Latest / Balance of Power / Carney Matches Trump Tariffs

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Carney Matches Trump Tariffs · Balance of Power

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 2: Podcasts.
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  Speaker 3: Radio.
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  Speaker 4: News.
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  Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
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  Speaker 5: Listen on demand wherever you get your podcasts or watch
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  Speaker 5: us live on YouTube.
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  Speaker 6: As we connect the dots here between Washington and Wall
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  Speaker 6: Street with a message of defiance today. Coming from both
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  Speaker 6: China and Canada, not always invoked in the same sentence.
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  Speaker 6: Of course, our trading partner, Canada, is responding to a
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  Speaker 6: tit-for-tat that we've been describing over the past couple of
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  Speaker 6: days following trade talks that fell apart over the weekend.
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  Speaker 6: China has a very different matter on what is now
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  Speaker 6: D plus one. If you're following the administration's economic actions
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  Speaker 6: against Iran. Yesterday was projected by Treasury Secretary Scott Besant
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  Speaker 6: as D-Day. And Xi Jinping does have some thoughts on
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  Speaker 6: the idea of secondary sanctions against Chinese entities that are
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  Speaker 6: doing business with and trading with Iran.
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  Speaker 1: Hours after the U.S.
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  Speaker 6: Sanctioned dozens of these Chinese organizations and threatened to target more, remember,
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  Speaker 6: the secretary said There would be more to come this week.
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  Speaker 6: Beijing responding, saying its relationship with Iran, quote, should not
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  Speaker 6: be disrupted or undermined, unquote, knowing, of course, that President
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  Speaker 6: Xi will be meeting. With President Trump on the 24th
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  Speaker 6: of September right here in the United States, here in Washington.
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  Speaker 6: As for Canada, a dollar for dollar match. That's the
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  Speaker 6: message from Mark Carney, the prime minister. Matching tariffs imposed
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  Speaker 6: by President Trump over the weekend, doubling existing counter tariffs
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  Speaker 6: on steel and aluminum to 50%. We heard from Doug
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  Speaker 6: Ford as well, the premier of Ontario, now in his
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  Speaker 6: own tit for tat. A bit of rhetoric back and
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  Speaker 6: forth with President Trump, who called him out on Truth
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  Speaker 6: Social for bluster.
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  Speaker 1: Here's what he said yesterday.
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  Speaker 7: No matter what President Trump sends our way, we'll have
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  Speaker 7: your backs. We will be there for you to protect
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  Speaker 7: your jobs and paychecks and stand up for Canada. The
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  Speaker 7: Prime Minister has my full support in this decision to
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  Speaker 7: walk away from a bad deal that would have hurt
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  Speaker 7: Canadian workers and undermined Canadian sovereignty.
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  Speaker 6: We will be speaking with Premier Ford on the late
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  Speaker 6: edition of Balance of Power, and I hope you'll join us.
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  Speaker 6: That'll be at 5 p.m.
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  Speaker 1: Eastern.
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  Speaker 6: He usually comes packed with soundbites, but we first want
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  Speaker 6: to talk with Tyler Kendall. Bloomberg's White House correspondent is
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  Speaker 6: on the North Lawn right now tracking all of this, Tyler.
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  Speaker 6: I'm not sure even where to begin today, so why
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  Speaker 6: don't we just stick with Canada right now? Was this
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  Speaker 6: an administration prepared for reciprocal or counter tariffs back from
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  Speaker 6: Canada as well?
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  Speaker 2: Well, Joe, it appeared that the president might have been
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  Speaker 2: gearing up for this action, one, because the Canadian prime
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  Speaker 2: minister had telegraphed as much. He did make good on
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  Speaker 2: his original threat to match the tariffs dollar for dollar.
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  Speaker 2: But just by the fact that we have seen a
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  Speaker 2: flurry of posts from President Trump today out on Truth
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  Speaker 2: Social in regard to the conflict with Canada and trade,
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  Speaker 2: in part saying, in one of them, I deal with
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  Speaker 2: many countries and Canada is easily the most difficult country
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  Speaker 2: And unreasonable, of course, our own reporting has indicated that
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  Speaker 2: Canadian officials have alleged that the U.S. was changing the, quote,
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  Speaker 2: gold posts when it came to the differences in the
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  Speaker 2: trade agreement that ultimately derailed the deal getting through.
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  Speaker 8: But, Joe, I think evident by the fact.
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  Speaker 2: That Canada's reciprocal tariffs are expected to go into effect
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  Speaker 2: on September 8th, the next round of escalation by the U.S.
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  Speaker 2: January 1st could lead to some negotiating room going forward.
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  Speaker 6: Well, those two dates are awfully important, so this is
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  Speaker 6: clearly not a case closed. But your point about the
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  Speaker 6: Truth Social posts, I counted 27 since 6.58 a.m., Tyler,
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  Speaker 6: and one of them includes this idea the president is
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  Speaker 6: floating now, the U.S. giving serious consideration to changing the
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  Speaker 6: name of Lake Ontario to Lake America, he says, in
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  Speaker 6: that we don't expect doing much business with Ontario any longer.
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  Speaker 1: Is this a joke?
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  Speaker 2: I would take the president probably at his word. If
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  Speaker 2: you're joining us on the television, you can see the
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  Speaker 2: map that he is issuing right there. We'll have to
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  Speaker 2: see how this ultimately goes from here. Of course, there
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  Speaker 2: are a lot of different leverage points, negotiating points, but
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  Speaker 2: this does play into the broader idea that there have
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  Speaker 2: been escalating tensions between between President Trump and the Canadian
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  Speaker 2: Prime Minister Mark Carney in particular, keeping in mind that
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  Speaker 2: Mark Carney had campaigned on basically countering President Trump and
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  Speaker 2: the tariff war a couple of years ago. And we
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  Speaker 2: have seen just escalating tension since then, whether that was
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  Speaker 2: his address at Davos, whether that was President Trump threatening
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  Speaker 2: tariffs over wildfire smoke. And this appears to be the
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  Speaker 2: latest escalation in what is happening. essentially now a pretty
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  Speaker 2: sudden reversal. We thought we were getting very close to
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  Speaker 2: a deal. We had sources familiar telling us here at
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  Speaker 2: Bloomberg some of those levies were going to be lowered,
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  Speaker 2: but at the end of the day, it just couldn't get.
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  Speaker 6: Over the finish line.
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  Speaker 1: Wow, really something.
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  Speaker 6: Tyler, I need to ask you about President Xi quickly.
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  Speaker 6: We're going to be talking in just a moment with
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  Speaker 6: the vice-ranking member of the House Foreign Affairs Committee. Congressman
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  Speaker 6: Amo is with us from Rhode Island. So we have
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  Speaker 6: geopolitics on our minds here. President Xi, pretty clear about
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  Speaker 6: the idea of secondary sanctions and knowing that China would
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  Speaker 6: have to be part of this for the so-called D-Day
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  Speaker 6: or I guess Operation, what are we calling it again?
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  Speaker 1: It's Operation Scofflaw or Outcast. That's what it is.
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  Speaker 6: The relationship with Iran, quote, should not be disrupted or undermined.
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  Speaker 6: China will take all necessary measures to safeguard its interests.
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  Speaker 1: What now, Tyler?
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  Speaker 2: Seeming to imply that China is prepared to retaliate if
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  Speaker 2: the U.S. does make good on its threats to hold
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  Speaker 2: those countries that still have financial ties with Iran accountable.
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  Speaker 2: The backdrop here being that China remains the top importer
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  Speaker 2: of Iranian crude to the tune of 90 percent of
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  Speaker 2: Iran's oil exports go to Beijing. The Treasury Secretary was
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  Speaker 2: asked yesterday multiple times about whether this would apply to China.
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  Speaker 8: He didn't rule it out. He said..
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  Speaker 2: That no one is going to be above this. I
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  Speaker 2: have to say, Joe, though, the people that I'm speaking
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  Speaker 2: to here in Washington don't believe that the administration thinks
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  Speaker 2: that China is going to cleanly cut financial ties with Iran.
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  Speaker 2: But perhaps this is seen as a negotiating tactic to
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  Speaker 2: help lower some of the leverage here, that China could
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  Speaker 2: maybe reduce its imports of Iranian crude, not cut them
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  Speaker 2: off completely. And that would still help the U.S. in
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  Speaker 2: its push to get Iran back to the negotiating table.
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  Speaker 1: Well, Tyler, thank you.
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  Speaker 6: Bloomberg's Washington correspondent with us live on the North Lawn
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  Speaker 6: of the White House. We'll let you know if there's
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  Speaker 6: more posting on Truth Social because we haven't heard from
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  Speaker 6: or seen the president making public comment today, at least
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  Speaker 6: not yet about these issues. But it is a great
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  Speaker 6: opportunity to spend some time on all of these issues
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  Speaker 6: with Congressman Gabe Amo back with us. on balance of
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  Speaker 6: power here on Bloomberg, straight from Rhode Island's first district,
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  Speaker 6: the Democrat who is in fact vice ranking member, as
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  Speaker 6: I mentioned, of the House Foreign Affairs Committee. It's great
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  Speaker 6: to see you, Congressman. Welcome back to Bloomberg TV and radio.
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  Speaker 6: From the great first district, from Woonsocket all the way
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  Speaker 6: down to Newport, as we've discussed, you are the epitome
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  Speaker 6: of the K-shaped economy in so many ways. And I
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  Speaker 6: want to get to some of these issues domestically, but
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  Speaker 6: as far as these go here, from your perch on
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  Speaker 6: the House Foreign Affairs Committee, have you been briefed on
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  Speaker 6: Operation Outcast? Did you hear that these Canadian tariffs were coming?
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  Speaker 6: And what should be Democrats' response?
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  Speaker 9: Well, look, Congress has been on a district work period.
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  Speaker 9: So I know as much now as I am at
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  Speaker 9: home as I do when we're here generally, because this
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  Speaker 9: administration has put Congress in the back burner and has
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  Speaker 9: not emphasized collaboration, cooperation. and really getting the consent of
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  Speaker 9: Congress to carry out its actions.
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  Speaker 1: On a global stage.
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  Speaker 9: And what we see is governing by truth social and
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  Speaker 9: chaos to our north and certainly in Asia and across
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  Speaker 9: the world when the president continues this war in Iran
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  Speaker 9: that is raising the costs on the lives of the
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  Speaker 9: American people.
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  Speaker 6: Well, the cost issue is a real one, and we'll,
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  Speaker 6: I'm sure, get into affordability with gas prices on the rise,
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  Speaker 6: food prices on the rise. But are you encouraged to
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  Speaker 6: see the president turn from military action to economic coercion?
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  Speaker 6: Is this the direction we should be taking?
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  Speaker 9: Well, look, I'm not going to praise an arsonist for
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  Speaker 9: trying to put the fire out that they started. And
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  Speaker 9: the fact of the matter is, we are here because
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  Speaker 9: the president abandoned diplomacy with Iran and decided to go
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  Speaker 9: forward with an illegal war with Iran that has done
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  Speaker 9: nothing to to make the world more stable and has
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  Speaker 9: only made the lives of Americans worse off. And so
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  Speaker 9: we were told about an economic D-Day.
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  Speaker 1: That's right. I don't know.
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  Speaker 9: I haven't seen one. I haven't seen anything of that nature.
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  Speaker 9: And in fact, as you just shared, China remains resolute
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  Speaker 9: in its vision of what should happen.
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  Speaker 6: So should we be putting secondary sanctions on Chinese buyers
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  Speaker 6: of Iranian oil?
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  Speaker 1: What does that cause?
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  Speaker 9: I think what we have is more piecemeal strategy from
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  Speaker 9: the administration. Instead of trying to understand what we're trying
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  Speaker 9: to get, we've had shifting rationale from the beginning, whether
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  Speaker 9: it was an imminent threat to dealing with a nuclear
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  Speaker 9: weapon on the horizon, to now, because of the situation
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  Speaker 9: that the Trump administration created, a Strait of Hormuz where
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  Speaker 9: we get unreliable reports about the level of openness it
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  Speaker 9: currently has. So, again, taking this piecemeal instead of a
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  Speaker 9: macro strategy leads us to a situation where they are
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  Speaker 9: reaching and grasping at straws.
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  Speaker 6: I'm glad that you mentioned the truth social. The president
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  Speaker 6: announcing today that the Strait of Hormuz has officially been demined.
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  Speaker 1: He made that announcement last week. Do you know what
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  Speaker 1: he's talking about? I have no idea what he's talking about.
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  Speaker 6: So was it mined and has it been demined?
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  Speaker 9: And this is something that I'm seeking answers to immediately
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  Speaker 9: from this administration. Look, Congress will, at least the House,
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  Speaker 9: will return to town next week. And I'm demanding alongside
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  Speaker 9: my colleagues a full briefing and update on their activities,
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  Speaker 9: including the cost of their activities. I joined a letter
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  Speaker 9: with dozens of my colleagues asking for a full accounting
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  Speaker 9: of why, of where we are and why the American
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  Speaker 9: people are feeling the pain that they are feeling at
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  Speaker 9: the gas pump, at the grocery store as they're doing
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  Speaker 9: their back-to-school shopping.
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  Speaker 6: You mentioned affordability. And of course, we look at gas
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  Speaker 6: prices every day around here. We're at $ 4. 09 a gallon,
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  Speaker 6: nationally speaking. In the great state of Rhode Island, you're
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  Speaker 6: at $ 4.
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  Speaker 1: 05.
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  Speaker 6: What the president is doing with Canada now, we're told,
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  Speaker 6: could make prices even higher.
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  Speaker 1: We took a look to just get a sense of Rhode.
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  Speaker 6: Island's trade relationship with Canada because so many northern states
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  Speaker 6: have a robust one. And sure enough, More than 1,400
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  Speaker 6: jobs at some 45 Canadian-owned companies doing business in the state.
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  Speaker 6: Cross-border trade, and this is really what we're talking about here,
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  Speaker 6: supports more than 25,000 Rhode Island jobs, according to the
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  Speaker 6: Canadian Consulate General in Boston. When you hear dollar-for-dollar tariffs,
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  Speaker 6: realizing they're not in place yet, what does that mean
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  Speaker 6: for home?
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  Speaker 9: Well, it means that the hardworking people that I work
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  Speaker 9: for in Rhode Island are going to feel pain.
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  Speaker 1: I think about all the fishermen.
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  Speaker 9: That's a big one of our exports in Rhode Island,
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  Speaker 9: especially calamari, the calamari comeback state, as we were once
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  Speaker 9: referred to.
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  Speaker 1: That means a lot.
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  Speaker 9: All of these people who are working every day with
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  Speaker 9: higher costs because of this administration will suffer. And then
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  Speaker 9: what might not be reflected in those numbers is the
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  Speaker 9: impact on tourism. You mentioned I have Newport in my district.
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  Speaker 9: I have the birthplace of the American Red. When's the
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  Speaker 9: last time you saw a Canadian walking around? They're around,
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  Speaker 9: but I'll say the numbers are down. I've spoken with
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  Speaker 9: the tourism councils. I've spoken with leaders there who have
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  Speaker 9: said that the bad feelings, the animus between our nations
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  Speaker 9: has yielded. less interest in coming down. You see it
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  Speaker 9: in tour bus numbers. You see it at all of
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  Speaker 9: our sites. So there is a secondary set of effects
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  Speaker 9: with the lack of good feeling between our nations when
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  Speaker 9: you have the president saying that he wants to rename
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  Speaker 9: Lake Ontario.
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  Speaker 1: You know somebody's showing up with legislation to do that
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  Speaker 1: next week. He's a one-trick pony. We already did that thing.
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  Speaker 9: The president has to step up to the plate and lead.
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  Speaker 9: And right now, all he's doing is causing more chaos.
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  Speaker 1: And who hurts?
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  Speaker 9: The American people every single time. At their bank accounts
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  Speaker 9: and at their dinner tables when they're making these tough decisions.
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  Speaker 6: Do you take heart in the fact that Canadian terrorists
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  Speaker 6: don't take effect until next month and... Those we are
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  Speaker 6: threatening don't take effect until January of 2027.
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  Speaker 1: Everybody climbs down from.
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  Speaker 7: This, right?
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  Speaker 9: Have we not seen this movie? Well, brinksmanship should not
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  Speaker 9: be the way we operate. There are other ways to
• 13:02
  Speaker 9: conduct our business. We have had a trade agreement that
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  Speaker 9: is now in peril in USMCA that certainly has been
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  Speaker 9: disregarded in this moment. So I would say to the
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  Speaker 9: Trump administration, it's time to lower the temperature. It's time
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  Speaker 9: to get to the table and let's figure out how
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  Speaker 9: we can continue to make the lives of Americans better.
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  Speaker 9: You know, everything from construction materials to appliances to agriculture.
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  Speaker 9: And now, because the Canadians are well aware that we
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  Speaker 9: have an election on the horizon, we see this hurting
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  Speaker 9: states where people have already been hit by the tariff
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  Speaker 9: regime that we saw previously, in addition to the high
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  Speaker 9: cost of living driven by the higher cost of fertilizer,
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  Speaker 9: the higher cost of machinery, all of the things that
• 13:50
  Speaker 9: may be passing through the Strait of Hormuz in a
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  Speaker 9: normal time, but aren't now.
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  Speaker 6: When you're back next week, it's going to remind us
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  Speaker 6: of so many things left undone.
• 13:59
  Speaker 1: What will happen between now and the midterms?
• 14:02
  Speaker 6: Will we actually see a CR codified?
• 14:04
  Speaker 1: Do we have to worry about a government shutdown? Well, look,
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  Speaker 1: I hope that cooler heads prevail, the Senate.
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  Speaker 9: Came to a bipartisan agreement to take us through December 11th,
• 14:15
  Speaker 9: which happens to be my birthday. And I'm hopeful that
• 14:19
  Speaker 9: we can pass something in the House to avert a
• 14:23
  Speaker 9: shutdown crisis.
• 14:24
  Speaker 1: Those are never good for anybody.
• 14:27
  Speaker 9: That's why during the last shutdown, I pushed forward a
• 14:30
  Speaker 9: piece of legislation to lessen the impact on women and children.
• 14:35
  Speaker 1: The WIC program that was affected by a shutdown.
• 14:38
  Speaker 9: We can't have working people have children who need to eat,
• 14:43
  Speaker 9: have the families of my district and districts across America's.
• 14:47
  Speaker 9: suffer because of the chaos of the Trump administration and
• 14:50
  Speaker 9: Republican Congress. We have to fight for lower costs and
• 14:54
  Speaker 9: do everything we can to stop the chaos.
• 14:56
  Speaker 6: Where are you on the request for this Pentagon? A
• 14:59
  Speaker 6: trillion and a half dollars. You're on the budget committee
• 15:02
  Speaker 6: as well, the mighty budget committee, which is pretty important
• 15:05
  Speaker 6: in the time that we're walking into here. I realize
• 15:07
  Speaker 6: we're not going to have regular order, but there will
• 15:09
  Speaker 6: be a robust debate.
• 15:10
  Speaker 1: About the Pentagon. Many Democrats see that as a proxy
• 15:14
  Speaker 1: on the war with Iran.
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  Speaker 7: Do you?
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  Speaker 9: Look, I think any dollar that I sign off on
• 15:20
  Speaker 9: without having a full airing from this administration about where
• 15:24
  Speaker 9: we are going and how we got here is me
• 15:28
  Speaker 9: signing off on an illegal war that I never had
• 15:31
  Speaker 9: an opportunity to vote on. In fact, voted to stop
• 15:34
  Speaker 9: with war powers resolutions with my colleagues in the House
• 15:37
  Speaker 9: and Senate. We need to have a robust conversation because
• 15:40
  Speaker 9: I want to protect our troops. I will always work
• 15:43
  Speaker 9: hard to protect our troops, but I will not continue
• 15:46
  Speaker 9: the chaos full stop until this administration shows up with
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  Speaker 9: real numbers or real accounting and a way to stop.
• 15:54
  Speaker 9: This pain that the American people are facing, we can't
• 15:58
  Speaker 9: have a real honest conversation about paying for this war.
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  Speaker 6: This is like the nicest week of the year in
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  Speaker 6: Rhode Island. What are you doing in Washington, D.C.? You
• 16:04
  Speaker 6: and I are like the only people here.
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  Speaker 1: I happen to be here for an event later this evening.
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  Speaker 1: It wasn't IndyCar? I thought you were going to tell
• 16:12
  Speaker 1: me it was the race.
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  Speaker 10: All right.
• 16:13
  Speaker 1: I've been to the Indy 500, though. But yeah, but
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  Speaker 1: I wasn't here for the races.
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  Speaker 8: All right.
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  Speaker 6: Well, I hope you get home for some calamari. That's
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  Speaker 6: what they call it. I don't know. With marinara. Anyway,
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  Speaker 6: it's great to see you. My regards to the great
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  Speaker 6: state of Rhode Island with many friends and family. Thanks
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  Speaker 6: to Congressman Gabe Amo with us here in the throes
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  Speaker 6: of recess. How about it? Live in Washington. We'll assemble
• 16:35
  Speaker 6: our political panel next. Stay with us on Balance of Power.
• 16:38
  Speaker 6: We'll have much more coming up after this.
• 16:43
  Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
• 16:46
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• 17:02
  Speaker 6: Looking forward to spending some time with our panel on this,
• 17:04
  Speaker 6: because I'll tell you what, when the headline broke right
• 17:06
  Speaker 6: before the late edition of Balance of Power late yesterday,
• 17:08
  Speaker 6: this looked like a whopper. When you look beyond the headline,
• 17:12
  Speaker 6: it's a little bit less intense when it comes to
• 17:16
  Speaker 6: mail-in voting. allowing the president's restrictions that he put forth
• 17:21
  Speaker 6: in executive order on mail-in voting to proceed for now.
• 17:24
  Speaker 6: But this is far from over, leaving uncertain whether these
• 17:27
  Speaker 6: restrictions are legal or, in fact, will even be able
• 17:29
  Speaker 6: to be used in this year's midterms. It's going back
• 17:33
  Speaker 6: to the lower court here, remembering that a bunch of
• 17:36
  Speaker 6: Democratic state attorneys general had challenged this E.O., that directed
• 17:44
  Speaker 6: the Department of Homeland Security to compile lists of citizens
• 17:48
  Speaker 6: eligible to vote.
• 17:51
  Speaker 1: The U.S.
• 17:51
  Speaker 6: Postal Service separately ordered to craft rules restricting ballots, I
• 17:57
  Speaker 6: should say, to those on the state-submitted lists of eligible voters.
• 18:01
  Speaker 6: It's a 6-3 ruling. We're going to get more on this,
• 18:04
  Speaker 6: as we learned last evening from Greg Stohr. But there's
• 18:08
  Speaker 6: way more to this than the ruling. What the president
• 18:11
  Speaker 6: is doing with the U.S. Postal Service— is far more important,
• 18:14
  Speaker 6: at least, again, for now. The New York Times spent
• 18:17
  Speaker 6: some time on this with good reporting today. Four weeks
• 18:20
  Speaker 6: before the president put forth this executive order on mail-in ballots,
• 18:24
  Speaker 6: he filed four nominations for vacancies on the Board of
• 18:28
  Speaker 6: Governors at the U.S.
• 18:30
  Speaker 1: Postal Service.
• 18:32
  Speaker 6: Bucking history here and what has tended to happen in
• 18:36
  Speaker 6: the past, all four were Republicans.
• 18:39
  Speaker 1: There was the.
• 18:39
  Speaker 6: Longstanding practice of nominating board members in bipartisan pairs. That's
• 18:45
  Speaker 6: out the window. Four Republicans now, three of them, interestingly,
• 18:50
  Speaker 6: have cast doubt on who won the 2020 presidential election.
• 18:57
  Speaker 6: So we have 2026 in mind. We also have 2028
• 18:59
  Speaker 6: in mind. And when you talk to lawmakers, as The
• 19:03
  Speaker 6: Times did, about the confirmation process for these nominees and
• 19:09
  Speaker 6: what they said in their questionnaires, it raises many questions
• 19:13
  Speaker 6: now about the role that the Postal Service may or
• 19:15
  Speaker 6: may not play in future elections in this country. It's
• 19:19
  Speaker 6: where we start with our political panel. Bloomberg Politics contributors
• 19:22
  Speaker 6: Jeannie Shanzano and Rick Davis join us now. Jeannie is
• 19:25
  Speaker 6: our Democratic Analyst and Democracy Visiting Fellow at Harvard Kennedy
• 19:28
  Speaker 6: School's Ash Center. Rick is our Republican Strategist. and partner
• 19:33
  Speaker 6: at Stonecourt Capital. Jeannie, when you start reading through some
• 19:38
  Speaker 6: of the biographical information on those who were appointed and
• 19:43
  Speaker 6: their commentary about 2020, it's really something. You've got Jeffrey Brodsky,
• 19:48
  Speaker 6: who is a co-founder of a management consultant firm, would
• 19:52
  Speaker 6: not say who won the 2020 election. William Gallo, a
• 19:56
  Speaker 6: retired commodities broker. Robert Stevens, a former top executive at Marvel.
• 20:02
  Speaker 1: These are the folks.
• 20:02
  Speaker 6: Then there was a fourth who withdrew his nomination for
• 20:05
  Speaker 6: personal reasons. What is the president trying to do, Jeannie,
• 20:08
  Speaker 6: with the post office?
• 20:11
  Speaker 4: He's trying to do what he's been doing since before
• 20:15
  Speaker 4: he got back into office. He is trying to put
• 20:18
  Speaker 4: his thumb on the scale of federal elections in every
• 20:22
  Speaker 4: way he can. We've seen it with mid-decade redistricting. We're
• 20:25
  Speaker 4: seeing it with the board, the post office. We're seeing it.
• 20:28
  Speaker 8: With the EO.
• 20:30
  Speaker 4: The list goes on and on. And this has sparked
• 20:32
  Speaker 4: so much fear around among so many Americans because we
• 20:37
  Speaker 4: all lived through January 6. We all remember that the
• 20:41
  Speaker 4: president will not be stopped in these attempts. And who
• 20:45
  Speaker 4: did we rely on to protect us at that point? Well,
• 20:48
  Speaker 4: we relied on the courts time after time after time
• 20:51
  Speaker 4: in over 60 cases to strike down the Republican and
• 20:56
  Speaker 4: the president's cases. and to agree that Joe Biden had
• 21:01
  Speaker 4: fairly won the 2020 election. And we're facing that all
• 21:05
  Speaker 4: over again. And now we've got a Supreme Court that
• 21:08
  Speaker 4: at 6-3 is saying, not on the merits, but is
• 21:11
  Speaker 4: saying that there hasn't been enough harm shown to these
• 21:16
  Speaker 4: 23 states that filed the And so we're going to
• 21:20
  Speaker 4: wait this thing out. And you've got the liberals turning
• 21:23
  Speaker 4: around and saying, wait this out. Mail-in ballots go out
• 21:26
  Speaker 4: in North Carolina next week.
• 21:28
  Speaker 11: How long are we going.
• 21:29
  Speaker 4: To wait to see harm?
• 21:31
  Speaker 1: So this is where we are.
• 21:33
  Speaker 4: And his activities with the post office, you can call
• 21:36
  Speaker 4: them that, are just another part and parcel of this
• 21:38
  Speaker 4: story that we've been watching for.
• 21:40
  Speaker 1: You know, a decade now. So is this really..
• 21:44
  Speaker 6: Rick, an argument about 2028? We can't change the rules
• 21:47
  Speaker 6: on mail-in ballots this close to November, can we?
• 21:51
  Speaker 11: Well, I think the president's intent was to change the
• 21:54
  Speaker 11: rules on mail-in vote this election cycle.
• 21:57
  Speaker 1: He may be thwarted by the courts in order to
• 21:59
  Speaker 1: do that.
• 22:00
  Speaker 11: And showing harm is actually a little more complicated than
• 22:03
  Speaker 11: just making a legal case. The harm would be if
• 22:06
  Speaker 11: the Postal Service actually started limiting what ballots they could
• 22:12
  Speaker 11: send out on mail-in ballots. But another federal case has
• 22:16
  Speaker 11: actually banned them from implementing this program. So the Supreme
• 22:20
  Speaker 11: Court basically said, look, if there's no implementation, there's no
• 22:24
  Speaker 11: There's no harm. And so it's not like they've got
• 22:27
  Speaker 11: to go find harm. They would actually have to have
• 22:30
  Speaker 11: the U.S. Postal Service implement the program. So it's a
• 22:33
  Speaker 11: little more complicated, I think, on the back end of this.
• 22:37
  Speaker 11: But the bottom line is this president, for whatever reason,
• 22:39
  Speaker 11: has defied sort of Republican orthodoxy. which is separation of
• 22:44
  Speaker 11: national government versus state government. And we always side with
• 22:47
  Speaker 11: state government. The best government is the government closest.
• 22:49
  Speaker 8: To the people.
• 22:50
  Speaker 1: And so elections, according to the Constitution.
• 22:53
  Speaker 11: Are supposed to be administered through the state legislatures by
• 22:56
  Speaker 11: the states.
• 22:56
  Speaker 1: And Donald Trump doesn't like that concept.
• 22:59
  Speaker 11: Every piece of legislation or executive order that he's tried
• 23:03
  Speaker 11: to implement around elections has basically been federal getting their
• 23:08
  Speaker 11: nose under the tent of running elections, especially in any
• 23:11
  Speaker 11: federal election. And so there's a fundamental issue here that's constitutional.
• 23:16
  Speaker 11: There's an implementing issue that is, you know, being prosecuted
• 23:21
  Speaker 11: in the courts. And the Supreme Court will have to
• 23:23
  Speaker 11: wait around and And to answer your original question, yeah,
• 23:26
  Speaker 11: that probably means 2028.
• 23:29
  Speaker 1: Okay. But also, Rick, you've spoken about.
• 23:33
  Speaker 6: Mail-in ballots and the role that they play within the
• 23:35
  Speaker 6: Republican electoral process. You talk about Republican orthodoxy on federal
• 23:41
  Speaker 6: versus state. This is something that Republicans have used to
• 23:45
  Speaker 6: elect Republicans for years, particularly throughout southern states. In your
• 23:49
  Speaker 6: state of Arizona that you worked in with John McCain
• 23:52
  Speaker 6: for so many years, The president himself voted by mail.
• 23:57
  Speaker 6: The extent to which he's seized on this, if we
• 23:59
  Speaker 6: did everything that we wanted or that he wanted here
• 24:02
  Speaker 6: in limiting mail-in ballots, would it not hurt Republicans?
• 24:06
  Speaker 11: Yeah, I think it hurts the system completely. And in
• 24:09
  Speaker 11: many states, first of all, all states are different, right?
• 24:12
  Speaker 11: That's the blessing and curse of our political system. We
• 24:15
  Speaker 11: have 50 states and they all have their own rules.
• 24:17
  Speaker 11: That's the point. And in a state like Arizona, you
• 24:21
  Speaker 11: learn how to deal with it. And frankly, Republicans were
• 24:24
  Speaker 11: winning enormous amount of elections because they were able to
• 24:28
  Speaker 11: identify their voters. track the process through mail-in ballots and
• 24:32
  Speaker 11: know whether they voted or not. And in many states,
• 24:34
  Speaker 11: like Arizona, the vast majority of people who vote are
• 24:37
  Speaker 11: voting mail-in. I mean, probably 60 to 70 percent of
• 24:41
  Speaker 11: Arizona voters and a lot of those, if not more
• 24:45
  Speaker 11: than half, are Republicans. And so there's not a political
• 24:49
  Speaker 11: operative in the country who doesn't love mail-in ballots because
• 24:53
  Speaker 11: you actually can track the process of voting and you
• 24:56
  Speaker 11: don't have to wait around for election day and hope
• 24:58
  Speaker 11: for the best.
• 24:59
  Speaker 8: Wow.
• 25:00
  Speaker 1: What's the Democratic answer to this genie?
• 25:02
  Speaker 6: Do you sit back and watch it happen, knowing that
• 25:05
  Speaker 6: it might hurt Republicans more than your party?
• 25:09
  Speaker 4: You know, I think, sure, the Democrats can, but I
• 25:12
  Speaker 4: think this is broader than either Republicans or Democrats. This
• 25:16
  Speaker 4: is the president creating a problem that does not exist.
• 25:20
  Speaker 4: The whole predicate for this is the president keeps telling
• 25:23
  Speaker 4: people there is fraud and mail-in balloting. And the fact is,
• 25:26
  Speaker 4: there is not. As you mentioned, he himself votes by
• 25:29
  Speaker 4: mail-in ballot, as did 47 million Americans in the last election,
• 25:34
  Speaker 4: one third of all ballots. It is so rare, Joe,
• 25:38
  Speaker 4: that the Brennan Center for Justice determined that you're more
• 25:42
  Speaker 4: likely statistically to be struck by lightning than to commit
• 25:46
  Speaker 4: mail-in or voter fraud. The Brookings Institute did an extensive
• 25:50
  Speaker 4: study And they found there were only four documented cases
• 25:55
  Speaker 4: of fraud in 10 million mail-in ballots. So this is
• 25:59
  Speaker 4: what frustrates Americans about our government and, quite frankly, this president.
• 26:04
  Speaker 4: We have so many issues to be addressing, whether it's
• 26:07
  Speaker 4: flock cameras, whether it's data centers, whether it's a war
• 26:10
  Speaker 4: in Iran, whether it's inflation, jobs, the list goes on.
• 26:13
  Speaker 4: And you are talking about a problem.
• 26:15
  Speaker 1: That does not exist.
• 26:17
  Speaker 4: Again, four in 10 million ballots of documented fraud. And
• 26:22
  Speaker 4: that to me is really the real frustrating part of this,
• 26:26
  Speaker 4: whether you're a Republican or Democrat, quite frankly.
• 26:29
  Speaker 9: Boy.
• 26:32
  Speaker 6: This is pretty amazing, Rick, and I don't know how
• 26:34
  Speaker 6: the rank and file manage this. If the president continues
• 26:37
  Speaker 6: to denigrate mail-in ballots and refer to them as the
• 26:41
  Speaker 6: basis of fraud, what do you do if you're a
• 26:43
  Speaker 6: Republican House member running for re-election, if you're a Republican
• 26:47
  Speaker 6: senator hoping to get the votes that you need, in
• 26:51
  Speaker 6: many cases, through the mail this November?
• 26:53
  Speaker 11: Yeah, I mean, you know, it's cringeworthy to see the
• 26:56
  Speaker 11: president's posts on social media and comments in the public
• 27:01
  Speaker 11: because these are the people who actually have to rely
• 27:05
  Speaker 11: on their voters. And a lot of Republican voters are
• 27:07
  Speaker 11: in rural areas where getting to the polls are not easy.
• 27:11
  Speaker 11: And so they have to, you know, hide behind the
• 27:14
  Speaker 11: president on this.
• 27:15
  Speaker 1: They're not going to.
• 27:16
  Speaker 11: Argue with them. You don't see any Republican backlash from
• 27:20
  Speaker 11: elected officials. But every single day they're out there whipping
• 27:24
  Speaker 11: their campaigns to try and make sure that absentee ballots
• 27:28
  Speaker 11: get to their voters and get turned in. And literally
• 27:32
  Speaker 11: every week you get the update from the county election
• 27:35
  Speaker 11: office tells you who's voted. I mean, you can't get
• 27:37
  Speaker 11: a better system than that as far as accountability.
• 27:41
  Speaker 1: How about that?
• 27:41
  Speaker 6: Rick Davis and Jeannie Shanzano break it down as always.
• 27:44
  Speaker 6: Our Bloomberg Politics contributors, when the court rules again. Assuming
• 27:49
  Speaker 6: that it will, we'll let you know here, of course,
• 27:51
  Speaker 6: on Balance of Power.
• 27:52
  Speaker 1: Stay with us on Balance of Power. We'll have much
• 27:54
  Speaker 1: more coming up after this.
• 28:00
  Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
• 28:03
  Speaker 5: us live weekdays at noon and 5 p.m. Eastern on
• 28:07
  Speaker 5: Apple CarPlay and Android Auto with the Bloomberg Business app.
• 28:10
  Speaker 5: Listen on demand wherever you get your podcasts or watch
• 28:13
  Speaker 5: us live on YouTube.
• 28:16
  Speaker 6: Thanks for joining us here on Balance of Power. We're
• 28:18
  Speaker 6: live from Washington on Bloomberg TV and radio, connecting the
• 28:22
  Speaker 6: dots between Wall Street and Washington. And there's a lot
• 28:25
  Speaker 6: to connect today with so much talk about tariffs, about sanctions,
• 28:32
  Speaker 6: and about debt. We touched on some of these a
• 28:35
  Speaker 6: bit earlier with the congressman from Rhode Island. But as
• 28:39
  Speaker 6: this tit-for-tat reaches new levels between the United States and Canada,
• 28:42
  Speaker 6: we wanted to seize on the moment with someone who
• 28:45
  Speaker 6: is steeped in this relationship, in cross-border trade, and as well,
• 28:51
  Speaker 6: the matter of tax and spending. As former chairman of
• 28:54
  Speaker 6: the House Ways and Means Committee, a legend in Republican politics,
• 28:58
  Speaker 6: former Congressman Kevin Brady, with us now from Texas.
• 29:01
  Speaker 2: Mr.
• 29:01
  Speaker 6: Chairman, it's great to see you. Welcome back to Bloomberg
• 29:04
  Speaker 6: TV and Radio. It is great to see you, Joe.
• 29:07
  Speaker 8: I hope things are going well.
• 29:08
  Speaker 1: Well, thank you. I hope your summer's been great.
• 29:10
  Speaker 6: The last time I believe you were at this table
• 29:12
  Speaker 6: with me here in Washington, we were joined by the
• 29:15
  Speaker 6: two gentlemen who helped to negotiate the USMCA. And now
• 29:19
  Speaker 6: that we have seen this relationship devolve to the point
• 29:21
  Speaker 6: of dollar-for-dollar counter-tariffs with Canada, I'm wondering if you see
• 29:25
  Speaker 6: the opportunity for a deal here or an intractable situation
• 29:29
  Speaker 6: with Canada.
• 29:30
  Speaker 2: Yeah.
• 29:31
  Speaker 8: Yeah, so look, there's no question.
• 29:33
  Speaker 10: What occurred was a serious bump in the road, no
• 29:36
  Speaker 10: doubt about that. But it's not necessarily a fatal one
• 29:39
  Speaker 10: in the sense that in the negotiations that had been
• 29:42
  Speaker 10: occurring in the weeks before, there was certainly a seriousness,
• 29:46
  Speaker 10: a purpose. demonstrated by both countries. They were tackling issues
• 29:50
  Speaker 10: that matter, some of them longstanding trade irritants, some of
• 29:54
  Speaker 10: them new issues that the US has raised in this
• 29:57
  Speaker 10: joint review of the US-Mexico-Canada agreement. There was real concrete
• 30:02
  Speaker 10: solutions moving forward. And the hope here was that this
• 30:06
  Speaker 10: would if not entirely clear the decks, really lay the
• 30:10
  Speaker 10: foundation for an announcement on country-to-country discussions, negotiations between the U.S.
• 30:16
  Speaker 10: and Canada that would lead ultimately to a bilateral agreement,
• 30:20
  Speaker 10: and then have the three countries, including Mexico, sit down
• 30:23
  Speaker 10: and work through some of the president's priorities on China,
• 30:26
  Speaker 10: economic security, and supply chains. So one thing, Joe, I've
• 30:29
  Speaker 10: learned in trade is... A deal is never done until
• 30:34
  Speaker 10: it's done. No matter how close and how certain it
• 30:37
  Speaker 10: appeared to be, it didn't. But that doesn't necessarily mean
• 30:42
  Speaker 10: that this has to devolve further. In fact, I think
• 30:46
  Speaker 10: as we watch the elections in Canada here about six
• 30:50
  Speaker 10: weeks away, the midterms here in the United States, I
• 30:53
  Speaker 10: think there will be an opportunity to come back because, again,
• 30:58
  Speaker 10: they had bridged the gap in pretty significant ways on
• 31:02
  Speaker 10: some real substantive issues.
• 31:04
  Speaker 2: Well, yeah.
• 31:05
  Speaker 6: So if you go back and read coverage from Thursday, Friday,
• 31:10
  Speaker 6: even early Saturday, there was an expectation that a deal
• 31:13
  Speaker 6: would be struck. Things fell apart, we understand, at the
• 31:17
  Speaker 6: last minute. But these new tariffs don't take effect yet.
• 31:20
  Speaker 6: Canada's take effect, I believe, the 8th of September. Ours
• 31:22
  Speaker 6: would be by January 1st, 2027. Is this just some
• 31:26
  Speaker 6: sort of high stakes negotiation that's playing out in public?
• 31:30
  Speaker 10: Look, one thing we know about trade, it is the
• 31:32
  Speaker 10: marriage of politics and economics. And all of trade is local.
• 31:38
  Speaker 10: And so, look, it is not surprising for a country
• 31:42
  Speaker 10: to view what the impact of a trade agreement is
• 31:44
  Speaker 10: going to be back home and make decisions based on that.
• 31:47
  Speaker 8: Every country does this.
• 31:49
  Speaker 10: In this case, I think ultimately the goal should be
• 31:53
  Speaker 10: to get to the negotiating grounds for the U.S.-Mexico-Canada agreement.
• 31:59
  Speaker 10: Because that agreement has become so vital to all three countries' economies,
• 32:04
  Speaker 10: including the U.S. We've visited before about this, but because
• 32:07
  Speaker 10: of the trade agreement the president negotiated six years ago,
• 32:11
  Speaker 10: Canada and Mexico today are now America's largest customers by far,
• 32:16
  Speaker 10: our biggest investors in the United States, mainly in manufacturing.
• 32:20
  Speaker 10: and our most important supplier. So this is a partnership
• 32:24
  Speaker 10: unique in the world. It is the most consequential trade
• 32:27
  Speaker 10: agreement in the world. It is worth millions of jobs
• 32:31
  Speaker 10: back home here in the United States. And so I
• 32:34
  Speaker 10: think you look across these three countries, our manufacturers, farmers,
• 32:38
  Speaker 10: small business people want to see this review come to
• 32:41
  Speaker 10: a conclusion in a positive way. And everyone hoped that
• 32:45
  Speaker 10: the agreement they were discussing would jumpstart those discussions.
• 32:49
  Speaker 2: Yes.
• 32:50
  Speaker 8: Right.
• 32:50
  Speaker 6: Well, I mean, look, as someone who was a key
• 32:52
  Speaker 6: negotiator in the original USMCA, did you see this coming
• 32:57
  Speaker 6: when the president chose to not reauthorize?
• 33:00
  Speaker 10: You know, not surprised because he'd been signaling it for
• 33:04
  Speaker 10: quite a while. One, his agreement is working. It is
• 33:09
  Speaker 10: the gold standard of free trade agreements. in the world,
• 33:13
  Speaker 10: no question about it. But over those six years, some
• 33:17
  Speaker 10: of the issues were not enforced as the US had hoped.
• 33:22
  Speaker 10: There have been new issues evolving, including China's super aggressiveness,
• 33:26
  Speaker 10: transshipment of goods, moving them through Mexico unfairly, issues like
• 33:32
  Speaker 10: that that needed to be raised. And so I think
• 33:35
  Speaker 10: what was important, the president didn't withdraw. He simply said,
• 33:39
  Speaker 10: unlike Canada and Mexico, I'm not going to renew it
• 33:42
  Speaker 10: in its current form and set up the negotiations with Mexico.
• 33:46
  Speaker 8: So clearly, there is a path here.
• 33:48
  Speaker 10: Ambassador Greer has adopted sort of the same formula, the
• 33:52
  Speaker 10: same model that's been used in these reciprocal trade agreements.
• 33:56
  Speaker 10: It's a model the president's familiar with because at the
• 33:59
  Speaker 10: end of the day, I think Ambassador Greer hopes to
• 34:02
  Speaker 10: take an agreement to the president by the end of
• 34:04
  Speaker 10: the year, get that sign off, negotiate the final details
• 34:08
  Speaker 10: of it. I think the biggest impact of this may
• 34:12
  Speaker 10: be a delay in that timetable.
• 34:15
  Speaker 1: Interesting.
• 34:16
  Speaker 6: Yeah, you do wonder what Mexico thinks of this particular
• 34:20
  Speaker 6: stop on the road here and how it might impact
• 34:23
  Speaker 6: our longer-term negotiations. But all this is happening.
• 34:26
  Speaker 2: Mr.
• 34:27
  Speaker 6: Chairman, while lawmakers are out of town, we're in August
• 34:29
  Speaker 6: recess right now, and they're going to be piling back
• 34:31
  Speaker 6: next week with a lot to manage here, including trade,
• 34:35
  Speaker 6: foreign policy with regard to Canada, with regard to Iran,
• 34:39
  Speaker 6: of course. And then there's going to be the matter
• 34:41
  Speaker 6: of budgeting for the new fiscal year. And we've got
• 34:44
  Speaker 6: a continuing resolution that you can weigh in on.
• 34:46
  Speaker 1: If you want.
• 34:46
  Speaker 6: But one thing that the White House appears to be
• 34:49
  Speaker 6: seeking is some changes to capital gains.
• 34:52
  Speaker 1: And I'm wondering your thoughts on this.
• 34:54
  Speaker 6: As the former chairman of the Ways and Means Committee,
• 34:57
  Speaker 6: you've had this argument before about indexing capital gains, as
• 35:00
  Speaker 6: the president has reportedly suggested he would like to see.
• 35:03
  Speaker 1: Is there an appetite for that in this Congress?
• 35:06
  Speaker 8: You know, I would hope so. Obviously, this is a
• 35:12
  Speaker 8: very pro-growth issue.
• 35:13
  Speaker 10: And we had wanted to lower the capital gains rate
• 35:16
  Speaker 10: in TCJA at the end of the day, sort of
• 35:19
  Speaker 10: ran out of the money to do it.
• 35:20
  Speaker 8: But there's no question about it.
• 35:22
  Speaker 10: If you index it, you quit taxing people on inflation
• 35:26
  Speaker 10: for their assets, which.
• 35:27
  Speaker 8: I think is a good principle, period.
• 35:29
  Speaker 10: Secondly, it unlocks the These assets, whether they're physical ones, stocks,
• 35:34
  Speaker 10: other types of investments, that's good for the economy as well,
• 35:37
  Speaker 10: creates new opportunities. There is a cost to it always.
• 35:41
  Speaker 10: On these issues, you've got to weigh the pro-growth outcome
• 35:45
  Speaker 10: against what that tax cut costs. But at the end
• 35:49
  Speaker 10: of the day, America, one of the reasons we have
• 35:52
  Speaker 10: such a resilient economy and the largest on the world
• 35:55
  Speaker 10: We have an investment infrastructure in the tax code. It
• 35:58
  Speaker 10: encourages investment by a lot of Americans, a lot of
• 36:01
  Speaker 10: businesses in a way that grows the economy. Capital gains
• 36:04
  Speaker 10: is a big part of those investment incentives that works.
• 36:11
  Speaker 1: You know, the bond market's been getting adjective, Mr.
• 36:14
  Speaker 8: Chairman.
• 36:14
  Speaker 1: Maybe you have too.
• 36:15
  Speaker 6: We're looking at a long bond has been above 5.2% here.
• 36:19
  Speaker 6: The 10-year we're told is going to be at 5%
• 36:22
  Speaker 6: at some point. It's just a question of when. And
• 36:24
  Speaker 6: it all came after this realization that our federal debt
• 36:29
  Speaker 6: was at $ 40 trillion. It looks like a typo even
• 36:35
  Speaker 6: days after it was first published. As we try to
• 36:37
  Speaker 6: get our heads around a number like that, is this
• 36:40
  Speaker 6: the right time? to be potentially lowering our capital gains revenue?
• 36:45
  Speaker 10: You know, actually, I think last time we lowered the rate,
• 36:49
  Speaker 10: the revenue from capital gains actually grew. Sort of like
• 36:52
  Speaker 10: as we did in 2017 when we lowered the corporate
• 36:54
  Speaker 10: tax rate.
• 36:55
  Speaker 8: Pax revenue from those corporations grew.
• 36:58
  Speaker 10: Economic growth really is a budget tool for you as
• 37:02
  Speaker 10: long as you restrain spending. That's where we're failing in
• 37:06
  Speaker 10: a big way. We've got record revenues coming in, but
• 37:09
  Speaker 10: our spending's outpacing it. And the stunning number, I agree
• 37:13
  Speaker 10: with you, $ 40 trillion just is a kick to the gut,
• 37:17
  Speaker 10: I think. Secondly, it's not going to take care of itself.
• 37:21
  Speaker 10: Congress is going to have to act. to move forward,
• 37:23
  Speaker 10: especially as we look at Social Security, Medicare, Medicaid, others
• 37:28
  Speaker 10: moving toward serious insolvency issues here. So you've got to
• 37:34
  Speaker 10: have that restraint. I did appreciate Republicans, I think, came
• 37:39
  Speaker 10: up with $ 1. 5 trillion in their recent permanence of the
• 37:44
  Speaker 10: Tax Cuts and Jobs Act, a good start.
• 37:46
  Speaker 8: They'd like to go farther.
• 37:47
  Speaker 10: But at the end of the day, America really needs
• 37:50
  Speaker 10: to tie our spending to the size of our economy,
• 37:54
  Speaker 10: and right-size it over time to where we're not at
• 37:57
  Speaker 10: financial risk going forward.
• 38:00
  Speaker 6: Well, of course, you've seen the Treasury Secretary get involved
• 38:03
  Speaker 6: in the bond market, which has been somewhat controversial, and
• 38:05
  Speaker 6: it hasn't made a big difference yet, realizing that he
• 38:08
  Speaker 6: could still do a lot more buying here.
• 38:11
  Speaker 1: We heard from Stanley Druckenmiller. Did you see this op-ed
• 38:14
  Speaker 1: this morning, Mr.
• 38:14
  Speaker 11: Chairman?
• 38:15
  Speaker 6: Governments defending prices against fundamentals always lose interest. He says,
• 38:20
  Speaker 6: that's Besson's own mentor, Druckenmiller. The only variable, he writes,
• 38:25
  Speaker 6: is how much they spend before conceding. Is this the
• 38:29
  Speaker 6: right move right now?
• 38:31
  Speaker 10: You know, I think, look, I think getting fiscal policy
• 38:34
  Speaker 10: right is the only solution here. It's not going to
• 38:37
  Speaker 10: come from the Fed. It will not come from Treasury
• 38:40
  Speaker 10: or any administration, frankly. It's going to have to come
• 38:43
  Speaker 10: from Congress. Setting guardrails around spending, sending enforceable, putting in
• 38:49
  Speaker 10: place enforceable spending caps. And over time, you're not going
• 38:53
  Speaker 10: to fix this problem immediately. But over time, right-sizing that
• 38:57
  Speaker 10: government in a way that markets, more importantly, the country
• 39:00
  Speaker 10: feels more secure. Joe, I have to tell you, my
• 39:03
  Speaker 10: first four years in Congress, we balance the budget every year.
• 39:07
  Speaker 10: And I thought, I just assumed it would always be
• 39:11
  Speaker 10: that way, but we've never seen a balanced budget since
• 39:15
  Speaker 10: those days.
• 39:16
  Speaker 8: So this is long overdue.
• 39:18
  Speaker 10: I do think there are a lot of members in Congress,
• 39:21
  Speaker 10: certainly my Republican colleagues, who this is what they wake
• 39:25
  Speaker 10: up to. This is what scares them the most, this
• 39:27
  Speaker 10: debt and deficit. So don't think all of Congress is
• 39:31
  Speaker 10: ignoring this. I think there is a pretty strong crew
• 39:35
  Speaker 10: of members who know we've really got to face this down.
• 39:41
  Speaker 6: Boy, until then, it's a continuing resolution, right? Nobody's crafting
• 39:45
  Speaker 6: a budget between now and November.
• 39:47
  Speaker 2: It is.
• 39:48
  Speaker 10: Yeah, our budget process is broken, Joe. Has been for
• 39:51
  Speaker 10: a long time. I would love to see budget reforms.
• 39:54
  Speaker 10: I've seen them through the years get floated. They're really smart.
• 39:57
  Speaker 8: They're really good. They should be bipartisan.
• 39:59
  Speaker 10: But look, the way our laws work, if we were
• 40:02
  Speaker 10: a manufacturing plant, Congress would manufacture spending. That's how our
• 40:06
  Speaker 10: budget's set up. If we want to manufacture... reductions in efficiency.
• 40:12
  Speaker 10: We got to retool the plant. That means rewriting how
• 40:14
  Speaker 10: we do our whole budget. And I think that, too,
• 40:18
  Speaker 10: is being considered by members of Congress who want to
• 40:21
  Speaker 10: take a serious, substantive look, like Jody Arrington, chairman of
• 40:24
  Speaker 10: the Budget Committee, would be one. But there are others
• 40:28
  Speaker 10: who are eager to join.
• 40:30
  Speaker 1: Really interesting. You're paying $ 3.
• 40:33
  Speaker 6: 62 for a gallon of gas in Texas, which is
• 40:36
  Speaker 6: quite a bit below.
• 40:36
  Speaker 1: The national average right now. In our remaining moment, Mr.
• 40:39
  Speaker 6: Chairman, to what extent will affordability play into the election,
• 40:43
  Speaker 6: the Senate election in the state of Texas?
• 40:47
  Speaker 8: You know, I think it already is.
• 40:49
  Speaker 10: Look, affordability is a big reason President Trump won the
• 40:54
  Speaker 10: presidency for his second term. Certainly a big reason Republicans
• 40:58
  Speaker 10: maintain the majority as well. Certainly we as Republicans and
• 41:04
  Speaker 10: they as a party will need to make that case
• 41:06
  Speaker 10: very strongly today.
• 41:07
  Speaker 8: In Texas and across the country.
• 41:10
  Speaker 1: It's good to see you and good to have you back, Mr. Chairman.
• 41:13
  Speaker 6: I hope it's been a good summer. As I mentioned,
• 41:14
  Speaker 6: Kevin Brady with us, the former chairman of the Ways
• 41:16
  Speaker 6: and Means Committee, Republican from Texas, House of Representatives, and
• 41:21
  Speaker 6: former negotiator of the USMCA.
• 41:22
  Speaker 1: Stay with us on Balance of Power. We'll have much
• 41:25
  Speaker 1: more coming up after this.
• 41:29
  Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
• 41:33
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• 41:39
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• 41:42
  Speaker 5: flagship New York station.
• 41:44
  Speaker 6: Just say Alexa, play Bloomberg 1130. Looking at you, Bitcoin,
• 41:49
  Speaker 6: topping $ 80, 000 a little while ago. It's just at 79
• 41:51
  Speaker 6: right now.
• 41:51
  Speaker 1: But up.
• 41:56
  Speaker 6: A hair as everybody tries to find some kind of
• 41:58
  Speaker 6: a new hedge. Gold has been rising and really interesting.
• 42:00
  Speaker 6: It's not up at the moment, but has been on
• 42:02
  Speaker 6: the rise with more folks looking at $ 5, 000 again. We're
• 42:05
  Speaker 6: going to have to get Miami Mike back in here
• 42:06
  Speaker 6: because this is a market that is adjusting every day
• 42:09
  Speaker 6: to policy coming out of Washington, not just earnings. And
• 42:12
  Speaker 6: by the way, we're going to be talking about Nvidia
• 42:14
  Speaker 6: earnings tomorrow. Uh, if you don't already have that, uh,
• 42:19
  Speaker 6: set aside for yourself. It's going to be an important one.
• 42:21
  Speaker 6: We get the, some of the big cyber names to
• 42:24
  Speaker 6: CrowdStrike is going to be reporting this week. So hold
• 42:26
  Speaker 6: on more information is coming, which is what we're all
• 42:30
  Speaker 6: about here on balance of power. Thanks for being with
• 42:32
  Speaker 6: us on the Tuesday edition. As we come to you
• 42:34
  Speaker 6: live from Washington, you remember it was back in July
• 42:39
  Speaker 6: when these videos went all over social media of the
• 42:42
  Speaker 6: blue angels doing this death defying thing. pass on the
• 42:48
  Speaker 6: beach down in Pensacola. I stopped like everyone else to
• 42:53
  Speaker 6: see if this is real. It looked like an AI video.
• 42:55
  Speaker 6: This thing was, you know, gosh, if you're with us
• 42:56
  Speaker 6: on YouTube, we'll show it.
• 42:57
  Speaker 1: There it is right now.
• 42:58
  Speaker 6: I mean, they're like two feet over people's heads. Beach
• 43:01
  Speaker 6: umbrellas come flying out of the ground. There's sand everywhere.
• 43:04
  Speaker 1: Like what the..
• 43:07
  Speaker 6: Some people were screaming. Other people thought it was cool.
• 43:10
  Speaker 6: It breached safety protocols though. And by the way, it
• 43:13
  Speaker 6: was not AI.
• 43:14
  Speaker 1: This was real.
• 43:16
  Speaker 6: Apparently, they have this thing in Pensacola called Breakfast with
• 43:19
  Speaker 6: the Blue Angels. As soon as I heard about this, like, honey,
• 43:23
  Speaker 6: we need to fly to Florida. I need to get
• 43:25
  Speaker 6: a load of this. But the fact of the matter is,
• 43:27
  Speaker 6: while we think it's pretty cool looking, I mean, people
• 43:31
  Speaker 6: were put in danger. Look at this thing. If you're
• 43:33
  Speaker 6: not on YouTube, get there and back it up. The
• 43:35
  Speaker 6: CC is showing you right now.
• 43:36
  Speaker 1: Death defying. To the point where Captain..
• 43:41
  Speaker 6: Adam Bryan, who's commanded the Blue Angels since 2024, told
• 43:45
  Speaker 6: reporters this was a breach of protocol. They never intend
• 43:48
  Speaker 6: to fly over a crowd that low, and they were
• 43:50
  Speaker 6: going to go back to review safety protocols. This is
• 43:54
  Speaker 6: like something out of Top Gun, right? Buzzing the tower.
• 43:59
  Speaker 6: And if you're Pete Hegseth, who grew up in the
• 44:02
  Speaker 6: same generation, I guess, that I did, we were all
• 44:05
  Speaker 6: raised with Top Gun, right? Your ego's right and checks
• 44:08
  Speaker 6: your body can't cash. The problem is for Pete Hegseth,
• 44:12
  Speaker 6: that's the point. That's the edge. That's what's cool. That's
• 44:16
  Speaker 6: what's to aspire to. Or so we have come to learn.
• 44:20
  Speaker 6: Because everybody was left off the hook on this one.
• 44:23
  Speaker 8: Remember?
• 44:25
  Speaker 6: Sent umbrellas and beach chairs tumbling, Pete Hegseth posted on
• 44:29
  Speaker 6: social media, quote, the flyovers will continue until morale improves.
• 44:34
  Speaker 6: It reminded us a little bit of that deal with
• 44:36
  Speaker 6: the Apache helicopters. Remember, they went up to Kid Rock's
• 44:39
  Speaker 6: house in some other breach of, he was out there
• 44:42
  Speaker 6: at the pool. No, sir, nothing wrong here. That's America,
• 44:47
  Speaker 6: bare chested and ready for anything. So we were taken
• 44:52
  Speaker 6: by Guadalmacunda's column this morning on the Terminal. And you know,
• 44:56
  Speaker 6: in this first hour of Balance of Power, this is
• 44:57
  Speaker 6: where we can have conversations like this. And this is
• 45:00
  Speaker 6: why you join us every day on Bloomberg Radio.
• 45:03
  Speaker 1: That's right.
• 45:06
  Speaker 6: Top Gun is Pete Hegseth's, maybe his favorite documentary. It
• 45:10
  Speaker 6: is mine too, but I don't run the Pentagon. And
• 45:14
  Speaker 6: as Gautam writes, the incident highlights the importance of maintaining
• 45:20
  Speaker 6: standards and upholding safety rules, even when they seem pointless
• 45:24
  Speaker 6: or unpopular. There's more about this than just being upset
• 45:30
  Speaker 6: with Pete Hegseth. You can extrapolate all kinds of ideas
• 45:34
  Speaker 6: about leadership, not only in the military, but in the
• 45:37
  Speaker 6: corporate space. This is why we all meet here every
• 45:39
  Speaker 6: day on Bloomberg. In a 2008 management science paper, fascinating,
• 45:46
  Speaker 6: Catherine Tinsley of Georgetown University's McDonough School of Business built
• 45:49
  Speaker 6: a body of research on why organizations fail to learn
• 45:52
  Speaker 6: from near misses. They found such events get filed as
• 45:57
  Speaker 6: successes rather than failures averted by luck. And you know
• 46:01
  Speaker 6: what that does? It causes you to make even riskier choices.
• 46:06
  Speaker 1: Human nature. And he's with us right now, I'm happy
• 46:09
  Speaker 1: to report.
• 46:11
  Speaker 6: It's my first opportunity to spend some time with Guadamacunda,
• 46:14
  Speaker 6: Bloomberg Opinion Contributor Lecturer, Yale School of Management. It's great
• 46:18
  Speaker 6: to have you with us. Guadam, you Top Gun guy?
• 46:20
  Speaker 1: Or just me?
• 46:23
  Speaker 3: I have seen Top Gun more times than I can count.
• 46:25
  Speaker 3: I'm pretty sure I have memorized every line. So I
• 46:28
  Speaker 3: might be as big a fan as you are.
• 46:31
  Speaker 8: All right.
• 46:31
  Speaker 1: So this is a good place to have..
• 46:34
  Speaker 6: This conversation may be routed as we come from similar history.
• 46:39
  Speaker 1: There's a difference when you put on the uniform. This
• 46:41
  Speaker 1: is not entertainment.
• 46:43
  Speaker 6: And what you point out here and the parallel I
• 46:45
  Speaker 6: find fascinating between leadership in the military and leadership on
• 46:48
  Speaker 6: the corporate level, this is human nature that we're trying
• 46:51
  Speaker 6: to counteract, right?
• 46:54
  Speaker 8: Very much so.
• 46:56
  Speaker 3: Keeping up standards is the part of being a leader's
• 47:00
  Speaker 3: job that isn't fun, right?
• 47:01
  Speaker 8: But it's all important, right?
• 47:03
  Speaker 3: So the key thing about what happened in Pensacola is
• 47:05
  Speaker 3: the Blue Angels themselves said this was not okay. This
• 47:09
  Speaker 3: was a mistake that can never happen again. We need
• 47:11
  Speaker 3: to figure out what went wrong and fix it. And
• 47:13
  Speaker 3: then Pete Hegseth comes in and overrules them. That is,
• 47:18
  Speaker 3: you know, that's what sort of a bad leader would
• 47:21
  Speaker 3: just sort of ignore things and let standards slip through inattention.
• 47:25
  Speaker 3: This is a toxic leader, someone who takes the things
• 47:28
  Speaker 3: that make an organization like the Blue Angels, like the
• 47:30
  Speaker 3: United States Navy, so extraordinarily successful, the discipline, right? The
• 47:36
  Speaker 3: ability to manage themselves and hold themselves as kind of
• 47:39
  Speaker 3: standard and say, I'm going to sabotage it because I
• 47:41
  Speaker 3: think it's cool.
• 47:44
  Speaker 6: You say rules look pointless when they work. And that's
• 47:47
  Speaker 6: the whole point, right? This whole, you know, rule guys
• 47:50
  Speaker 6: are boring. We're ripping our shirts off here and showing
• 47:54
  Speaker 6: America for what it's worth. And then that creates its
• 47:57
  Speaker 6: own backlash and we get even harder and more strict
• 48:00
  Speaker 6: rules as we go.
• 48:03
  Speaker 3: Yeah, like I'm the first person to say that there
• 48:05
  Speaker 3: are lots of rules and sort of bureaucratic thickets that
• 48:08
  Speaker 3: build up over time that a good leader gets rid of.
• 48:10
  Speaker 3: But the point is that a good leader understands the
• 48:13
  Speaker 3: difference between the rules that matter and the rules that don't.
• 48:16
  Speaker 3: And when the commander of the Blue Angels is telling
• 48:19
  Speaker 3: you this is a problem. that's a pretty big indicator
• 48:22
  Speaker 3: that that's actually a rule that matters. And it tells
• 48:24
  Speaker 3: you that it takes a really, really bad leader in
• 48:26
  Speaker 3: the Secretary of Defense to come in and overthrow it.
• 48:29
  Speaker 3: And it's not just a one-off, right? We know this
• 48:31
  Speaker 3: is his pattern over and over and over again. This
• 48:34
  Speaker 3: is how he envisions sort of military leadership. And it's
• 48:37
  Speaker 3: incredibly telling and explains a lot about what's happened at
• 48:40
  Speaker 3: the Pentagon while he's been in charge.
• 48:43
  Speaker 1: Well, and the numbers speak for themselves.
• 48:44
  Speaker 6: As you point out, the Blue Angels count 26 pilot
• 48:48
  Speaker 6: deaths in the team's first 70 years. And some of
• 48:52
  Speaker 6: those have been somewhat recent, if you follow the history
• 48:55
  Speaker 6: of the Blue Angels, you know, in the last 10
• 48:57
  Speaker 6: years or so. But this is a broader issue. I
• 49:00
  Speaker 6: mentioned the Apache helicopters going to Kid Rock's house. Do
• 49:03
  Speaker 6: we equate any of this culture to what's happening on
• 49:07
  Speaker 6: the front lines with extended deployments, with morale concerns?
• 49:12
  Speaker 8: So I think we do.
• 49:13
  Speaker 3: But I think the equation is that all of those things,
• 49:15
  Speaker 3: the extended deployments, the morale concerns, those are the consequence
• 49:19
  Speaker 3: of someone whose vision of strategy is basically blow stuff
• 49:23
  Speaker 3: up and good things will happen, right?
• 49:25
  Speaker 8: And everything that the.
• 49:26
  Speaker 3: Pentagon keeps, everything that Pete Hegseth keeps telling us about is, oh,
• 49:29
  Speaker 3: we hit this target, we destroyed this thing.
• 49:32
  Speaker 8: That is a child's view of war.
• 49:34
  Speaker 2: Right?
• 49:35
  Speaker 3: Strategy, military strategy is about the use of force to
• 49:38
  Speaker 3: achieve political ends. And so blowing things up is not
• 49:42
  Speaker 3: a goal. Blowing things up is a means. And it
• 49:45
  Speaker 3: is quite clear that the means he's adopted aren't getting
• 49:48
  Speaker 3: to any sort of meaningful political goal because, again, his
• 49:51
  Speaker 3: view of these things is it's like Top Gun.
• 49:54
  Speaker 2: Right?
• 49:55
  Speaker 3: Let's just do things that are fun and cool and
• 49:56
  Speaker 3: exciting and get cheers. And we've all seen leaders like
• 50:00
  Speaker 3: that in the corporate world, too. And I honestly can't
• 50:03
  Speaker 3: think of a case where it's ever worked out well.
• 50:06
  Speaker 6: The flybys have been amazing this summer, Gautam. I don't
• 50:08
  Speaker 6: know if you're in Washington, D.C., but we've been spoiled.
• 50:10
  Speaker 6: This is just one way that it also manifests itself.
• 50:13
  Speaker 6: But what does it mean if you're serving in this military?
• 50:16
  Speaker 6: They're asking for a trillion and a half dollar defense budget.
• 50:20
  Speaker 6: We're obviously engaged with tens of thousands of men and women,
• 50:25
  Speaker 6: Americans in the Middle East right now. And, you know,
• 50:28
  Speaker 6: we're watching at least what's happening in Ukraine and said
• 50:31
  Speaker 6: to be preparing for an eventual war with China.
• 50:35
  Speaker 3: If this is the culture at the top, how does
• 50:37
  Speaker 3: it trickle down? So it trickles down in a lot
• 50:40
  Speaker 3: of ways, right? So the military organizations succeed when they're disciplined.
• 50:45
  Speaker 3: And this is a message from the top saying, right,
• 50:48
  Speaker 3: stop being disciplined.
• 50:49
  Speaker 8: So that's a problem.
• 50:51
  Speaker 3: And sure, it'll get you cheers, it'll get you short-term
• 50:53
  Speaker 3: popularity right up until you start losing wars because you're
• 50:56
  Speaker 3: not disciplined, right?
• 50:57
  Speaker 8: But it does go beyond that.
• 50:58
  Speaker 3: We just saw the Pentagon get rid of the unit
• 51:02
  Speaker 3: that had been created under the previous administration to learn
• 51:05
  Speaker 3: about drone warfare in Ukraine and figure out what's happening
• 51:08
  Speaker 3: there and import those learnings back into the rest of
• 51:11
  Speaker 3: the armed forces. And instead, we've got a team that
• 51:13
  Speaker 3: says they want to go back to basics. And Pete
• 51:15
  Speaker 3: Hegseth is sort of seems more focused on, you know,
• 51:18
  Speaker 3: are people have beards or are they thin enough? Then
• 51:22
  Speaker 3: do they know how to fight a 21st century warfare
• 51:24
  Speaker 3: with autonomous weapons? I don't think your number of push-ups
• 51:29
  Speaker 3: is going to help you a lot when drones are
• 51:31
  Speaker 3: flying overhead 24-7. And this is the same type of pathology.
• 51:36
  Speaker 3: And it's, you know, it's not just a Pete Hegseth thing.
• 51:39
  Speaker 3: He's just like the most egregious example, right? of someone
• 51:43
  Speaker 3: whose vision of leadership is the guy who does the
• 51:45
  Speaker 3: rah-rah thing and the cheers, but not the hard work
• 51:48
  Speaker 3: of building institutions or thinking, right? Figuring out and learning
• 51:52
  Speaker 3: from seeing the world and learning.
• 51:54
  Speaker 1: About what makes a difference.
• 51:55
  Speaker 3: But if there's one thing that the management literature tells
• 51:57
  Speaker 3: us about successful leaders, successful leaders learn.
• 52:02
  Speaker 1: That swamps everything else. Interesting. So we're talking..
• 52:08
  Speaker 6: About what's happening from the defense secretary down. How about
• 52:11
  Speaker 6: from Pete Hegseth up? Does he not mirror the stylings
• 52:15
  Speaker 6: of Donald Trump? Does this not start in the White House?
• 52:18
  Speaker 1: Of course it does.
• 52:19
  Speaker 3: And this is, you know, Pete Hegseth played a defense
• 52:22
  Speaker 3: commentator on television, which is why he got selected. Remember
• 52:25
  Speaker 3: that he was an unsuccessful junior officer, right? So this
• 52:28
  Speaker 3: is not, we're not talking about George Marshall or Stan McChrystal.
• 52:31
  Speaker 3: This is a guy who washed out and then had
• 52:34
  Speaker 3: a role on Fox News and then get tapped for
• 52:36
  Speaker 3: the job. And like, That is the style that Donald Trump,
• 52:40
  Speaker 3: also a reality television star, he really liked, right? He
• 52:43
  Speaker 3: always says he gets people on central casting. And so
• 52:46
  Speaker 3: when they decided, were they going to go into this war?
• 52:49
  Speaker 3: You know, Tulsi, we had reporting today where Tulsi Gabbard
• 52:52
  Speaker 3: was conveying the consensus estimate of American intelligence that this
• 52:57
  Speaker 3: is not going to work. And Pete Hegseth was telling
• 52:59
  Speaker 3: him this is going to be easy.
• 53:00
  Speaker 8: We'll go fine.
• 53:01
  Speaker 3: Is it all that surprising that Donald Trump went with
• 53:03
  Speaker 3: the reality TV star who told him that he could
• 53:05
  Speaker 3: get what he wanted easily instead of the people saying,
• 53:07
  Speaker 3: this is not going to work, it's going to be
• 53:08
  Speaker 3: a disaster?
• 53:11
  Speaker 1: I think that's rhetorical.
• 53:13
  Speaker 6: He teaches leadership at the Yale School of Management. He's
• 53:15
  Speaker 6: author of Indispensable, When Leaders Really Matter. Guadalupe Cunda, great
• 53:20
  Speaker 6: to see you. Great to talk to you. Thanks for
• 53:24
  Speaker 6: listening to the Balance of Power podcast. Make sure to
• 53:27
  Speaker 6: subscribe if you haven't already at Apple, Spotify, or wherever
• 53:30
  Speaker 6: you get your podcasts. And you can find us live
• 53:33
  Speaker 6: every weekday from Washington, D.C. at noontime Eastern at Bloomberg.com.