and radio that my colleague Eric
• 23:51
  Speaker 5: Wasson just spoke up with the Speaker of the House,
• 23:53
  Speaker 5: Mike Johnson, on Capitol Hill, who told him that the
• 23:56
  Speaker 5: meeting that he had called for with AI executives will
• 23:58
  Speaker 5: be at the end of this week or early next week.
• 24:01
  Speaker 6: Next week.
• 24:01
  Speaker 5: He suggested that developing a legislative answer to this will
• 24:05
  Speaker 5: take some time. He says it's a very complex issue
• 24:08
  Speaker 5: that requires a lot of work and a bipartisan solution.
• 24:12
  Speaker 6: Just quickly, Brian, before.
• 24:14
  Speaker 5: I let you go, as Carney calls for this kind
• 24:16
  Speaker 5: of oversight board, whether it looks like the Financial Stability
• 24:20
  Speaker 5: Council or something akin to FINRA, is this a bipartisan
• 24:23
  Speaker 5: issue in Canada, too? It seems like it unites everyone
• 24:27
  Speaker 5: from all political sides of the equation here. in the U.S.?
• 24:32
  Speaker 5: Is it the same there?
• 24:33
  Speaker 1: I think so.
• 24:34
  Speaker 12: I don't think this would be a politically controversial thing.
• 24:37
  Speaker 12: I mean, the thing is, in Canada, you know, you're
• 24:39
  Speaker 12: kind of— like, the question I asked him was if it's
• 24:42
  Speaker 12: the U.S. that needs to legislate on this, because if
• 24:44
  Speaker 12: you're looking at this from the Canadian point of view,
• 24:46
  Speaker 12: these are American tech companies, basically, right? And so, you know,
• 24:50
  Speaker 12: I think the more that Canada can do to encourage
• 24:52
  Speaker 12: international cooperation— I' m sure that does have bipartisan support in Canada—
• 24:56
  Speaker 12: But what you really need to do is get the
• 24:57
  Speaker 12: rest of the world on board. And what you really need,
• 24:59
  Speaker 12: of course, is to get the U.S. government on board
• 25:02
  Speaker 12: if you want to see some of those guardrails in place.
• 25:05
  Speaker 6: All right.
• 25:06
  Speaker 5: Brian Platt, our Ottawa Bureau Chief at Bloomberg News, who
• 25:09
  Speaker 5: sat down with Canadian Prime Minister Mark Carney today. Brian,
• 25:12
  Speaker 5: thank you so much. And great conversation. You'll hear more
• 25:15
  Speaker 5: of it throughout the day here on Bloomberg TV and radio.
• 25:18
  Speaker 5: And as I mentioned, the speaker is talking about meeting
• 25:21
  Speaker 5: with AI executives and how it may take some time
• 25:23
  Speaker 5: to have actual AI legislation on the floor. Unrelated tech
• 25:28
  Speaker 5: legislation could be on the floor in the Senate. Tomorrow,
• 25:31
  Speaker 5: there will be a vote, a cloture vote, a procedural
• 25:34
  Speaker 5: vote to advance the Clarity Act, of course, long-awaited crypto
• 25:36
  Speaker 5: market structure legislation. So what a week for the Solana
• 25:40
  Speaker 5: Policy Institute Summit to be taking place here in Washington, D.C.
• 25:44
  Speaker 6: As well.
• 25:45
  Speaker 5: And that's where we find Bloomberg Washington correspondent Tyler Kendall. Tyler,
• 25:49
  Speaker 5: I would imagine the conversation there is being dominated by
• 25:51
  Speaker 5: the desire to see Clarity pass.
• 25:56
  Speaker 6: Right, Kayleigh, exactly.
• 25:57
  Speaker 14: Everybody wants to know whether or not this will cross
• 25:59
  Speaker 14: that key procedural vote that's set to happen tomorrow, 2.15 p.m.
• 26:03
  Speaker 14: Eastern in the Senate. We did get updated text for
• 26:06
  Speaker 14: this bill last night released from the majority side, from
• 26:09
  Speaker 14: the Republicans, that included, they say, many changes that Democrats wanted,
• 26:13
  Speaker 14: including an updated ethics provision that will give state attorneys
• 26:17
  Speaker 14: general some authority to enforce some of the ethics rules.
• 26:21
  Speaker 14: It will also require presidents and other elected officials to
• 26:25
  Speaker 14: either put their digital asset holdings into a blind trust
• 26:29
  Speaker 14: or force divestiture. The question is, will this be enough?
• 26:32
  Speaker 14: for Democrats to get on board since so far we've
• 26:36
  Speaker 14: only really heard from the White House. But it is
• 26:38
  Speaker 14: notable that there was this updated ethics provision because it
• 26:41
  Speaker 14: does mean that President Trump agreed to it after we
• 26:44
  Speaker 14: had heard at this point for weeks that the president
• 26:47
  Speaker 14: wasn't really looking to negotiate around that issue. Another issue, though,
• 26:51
  Speaker 14: has appeared to really come into the forefront today. And
• 26:53
  Speaker 14: that has to deal with yields on stablecoin holdings. There
• 26:57
  Speaker 14: is a growing pushback from community banks that are concerned
• 27:01
  Speaker 14: that if yields or reward programs are allowed to be
• 27:06
  Speaker 14: given on your stablecoin holdings, that could contribute to something
• 27:09
  Speaker 14: known as deposit flight out of these holdings. community banks.
• 27:12
  Speaker 14: And we're waiting to see whether or not there are
• 27:14
  Speaker 14: still concerns with this updated proposal that would essentially have
• 27:19
  Speaker 14: something known as a circuit breaker provision that could allow
• 27:23
  Speaker 14: the Treasury to step in if there is significant deposit flight.
• 27:27
  Speaker 14: So there's still a few different things here that we
• 27:29
  Speaker 14: need to watch, because that is the issue that some Republicans,
• 27:32
  Speaker 14: including Senator Josh Hawley and Jerry Moran, have voiced concerns about.
• 27:37
  Speaker 14: So a lot to watch heading into tomorrow. The White
• 27:40
  Speaker 14: House certainly wants to see at least the procedural vote
• 27:43
  Speaker 14: get over the finish line. But at this point, that's
• 27:46
  Speaker 14: not even a done deal. All Republicans would have to
• 27:48
  Speaker 14: get on, then seven Democrats to reach that 60-vote threshold.
• 27:53
  Speaker 5: Yeah, of course, President Trump has called for clarity to
• 27:55
  Speaker 5: be passed. So, too, has the chair of the CFTC, Stelig, who,
• 27:59
  Speaker 5: of course, you've spoken with recently, Tyler, who said that
• 28:02
  Speaker 5: to you, that that is plan A. Yes, the regulator
• 28:05
  Speaker 5: may have to do some things if clarity doesn't pass,
• 28:07
  Speaker 5: but they still want to see this legislation passed.
• 28:09
  Speaker 6: Can I ask you as well about.
• 28:11
  Speaker 5: While there is the desire to see a regulatory bill
• 28:14
  Speaker 5: passed in the crypto space, this White House apparently has
• 28:16
  Speaker 5: no desire to see greater regulation on AI. The president
• 28:20
  Speaker 5: suggests a slowdown isn't needed. All you need is a
• 28:22
  Speaker 5: smart president, to paraphrase his words.
• 28:27
  Speaker 14: Yeah, that was the latest that we heard from President
• 28:29
  Speaker 14: Trump today. After over the weekend, he essentially said as much,
• 28:32
  Speaker 14: but also, of course, brought in the idea that the U.S.
• 28:34
  Speaker 14: must stay competitive with China. We have heard a little
• 28:37
  Speaker 14: bit more of tempered rhetoric from some of his advisers,
• 28:40
  Speaker 14: including the NEC director, Kevin Hassett. over the weekend seemed
• 28:43
  Speaker 14: to lend support to some sort of guardrails after we
• 28:46
  Speaker 14: saw these major AI companies say that we may need
• 28:49
  Speaker 14: to face the frontier in their words. It is interesting, though,
• 28:53
  Speaker 14: because this comes at a moment where we have this
• 28:55
  Speaker 14: political dynamic and voters have grown increasingly concerned about AI,
• 29:00
  Speaker 14: including when it comes to their job prospects, but also
• 29:02
  Speaker 14: the idea of the data center build out. A recent
• 29:05
  Speaker 14: poll from Reuters shown only one in three Americans are
• 29:08
  Speaker 14: OK with the pace of the data center rollout at
• 29:11
  Speaker 14: this moment. So it to your point, one to watch,
• 29:14
  Speaker 14: but one that the administration at the moment is holding
• 29:16
  Speaker 14: firm on.
• 29:16
  Speaker 3: All right.
• 29:18
  Speaker 5: Bloomberg's Tyler Kendall live at the Solana Policy Institute Summit
• 29:22
  Speaker 5: here in Washington. Thank you so much. There's more ahead
• 29:25
  Speaker 5: here on Balance of Power. Maya McGinnis of the Committee
• 29:27
  Speaker 5: for a Responsible Federal Budget will join us next on
• 29:30
  Speaker 5: Bloomberg TV and radio.
• 29:31
  Speaker 8: Stay with us on Balance of Power. We'll have much
• 29:33
  Speaker 8: more coming up after this.
• 29:38
  Speaker 4: You're listening to the Bloomberg Broadcasting Balance of Power podcast.
• 29:41
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• 29:44
  Speaker 4: on Apple CarPlay and Android Auto with the Bloomberg Business app.
• 29:48
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• 29:51
  Speaker 4: flagship New York station. Just say, Alexa, play Bloomberg 1130.
• 29:57
  Speaker 5: Oil is still higher on the day, though, off of
• 29:59
  Speaker 5: session highs, but we remain close to $ 106 a barrel
• 30:03
  Speaker 5: on Brent crude.
• 30:04
  Speaker 6: Obviously, there's a.
• 30:04
  Speaker 5: Few factors impacting energy markets, one, of course, being the
• 30:08
  Speaker 5: ongoing conflict in the Middle East and not just directly
• 30:11
  Speaker 5: between the U.S. And Iran, though that is still very
• 30:15
  Speaker 5: much a question around the Strait of Hormuz, but also
• 30:17
  Speaker 5: when it comes to Saudi Arabia, which over the weekend
• 30:20
  Speaker 5: had to shut its east-west pipeline, of course, a crucial
• 30:23
  Speaker 5: conduit for diverting crude supplies away from the Strait of
• 30:27
  Speaker 5: Hormuz and toward the Red Sea.
• 30:29
  Speaker 6: It was hit by a drone attack.
• 30:31
  Speaker 5: Over the weekend by militias based in Iraq and therefore
• 30:33
  Speaker 5: the pipeline had to shut down. Apparently it could take
• 30:35
  Speaker 5: weeks to reopen, which is in part why oil was
• 30:38
  Speaker 5: moving higher today. Add on to that the latest missive
• 30:41
  Speaker 5: from the president or one of the latest because he's
• 30:43
  Speaker 5: had a lot of them to throw out there today
• 30:45
  Speaker 5: to suggest that Iran may want to make a deal
• 30:47
  Speaker 5: and he will determine whether or not the U.S. will
• 30:50
  Speaker 5: choose to engage. He says they're open to the concept.
• 30:54
  Speaker 5: That's just one hot conflict to consider. There's also the
• 30:56
  Speaker 5: war between Russia and Ukraine. As President Trump posted today
• 30:59
  Speaker 5: that Ukraine has agreed to no longer attack Russian energy
• 31:03
  Speaker 5: targets and that Russia has agreed likewise. The president saying
• 31:08
  Speaker 5: on True Social, the world's diesel price rise is mostly
• 31:11
  Speaker 5: caused by the Russia-Ukraine war, not Iran.
• 31:14
  Speaker 6: Diesel prices, of course, hitting a record earlier today again.
• 31:18
  Speaker 5: So let's get into all of this now as we
• 31:19
  Speaker 5: turn to Wendy Benjaminson, who leads our national security team
• 31:22
  Speaker 5: here at Bloomberg and is in our Washington, D.C.
• 31:24
  Speaker 6: Studio with me.
• 31:25
  Speaker 5: So, Wendy, let's begin first with the Middle East, because
• 31:28
  Speaker 5: obviously there's the Strait of Hormuz, which has been a
• 31:31
  Speaker 5: problem for months.
• 31:32
  Speaker 6: The Red Sea, possible.
• 31:34
  Speaker 8: Workaround.
• 31:34
  Speaker 5: And yet you have the Houthis in Yemen, obviously, trying
• 31:38
  Speaker 5: to exercise some authority in that waterway. The East-West pipeline
• 31:41
  Speaker 5: is shut down. How much worse could this get for
• 31:44
  Speaker 5: global energy markets?
• 31:45
  Speaker 15: This could get significantly worse. And I think that was
• 31:48
  Speaker 15: at least the spirit of what Trump was trying to
• 31:50
  Speaker 15: get at, minus some factual problems. But yes, the The
• 31:56
  Speaker 15: east-west pipeline across Saudi Arabia was supposed to be the solution,
• 32:00
  Speaker 15: or at least a help to a solution, for the
• 32:03
  Speaker 15: closed Strait of Hormuz. So, you know, Iranian oil is
• 32:06
  Speaker 15: coming up against a U.S. naval blockade. Other ships are
• 32:10
  Speaker 15: being sort of targeted as they're trying to get out
• 32:12
  Speaker 15: with the protection of the U.S. naval blockade, but sometimes
• 32:15
  Speaker 15: they get hit before that, or just are too afraid
• 32:19
  Speaker 15: to go through. So this pipeline was a really great
• 32:22
  Speaker 15: idea to get it out, but now the Houthis, backed
• 32:24
  Speaker 15: by Iran— are trying to shut the Red Sea ports down,
• 32:29
  Speaker 15: which is the exit point for this pipeline. And the
• 32:31
  Speaker 15: Saudis are saying it could be five or six weeks
• 32:33
  Speaker 15: before they open the pipeline again. And so that only
• 32:37
  Speaker 15: means one thing, that prices are going to continue to rise.
• 32:40
  Speaker 5: Even as the president continually suggests they will come down
• 32:43
  Speaker 5: as soon as the war ends.
• 32:44
  Speaker 1: Is over.
• 32:45
  Speaker 5: But when it comes to the direct conflict between the U.S.
• 32:48
  Speaker 5: and Iran, at whatever maybe lower intensity level it exists
• 32:52
  Speaker 5: right now, Wendy, is there any real sign of diplomacy,
• 32:56
  Speaker 5: either overt diplomacy or back channel?
• 32:58
  Speaker 15: None whatsoever. I mean, first of all, there were supposed
• 33:01
  Speaker 15: to be talks beginning today between all of the Gulf
• 33:04
  Speaker 15: states sort of the Gulf Cooperation Council states and Iran
• 33:08
  Speaker 15: to talk about the Strait of Hormuz, because it's in
• 33:11
  Speaker 15: everyone's interest there.
• 33:12
  Speaker 6: And they were sort of cutting.
• 33:13
  Speaker 15: Out the United States, or not cutting them out, but
• 33:17
  Speaker 15: going ahead without the United States, to have this conversation
• 33:20
  Speaker 15: regionally to decide how they're going to do this, because
• 33:23
  Speaker 15: everybody's losing money. And Saudi Arabia decided they weren't going
• 33:28
  Speaker 15: to participate because they're frustrated with Iran because of the
• 33:32
  Speaker 15: Houthi attacks. And so the talks were put off for now,
• 33:36
  Speaker 15: which we don't know how long that will be. So
• 33:39
  Speaker 15: that's not happening. Then the president, as you mentioned, said
• 33:43
  Speaker 15: Iran is begging for a deal and all of this.
• 33:46
  Speaker 15: Everything they've said And we can only take them at
• 33:49
  Speaker 15: their word. But everything they have said on this has been,
• 33:52
  Speaker 15: we're not talking. We're in this for the long haul.
• 33:55
  Speaker 15: We have our position. If Donald Trump wants to talk
• 33:58
  Speaker 15: to us, you know, he can come to us. And
• 34:00
  Speaker 15: so Trump says he's open to talks, but we see
• 34:03
  Speaker 15: absolutely no avenue for that happening at the moment.
• 34:06
  Speaker 5: Well, the president also apparently has talked to Russia and Ukraine,
• 34:10
  Speaker 5: and they both have agreed to stop hitting each other's
• 34:12
  Speaker 5: energy assets. This is, of course, after over the weekend,
• 34:15
  Speaker 5: President Trump said Ukraine needs to stop hitting Russian refineries
• 34:18
  Speaker 5: because it is perpetuating the diesel problem.
• 34:21
  Speaker 3: Right.
• 34:21
  Speaker 15: And to be sure, it is perpetuating the diesel problem,
• 34:24
  Speaker 15: but it's a smaller problem than the Iran war, because
• 34:28
  Speaker 15: that is such, you know, the Strait of Hormuz, as
• 34:31
  Speaker 15: we've said many times in our stories, is You know, 20%
• 34:34
  Speaker 15: of the world's oil and liquefied natural gas comes through
• 34:37
  Speaker 15: the Strait of Hormuz. Obviously, there are Russian outflows, too.
• 34:40
  Speaker 15: The trouble is that when we checked, our reporters checked with— well,
• 34:45
  Speaker 15: Russia hasn't said anything about Donald Trump's tweet. And Ukraine's
• 34:48
  Speaker 15: answer has been, if Russia stops attacking our grain and
• 34:53
  Speaker 15: oil facilities, the energy facilities, then we will stop attacking them.
• 34:58
  Speaker 15: But that— What Zelensky is basically saying is it takes
• 35:02
  Speaker 15: two to tango, and I will only do it if
• 35:05
  Speaker 15: Russia does.
• 35:05
  Speaker 6: Which suggests two things. One, Trump wasn't.
• 35:08
  Speaker 15: Exactly being accurate when he said they've already agreed to this,
• 35:12
  Speaker 15: and two, that they're not going to stop. So that,
• 35:17
  Speaker 15: I mean, we just have to look at diesel prices
• 35:20
  Speaker 15: continuing to rise. And let's remember that diesel is very
• 35:23
  Speaker 15: important to farm equipment. And it's very important to all
• 35:26
  Speaker 15: those 18-wheelers that deliver our, you know, Internet-ordered goods and
• 35:31
  Speaker 15: other goods around the country. And that means prices increase.
• 35:34
  Speaker 15: of those goods goes up too.
• 35:36
  Speaker 5: Literally the fuel of the American economy. Wendy Benjaminson leading
• 35:40
  Speaker 5: our national security coverage here at Bloomberg. Thank you so
• 35:42
  Speaker 5: much having us covered on all things geopolitics. But we
• 35:45
  Speaker 5: want to talk domestic politics as well as, of course,
• 35:48
  Speaker 5: President Trump has not only suggested that oil prices will
• 35:51
  Speaker 5: come down soon, but that soon all adult American citizens
• 35:54
  Speaker 5: could be getting a $ 5, 000 check in the form of
• 35:57
  Speaker 5: what he called in Dallas last week a Trump dividend
• 36:00
  Speaker 5: if Republicans are reelected to majorities in the House and Senate.
• 36:04
  Speaker 5: It wasn't just on stage in Dallas last week. The
• 36:06
  Speaker 5: president doubled down on this idea in Ireland over the weekend.
• 36:10
  Speaker 7: That's going forward.
• 36:11
  Speaker 10: The $ 5, 000 debt is going forward.
• 36:14
  Speaker 7: And that's because we're taking in so much money in
• 36:16
  Speaker 7: so different ways, including the tariff. The $ 5, 000 is going
• 36:21
  Speaker 7: to happen 100%. And the reason is because our country
• 36:24
  Speaker 7: is taking in trillions and trillions of dollars.
• 36:28
  Speaker 3: And it's going to happen.
• 36:30
  Speaker 5: The president echoing that on True Social today, saying the
• 36:34
  Speaker 5: $ 5, 000 Trump dividend to be given to all adults in
• 36:36
  Speaker 5: the United States due to the fact that our country
• 36:38
  Speaker 5: is taking in trillions of dollars of economic development, investment,
• 36:41
  Speaker 5: and pure success is being criticized by what he says
• 36:45
  Speaker 5: are Democrats. I would imagine it's not just Democrats, but
• 36:49
  Speaker 5: Maya McGinnis has a few thoughts on this proposal as well. She,
• 36:52
  Speaker 5: of course, is the president of the Committee for a
• 36:54
  Speaker 5: Responsible Federal Budget and is back with us on Bloomberg
• 36:56
  Speaker 5: TV and radio. Maya, always good to have you on
• 36:59
  Speaker 5: Balance of Power. The president suggests trillions are coming in. Therefore,
• 37:03
  Speaker 5: we can afford to send these $ 5, 000 checks out. If
• 37:06
  Speaker 5: every American citizen gets $ 5, 000, what would the price tag
• 37:10
  Speaker 5: of this be?
• 37:13
  Speaker 1: This is a doozy of a price tag.
• 37:14
  Speaker 11: So this would cost in one year about $ 1. 2 trillion.
• 37:20
  Speaker 11: And that would be about the second largest item in
• 37:23
  Speaker 11: the entire federal budget. When he talks about trillions are
• 37:27
  Speaker 11: coming in, that's true, but we're trillions short of how
• 37:31
  Speaker 11: much is going out also. We have $ 2 trillion deficits
• 37:34
  Speaker 11: every year. That's how much we're borrowing. There is no
• 37:38
  Speaker 11: space in the federal budget. For something like this. And
• 37:40
  Speaker 11: that just seemed to be out of the blue. And
• 37:42
  Speaker 11: it certainly caught all of us by surprise. And I
• 37:46
  Speaker 11: can't think of anybody who thinks we have the fiscal
• 37:48
  Speaker 11: foundation to actually pay for a policy like that.
• 37:52
  Speaker 5: Well, of course, the president suggested the $ 5, 000 checks would
• 37:55
  Speaker 5: have to be spent in the U.S., perhaps fuels an
• 37:58
  Speaker 5: argument that this would just be fed back into the
• 38:00
  Speaker 5: economy and that we could grow our way into having
• 38:04
  Speaker 5: a benefit from this, Maya, as was the argument with
• 38:07
  Speaker 5: the one big beautiful bill passed last year that those
• 38:10
  Speaker 5: tax policies were going to fuel growth. And that is
• 38:12
  Speaker 5: how ultimately this all will pay for itself. Has that
• 38:16
  Speaker 5: ever come to fruition?
• 38:18
  Speaker 11: Yeah, no, things like that do not pay for themselves,
• 38:21
  Speaker 11: but just a quick kind of explanation of how it works.
• 38:24
  Speaker 11: When you have an economy that is running reasonably strong,
• 38:27
  Speaker 11: and in fact, inflation is above where you want it
• 38:29
  Speaker 11: to be, the worst thing that you can do to
• 38:32
  Speaker 11: help counter that inflation is borrow more money and put
• 38:36
  Speaker 11: that in the economy. So the affordability challenges that we
• 38:39
  Speaker 11: have right now are really a big problem, and things
• 38:42
  Speaker 11: must be done to help bring down the cost relative
• 38:44
  Speaker 11: to people's incomes. But part of what's created that is
• 38:48
  Speaker 11: inflation and the economy running too hot from inflation, which
• 38:52
  Speaker 11: comes in part from borrowing. You cannot address that by
• 38:55
  Speaker 11: borrowing more.
• 38:56
  Speaker 1: So while this is not the answer.
• 38:57
  Speaker 11: That anybody wants to hear, one of the ways that
• 39:00
  Speaker 11: you deal with affordability that would be sustainable... is you
• 39:04
  Speaker 11: bring your spending and your taxes back into alignment. But
• 39:07
  Speaker 11: if you're just heating up the economy, throwing more money
• 39:09
  Speaker 11: into it, that can create the sugar high that we
• 39:12
  Speaker 11: often hear about when people are doing borrowing. And it's
• 39:15
  Speaker 11: a short-term burst that leads to a long-term crash and
• 39:18
  Speaker 11: it makes your fiscal situation even worse. That further pushes
• 39:22
  Speaker 11: up interest rates, that further pushes up inflation, and you
• 39:25
  Speaker 11: maintain the bad cycle that we're stuck in right now.
• 39:30
  Speaker 5: Well, it's the cycle that the bond market has been
• 39:32
  Speaker 5: worried about. While we're off the highs of the session, Maya,
• 39:35
  Speaker 5: we saw the 10-year yield break above 5% today for
• 39:38
  Speaker 5: the first time since 2023. Of course, at the longer end,
• 39:40
  Speaker 5: we're seeing multi-decade highs there. The Treasury Secretary, Scott Besson,
• 39:46
  Speaker 5: has tried to cool things off at the long end
• 39:48
  Speaker 5: with changes to the buybacks, though those underwhelmed last week.
• 39:51
  Speaker 5: He has also suggested that there is coming fiscal changes. consolidation.
• 39:55
  Speaker 5: If the House is going on recess until after the
• 39:57
  Speaker 5: midterms at the end of this week, and of course,
• 40:01
  Speaker 5: there's the midterm considerations for everyone running for re-election in
• 40:04
  Speaker 5: the Senate as well. Do you see fiscal consolidation coming
• 40:07
  Speaker 5: anytime soon?
• 40:08
  Speaker 11: Well, yeah, I heard that along with everybody else that
• 40:11
  Speaker 11: the Treasury Secretary promised a fiscal consolidation plan. And then
• 40:14
  Speaker 11: the next thing we heard was here's a plan that
• 40:17
  Speaker 11: would borrow over a trillion dollars, which is obviously the
• 40:20
  Speaker 11: opposite of consolidation.
• 40:22
  Speaker 1: So I'm not sure.
• 40:23
  Speaker 6: What's going on here.
• 40:24
  Speaker 11: We're getting warning signs from everywhere. The treasury market obviously
• 40:28
  Speaker 11: is sending us message after message that there are deep concerns.
• 40:31
  Speaker 11: Interest rates are too high. Inflation stays too high. The
• 40:35
  Speaker 11: deficit numbers are above where we thought they would be.
• 40:37
  Speaker 11: Interest payments are over a trillion dollars. Just the list
• 40:41
  Speaker 11: goes on and on. And the one thing that you
• 40:43
  Speaker 11: can't respond to that with is, I know, let's borrow
• 40:47
  Speaker 11: more money. So I'm really concerned that when we heard
• 40:51
  Speaker 11: there was going to be a fiscal consolidation plan, that's
• 40:53
  Speaker 11: exactly what we need. It should be bipartisan. It should
• 40:56
  Speaker 11: look at all parts of the budget. It's not going
• 40:58
  Speaker 11: to be easy, but the payoff will be significant. That
• 41:01
  Speaker 11: is exactly what we need. Borrowing more money is the opposite.
• 41:05
  Speaker 11: And yes, I'm really worried that during midterms, I mean,
• 41:07
  Speaker 11: it always seems like it's election time, right? With the
• 41:10
  Speaker 11: two parties constantly at war with each other, there's never
• 41:13
  Speaker 11: sort of put politics aside for good policy, but it's
• 41:16
  Speaker 11: about to get even more heated. So I'm very concerned
• 41:19
  Speaker 11: that people might fall onto the kind of wagon of
• 41:22
  Speaker 11: competing promises. I'll give you a $ 5, 000 check while I'll
• 41:25
  Speaker 11: give you this and I'll give you this. And you
• 41:28
  Speaker 11: can see these things getting ratcheted up. We need adults
• 41:32
  Speaker 11: to prevail. We need, it's like, it feels like Oprah politics, right?
• 41:35
  Speaker 8: Like you can have a car.
• 41:37
  Speaker 11: You can have a car, you can have a car.
• 41:38
  Speaker 11: And the difference is the federal government doesn't have the
• 41:41
  Speaker 11: money to back up these promises. So something has to give.
• 41:46
  Speaker 5: And yet isn't the reality, Maya, and your point is
• 41:48
  Speaker 5: well understood that it seems like it's always election season.
• 41:51
  Speaker 5: But the people who are being elected to the Senate
• 41:54
  Speaker 5: in November, whoever it is that wins, it's them that
• 41:57
  Speaker 5: are going to have to address the Social Security cliff.
• 42:01
  Speaker 7: Right.
• 42:01
  Speaker 5: If we're looking at insolvency in six years, they aren't
• 42:03
  Speaker 5: going to be able to insulate themselves from that issue
• 42:05
  Speaker 5: for very long.
• 42:07
  Speaker 1: Yeah, absolutely.
• 42:08
  Speaker 11: And at least this is one that's starting to get attention.
• 42:10
  Speaker 11: The fact that Social Security will go insolvent in the
• 42:13
  Speaker 11: next six years when the next folks who are elected
• 42:16
  Speaker 11: to the Senate are in office and will have to
• 42:18
  Speaker 11: make those choices, it makes it a lot more difficult
• 42:20
  Speaker 11: to continue to kick that can. As we have been
• 42:23
  Speaker 11: doing for decades, the trustees have been warning us. for
• 42:27
  Speaker 11: decades that this was going to be a problem at
• 42:30
  Speaker 11: some point, and they've been pinpointing kind of this period
• 42:33
  Speaker 11: of time when it was going to hit. So we
• 42:35
  Speaker 11: know that those changes have to be made, but at
• 42:37
  Speaker 11: least we're hearing it talked about in some of the
• 42:39
  Speaker 11: Senate campaigns. The media is asking about it. Seniors are
• 42:43
  Speaker 11: concerned because if we don't fix this program, it's their
• 42:46
  Speaker 11: benefits that will be cut, whereas if we made normal changes...
• 42:50
  Speaker 11: they would be protected. So they have a vested interest
• 42:53
  Speaker 11: in seeing these changes be made. And everybody knows that
• 42:55
  Speaker 11: Social Security is the biggest and one of the most
• 42:57
  Speaker 11: important programs. So that one's starting to get some attention.
• 43:01
  Speaker 11: I am hopeful that in the next year, before the
• 43:05
  Speaker 11: last minute, we can put together a reasonable plan to
• 43:08
  Speaker 11: avert insolvency and help make sure that we can pay
• 43:11
  Speaker 11: all the benefits that we've promised.
• 43:14
  Speaker 1: But it's not just Social Security.
• 43:15
  Speaker 11: We're going to have to make those same kinds of
• 43:17
  Speaker 11: changes to deal with the national debt as well.
• 43:20
  Speaker 5: Indeed, north of $ 40 trillion and climbing. Maya McGinnis of
• 43:24
  Speaker 5: the Committee for a Responsible Federal Budget. Thank you, as always,
• 43:27
  Speaker 5: for joining us.
• 43:30
  Speaker 10: Thanks for listening to the Balance of Power podcast.
• 43:33
  Speaker 1: Make sure to subscribe, if you haven't already.
• 43:35
  Speaker 8: At Apple, Spotify, or wherever you get your podcasts. And
• 43:38
  Speaker 8: you can find us live every weekday from Washington, D.C.
• 43:41
  Speaker 8: at noontime Eastern at Bloomberg.com.