June 10, 2025 • 33 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
Any Senate tax bill that doesn’t exempt taxes on tips and overtime would be “dead on arrival” in the House, Ways and Means Chair Jason Smith (R-Mo.) said today on Bloomberg.
GOP Sens. including Thom Tillis (N.C.) and Lindsey Graham (S.C.) expressed skepticism about the cost and economic wisdom of including the two provisions, which were key campaign trail promises made by President Donald Trump. Senators instead called for funds to be used to make temporary business tax breaks permanent.
Such a change would a “no go” for House Republicans, Smith said. Sen. Josh Hawley (R-Mo.) said Trump told him this morning that tax exempt tips and overtime, as well as a tax cut for the elderly, are the most important provisions in the bill.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Chairman of the House Ways and Means Committee Jason Smith.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Bloomberg Intelligence Senior US Policy Analyst Nathan Dean.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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Speaker 2 (00:25):
The Treasury Secretary Scott Besson, who's currently still in London
at these talks, is technically scheduled to testify before the
House Ways and Means Committee tomorrow morning on the budget
from the play school year.
Speaker 3 (00:35):
Yeah. I'm not sure how we're going to do that. Yeah,
it does bring us to matters of course on Capitol
Hill though, Kaylee, and some big questions about what happens
to the big beautiful bill, if we are going to
be in store for some changes as soon.
Speaker 2 (00:46):
As today indeed, and it's on that note we turn
to Capitol Hill now, where we're joined live by the
chair of the House Ways and Means Committee, the Republican
Congressman from Missouri, Jason Smith. Back with us on Bloomberg
TV and Radio. Mister Chairman, we appreciate you being here
on Balance of Power as we consider the changes that
are underway in the Senate. Have you been read in
to what the Senate Parliamentarian is saying needs to be
(01:09):
stripped from this package.
Speaker 4 (01:12):
Yeah, the Senate Parliamentarian has been ruling on various different items.
It's really have not been that many, especially when it
comes to the tax policy. These are things that we
have been very careful that when we were trying to
draft the legislation over on the House side, that it
would be bird compliant and be able to follow the
rules of reconciliation and that would that would fly for
(01:35):
the parliamentarian. However, a few things that might have to
be changed will be done before we send the final
bill over.
Speaker 2 (01:45):
To well and what few things, mister Chairman, what are
we still waiting?
Speaker 4 (01:49):
We're still waiting for the final analysis. But when it
comes to some tax policies that were discussed, for example,
provisions that was in the bill that affect.
Speaker 5 (02:02):
Non for profits that.
Speaker 4 (02:04):
Are funding terrorism that was not a budgetary impact and
so it had to be taken out.
Speaker 5 (02:11):
It's things like that.
Speaker 4 (02:13):
Nothing of major significance that will alter the bill. The
biggest things that I think is still left to be
decided by the Senate Parliamentarian when it comes to tax
policy is eliminating the employment tax credit and also something
in regards to purple Heart designation.
Speaker 3 (02:35):
Interesting, mister Chairman. I know there's an important rules committee
meeting on the House side about an hour from now.
Will those changes be made in that session so you
can do this before it's technically in the hands of
the Senate.
Speaker 4 (02:48):
I don't serve on the Rules committee, but it's very
possibly those changes will be made before it is released
to the Senate. And the Senate is working around the
clock on this bill. They've been working with the fellow
their fellow colleagues over in the Senate and trying to
thread the needle that we thread over in the House Representatives.
Speaker 5 (03:10):
It's very, very tough to.
Speaker 4 (03:13):
Thread that needle when you look at the debt and
deficit hawks that some want to cut more money, others
think you're cutting too much. It's the same way with
all the green credits. Some folks want the green credits
eliminated immediately, others want to use a scalpel and look
at it approach. And it's the same way with the
state and local tax deduction. There's some senators over there
that they don't like it, but they know that they
(03:35):
have to balance it in order to make sure we
get two eighteen in the House and fifty one in
the Senate.
Speaker 2 (03:41):
Well, and it doesn't look like they're stopping it changes
to salt. We've heard talk as well of senators of
the Senate looking to make changes to the no tax
on tips and overtime measures that were included in the
House package. In fact, the Senate Budget Chair Lindsey Graham
told Semaphore in an interview earlier today that he thinks
those things may not fit in this megabill for there
might need to be another budget reconciliation package later down
(04:04):
the line. And mister Chairman, I wonder what your response
to that is.
Speaker 4 (04:07):
That's a no go. It would be dead on arrival.
The Senators need to know that we have followed through.
We pass this one big, beautiful bill.
Speaker 5 (04:16):
It's what the President is asked. They need to do
the same thing.
Speaker 4 (04:19):
There's no reason for those senators to kick the can
down the road on priorities that the President campaigned on.
Speaker 5 (04:27):
No tax on tips, no tax on overtime.
Speaker 4 (04:30):
These are items that the President spoke at every one
of his rallies and seventy seven million people voted for him.
The House delivered on it. The Senate will deliver on
it as well.
Speaker 3 (04:42):
Well, mister Chairman, we just arrived at one deal breaker
in your words here, and I wonder what some of
the others are. You hear all the same talk that
everybody here is. In fact, i'm sure you know a
lot more about it than we do, which is why
we're glad to have you with us today. When you
talk about changes to salts, you talk about pulling out
the so called revenge tax, maybe some of the green
incentives that are in there. What's the deal breaker on
(05:04):
the House side, Because the conventional wisdom we keep hearing
is the Freedom Caucus will deal with it if the
salt number stays where it is, for instance, that some
of the issues from the more conservative members of the
House will have to be dealt with because you need
to keep the moderates the New York, New Jersey, California
delegations happy, am I am I anywhere close to true
on this.
Speaker 4 (05:25):
The deal breaker is whenever you get out of balance.
We struck a very good balance of passing a bill
two hundred and fifteen to two point fourteen in the
House of Representatives, you have to thread a very narrow needle,
and that's what the deal breaker could be, is if.
Speaker 5 (05:43):
The Senate adjusts it too much one.
Speaker 4 (05:46):
Way or the other, you could either lose members of
the right flank or you could lose members on the
left flank. And so those are things that were balancing,
and that is what could be fatal. But failure's not
an option. We're going to get this done. Leader Thun,
Chairman Crapo. They are navigating it over on their side
(06:07):
the building, and they understand the huge dynamics that we
have within the House of Representatives, and they're going to
make some changes over there. But I don't see those
to be mega changes that are going to be catastrophic.
It's going to be changes that probably will make the
bill better.
Speaker 2 (06:24):
Well, what about the change specifically or the decision to
drop the AI regulation moratorium. Have you heard from colleagues
in the House as to whether or not that's a
deal breaker for any of them.
Speaker 4 (06:34):
We've had colleagues in the House that has raised a
lot of concerns about it. Of course, that was not
in the ways and means jurisdiction whenever it was it
was put in. But it's something I think that the
Senate or I know that the Senate is definitely addressing.
Speaker 3 (06:51):
I'm curious as well about some of the green incentives,
Mister Chairman. There's reporting that more than thirty owners of
rural energy companies are swarming the Hill to knocking on doors.
Maybe they've been knocking on yours to urge Republican lawmakers
to preserve clean energy tax credits. Let's put evs aside
and the whole Elon Musk conversation when it comes to
wind in solar, if those are restored in the Senate,
(07:14):
is that a deal breaker in the House.
Speaker 4 (07:17):
So we cut over half a trillion dollars of the
green energy credits. This is something that the President called for,
This is something that the majority of the House Republicans
called for. You have to understand, not one Republican in
the House or the Senate voted for these green credits
(07:37):
and the Inflation Reduction Act. And so we tried to
use a very balanced approach so that it didn't rip
the rug from underneath industries that have invested already within
the current tax policies, and we figured out a way
to phase it out over a period of time. You
just have to be balanced. We cannot be extreme and
(07:58):
just ripping them away. We cannot be extreme and not
taking them away. So it's right in the middle. You
have to be right in the middle, and that's what
we're doing well.
Speaker 2 (08:10):
And as you talk about needing to be right in
the middle, how this is a very difficult line to
walk for both chambers, mister Chairman, when we consider the
Congressional Budget Office yesterday released another estimate of when the
US will reach the X date when it can no
longer fulfill its debt obligations, guessing that could be as
soon as mid August, when you and your colleagues are
on recess. Can you rule out entirely that the debt
(08:31):
ceiling is not going to have to be addressed separately?
If by the end of July this bill has not
worked its way through both chambers, what odds would you put.
Speaker 4 (08:40):
Around that the House has increased the debt selling. We've
addressed that in the one big, beautiful bill the Senate
needs to act. We have said all along, let's put
this bill on the President's desk by July fourth, and
then you have nothing to worry about. The Senate trying
to break different items in fifteen different bills is a
no go. We have delivered in the House, they need
(09:03):
to deliver in the Senate.
Speaker 3 (09:06):
Mister Chairman, I wonder if you've had a chance to
speak with Elon Musk or any of his allies since
he took a position of opposition on this bill, and
whether he's giving members of the Freedom Coccus or anyone
in the Republican Conference in the House, or for that matter,
Republicans in the Senate cover to vote no.
Speaker 4 (09:26):
Let me just say this, the bill that we passed,
the One Big Beautiful Bill, is the largest cut to
spending in the history of our country, almost one point
seven trillion dollars. With all the great work that Elon
and Doge has done in cutting, they cut one hundred
and seventy five billion dollars in five months. The bill
(09:50):
that we passed out of the House cut.
Speaker 5 (09:52):
One point six y nine trillion. Could we cut more?
Speaker 4 (09:57):
I would love to cut more, but it's still the
largest cut.
Speaker 5 (10:01):
In the history of America.
Speaker 4 (10:02):
And that's what I like to point out whenever people
try to use the accounting measure sam that it's going
to add two plus trillion dollars to the deficit. I
believe that that is funny funny math, because what they
are referring to is existing tax policy is going to
cost roughly four trillion dollars, and that's not the case.
(10:25):
Our revenues into this country right now is seventeen point
two percent of GDP, and if you look at the
historic level over the last fifty years, revenues to GDP
has been right at seventeen percent. We don't have a
revenue problem, we have a spending problem.
Speaker 2 (10:42):
Well, finally, mister Chairman, on the revenue side, tariffs of
course factor into that equation, and just quickly, we have
a minute left here on tariffs. The Treasury Secretary Scott
Besson is currently still in London working on trade negotiations
with China that are expected to go late into the
light night local time. Are you still expecting him before
the committee for his testimony tomorrow more?
Speaker 4 (11:01):
I am still expecting him before the committee. It looks
like he may have a long night, But I'm grateful
for the work that he's doing. Howard Lutnik and Ambassador
Greer is doing because they are working and representing the
United States when it comes to China and all the
other countries coming to the table to make sure that
(11:21):
the American worker, American manufacturing, American farmer is treated fairly
on a world stage.
Speaker 3 (11:27):
You may need stronger coffee tomorrow morning, mister chairman. This
thought it'd be interesting.
Speaker 5 (11:33):
The energy drinks for them.
Speaker 3 (11:35):
Kiss all right, I guess we love. Congressman Jason Smith,
Republican chair of the House Ways and Means Committee, wanted
that last word. We'll assemble our panel next Yeah, Okay,
Rit Davis and Jeanie Shanzino are on the way in
here on the fastest show in politics. This is Bloomberg.
Speaker 1 (11:56):
You're listening to the Bloomberg Balance of Power podcast. Catch
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You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven.
Speaker 2 (12:13):
Thirty, continuing drama over protests in Los Angeles, where, of
course we've seen the deployment of another two thousand National
Guard members after the initial two thousand members deployed over
the weekend, and of course seven hundred marines active duty
Marines have now arrived in Los Angeles as well as
President Trump describes that as an effort necessary to keep
(12:34):
Los Angeles from burning into control the activity we're seeing.
But he also said in the Oval Office while speaking
to reporters in the last hour, that he spoke with
California's Governor Gavin Newsom a day ago, to quote, the
President called him up to tell him got to do
a better job. He's doing a bad job, to which
the governor is now responding, there was no call, Joe,
(12:54):
he says, not even a voicemail.
Speaker 3 (12:57):
Yeah, Gavin Newsome going on to write that American should
alarmed that a president deploying marines onto our streets doesn't
even know who he is talking to, kind of taking
a page from Trump the way he talks about Joe Biden.
Let's assemble our political tannel. Bloomberg Politics contributors Rick Davis
and Genie Shanzano are on board with us today, back
together for the first time in over a week. Rick
(13:17):
is our Republican strategist and partner at Stone Core Capital.
Genie senior democracy fellow with the Center for the Study
of the Presidency and Congress and Bloomberg Politics contributor Genie.
We keep hearing that this is good politics for Donald Trump.
This seems like it's pretty good politics for Gavin Newsom too,
What do you think it is?
Speaker 6 (13:39):
And you know, I share Gavin Newsom's use of the
word alarm, but probably not for the same reason he's
using it. I am alarmed that a president would say
just minutes ago in the Oval Office that if you're
going to protest on the two hundred and fiftieth anniversary,
you will be met with heavy force, without differentiating that
peaceful protest is one one of the lynchpins of being
(14:01):
an American, our right to speak and assemble. I'm alarmed
that he would send troops in without being asked by
the governor. But I'm also alarmed on the democratic side
that they are playing into this theatricality. The reality is
is that we do need a solution to immigration, and
the kind of solution we need is not this performative
(14:24):
back and forth of our leaders on social media yelling
at each other. It is a legislation out of Congress,
like Rick's former boss Don McCain put together. That's what
we need. And what's alarming is we are nowhere close
to their And oh, by the way, we have a
director of Homeland Security who went on TV last night
(14:44):
and said everybody in LA is a criminal. That kind
of performative nonsense is not what we need. We need solutions.
Speaker 2 (14:54):
Well, when we consider the performance, if you will, Rick,
in the continued escalation we see p and Trump was
asked in the Oval office by a reporter if he
would consider invoking the Insurrection Act, and he said, if
there's an insurrection, I will invoke the Insurrection Act. That
of course would carve out what is not allowed thanks
to the Possecommitatus Act, which is the US military acting
(15:16):
in a law enforcement capacity. Do you really believe the
President would go there?
Speaker 7 (15:22):
You know, it's hard to tell in these circumstances.
Speaker 8 (15:24):
You know, he gets a question, he feels like he's
got to answer the question.
Speaker 7 (15:28):
And I thought it was actually pretty noncommittal.
Speaker 8 (15:32):
But look, I mean, the difference between the Marines going
to California and protecting the assets of the federal government,
you know, courthouses and federal government centers where some of
the deportees are being held, that's one thing. But then
you know, basically them acting as a police squad in
any jurisdiction of America is going to have a different reaction.
Speaker 7 (15:53):
Right now, we're.
Speaker 8 (15:53):
Debating whether or not a phone call was made or
who asked for what? In that case, when you take
that kind of constitutional action where you suspend passe comatatis,
I think you would see a national dialogue erupt of
epic proportions, because you really wonder at what point does
(16:13):
the violence have to occur to have that triggered in
a Donald Trump administration. And I don't think we know
the answer to that question, and pretty much I don't
think he did either when he answered the question today,
So stay tuned on this. Luckily, it looks like some
of the riots have dispelled in LA and it's starting
to quiet down, so hopefully it won't matter in this instance.
(16:35):
But I think it's definitely a page to watch.
Speaker 3 (16:39):
Interesting as we learn more about some of the folks
who are arrested. Genie, isn't that interesting? We're not hearing
very much about what went behind these arrests. In some
cases there were violent criminals. We heard about a handful
of them, but we're learning more now as well about
for instance, Juan Fernando, detained by ice at his job
at a CLI clothing factory, transported back to the country
(17:03):
he had left behind without much time past to be
the same day he was pulled out of his job
and immediately deported. His family is asking for due process.
So we're going to go through this all over again
with this group, like we did with those deported to
El Salvador.
Speaker 6 (17:22):
I think we probably will. The reality is Donald Trump
deserves credit for shutting the border. We need common sense
immigration reform and it is neither cost effective nor enforceable
for the United States to deport people who have been here,
many of them brought as young people for their entire lives,
(17:44):
who are working in paying taxes, to pick them up
at home, depot or like you're talking about these people criminals. Absolutely,
but that was part of the DAKA and Donald Trump
had embraced some of that in the past. Now he
is being pushed by the likes of Stephen as is
Ice to deport two to three thousand people per day.
(18:04):
That means you go to peaceful, tax paying people who,
by the way, are paying taxes and helping our economy.
It is not a common sense solution to a real
crisis and problem we've long had, and the President should
be called out for not working with Congress to get
a deal done. This is the same person for electoral
reasons in January blew up, much to the dismay of Republicans,
(18:29):
a very strong immigration bill that could have moved us forward.
That's what Americans should be alarmed about.
Speaker 2 (18:37):
Well when we consider immigration related legislation, though Rick the
White House in recent days has been very quick to
point every one to you the fact that the one
big beautiful bill working its way through the Hill right
now does include funding for more ice agents, more customs agents,
more border patrol agents. How does that factor into the
overall likelihood of the bill sailing through or at least
(18:57):
getting through easier?
Speaker 5 (19:00):
Shall we say?
Speaker 8 (19:01):
Yeah? I would say the one item that has not
generated much controversy at this point in time, and the
big beautiful bill, the Reconciliation Bill, has been money for
the Homeland Security and for Department of Defense and their
portion on things like building the wall. So the reality
is this is one there. Most Republicans have been jumping
(19:23):
on board. It's gotten some criticism for being a big
spending item.
Speaker 7 (19:27):
And we just talked to the chairman of the Ways
and Means Committee.
Speaker 8 (19:31):
Basically from what I could tell, what he was saying
is we've cut enough, don't need to cut anymore, and
so probably no appetite in the House side.
Speaker 7 (19:40):
I guess to go after those funds.
Speaker 8 (19:42):
But the reality is it's a significant, over three hundred
billion dollars commitment at a time when border security seems
to be handled pretty well.
Speaker 7 (19:50):
And so it's really deportations.
Speaker 8 (19:52):
And I could just add there have been more deportations
in the first year at this point in time in
the bidendministration than it is today. Donald Trump's deporting fewer people.
So it's not the issue of deportation as it exists,
that's happened throughout all the administrations. It's the tactics under
which they're using the deportation rules to their advantage.
Speaker 3 (20:14):
Well, that's a really important point to make, Rick, It's
kind of ironic, Genie. Remember the big argument was do
we do this in one big beautiful bill. That's why
we call it that, because the other option was to
break it in two. That was the John Thune option.
Get the border money out the door, and we'll spend
time on taxes and the rest, which will be more
difficult to debate. Well, here we are, one big beautiful
(20:35):
bill was the answer. And it kind of ironic that,
based on current events, it is in fact the border
component that could help push this over the finish line,
isn't it.
Speaker 6 (20:43):
Yeah, it's ironic, or it is something that the administration
helped to sort of push forward. But the reality a part.
Speaker 3 (20:53):
Of the plan is what you're saying.
Speaker 6 (20:55):
I don't know, but you know, I'm not sure it's ironic.
But the reality is is that this bill funds the border.
That is fine, But what we need is immigration reform.
We have six to seven million people in this country
the government doesn't even know, They can't tell you who
are brought here as babies and children. Are we really
(21:17):
going to pick these people up, take them to a
place or push them out to a place they've never
been and know nothing about while they have done nothing wrong.
Very few Americans support that tactic. We have to find
a common sense pathway to citizenship. Yes, close the border, Yes,
fund border security. Yes, deal with people who are committing crimes.
(21:39):
But yes, also find a common sense way to keep
people who are working and contributing in this country, especially
people who are brought here who work with many of us,
and we know many personally. They are friends, neighbors, and
family members. They are here and they should be supported
in an effort to stay here and to continue contributing
(22:01):
to this great country. That's where the President's planned here
and Stephen Miller's quite frankly falls very short.
Speaker 2 (22:09):
Rick, in our final minute, your degree of confidence that
that common sense solution can be found in the near term, Well.
Speaker 8 (22:15):
I certainly worked hard enough with John McCain to try
and have a comprehensive immigration bill passed and didn't work
out so well. But it is the way to actually
have all these jobs that people are getting deported from
to be filled with people who actually come in legally.
And of course I think there's a broad bipartisan support
for legal immigration reform, and it's just not the administration
(22:39):
it's likely to pass it, but it would be a
very good thing in the heels of this current debate
to be contemplating.
Speaker 7 (22:47):
If you're the Trump administration.
Speaker 3 (22:49):
Talking about motivations here on both sides of the Aisle Genie,
Would it help Democrats if this did not fizzle out
and in fact spread to other cities as we consider
messaging ahead of the mids.
Speaker 6 (23:01):
You know, maybe politically, but you know, I think many
Americans are tired of thinking about this from a political lens.
I mean, we need solutions, and so yeah, that helps democrats.
That's fine for democrats, but it doesn't help the United
States as a whole, not to treat people the way
they should be treated and to keep people brought here
(23:22):
as children here contributing to society and making us the
best we can. So I think that's also important in
addition to the political end.
Speaker 2 (23:31):
All right, Jeanie Shanzano and Rick Davis, Bloomberg Politics contributors
in our political panel on this Tuesday, thanks for joining
us on Balance of Power, and we'll have more head
here on Bloomberg TV than treat.
Speaker 1 (23:41):
You than you're listening to the Bloomberg Balance of Power podcast.
Catch us live weekdays at noon and five pm Eastern
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Listen on demand wherever you get your podcasts, or watch
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Speaker 3 (24:00):
Bloomberg Radio Satellite radio channel one twenty one. Maybe you're
watching us on YouTube right now. If not, this is
the coolest thing we have going search Bloomberg Business News Live.
It's not just this show, it's all the way, surveillance
through the day, Bloomberg Business Week Daily, and we were
always live for you in the studio with our great
guests here in Washington as we try to get our
arms around reconciliation, kind of like the Senate's trying to
(24:22):
do as we speak. Some important things are going to
take place today. All procedural, but if you want to
sound smart at the cocktail party, we're about to get
you ready on this Tuesday edition. Right, it's Tuesday, which
means we have about three and a half weeks until
the fake deadline of the fourth of July that even
the President doesn't seem to care about. Yesterday, at this
(24:44):
invest event, he's sitting next to speaker Johnson, fourth of July.
He said, yeah, or it might take a little longer.
Is something going on over there, James. They're gathering the pool.
This is It's noontime. This happens every day. We can
just talk amongst ourselves. I get up in the morning,
I do my reading, I talk to the people I trust,
(25:06):
try to figure out what's going on in the world.
We start mapping out the show that I connect with
producer James Booker, Matt co anchor Kayley. We come up
with a plan. Different people to call you book some things.
You map out a show. This is what we're going
to have for our viewers and listeners. And then at
high noon they assemble the press pool, Donald Trump starts
(25:27):
talking and it all goes off the rails. Maybe we'll
do this again together. At least we enjoy each other. Right,
this is the new world we're in, and a big
part of this new world is the effort that's unfolding
right now on Capitol Hill. Yeah, CC is part of
this mix too. It's a big family behind this show.
(25:48):
The Rules Committee is going to get down to brass
tacks today in the House at two o'clock. That's right
around the time we got off there, two hours from now.
In the meantime, they're expecting a report from the Parliamentarian
and the Senate. Right, this is the ref who says
you can do this in reconciliation. You're not allowed to
do that. Budget matters, yes, everything else. No, this is
the bird bath, the bird rule we talk about. And
(26:09):
so by the end of this day, I suspect we're
going to have a much better idea of what's going
to end up in the Senate version of this bill.
And that's why we have Nathan Dean with US senior
US policy analyst at Bloomberg Intelligence. His phone is ringing
because we're actually getting into something here. Nathan is great
to see you. What's the parliamentary going to tell us today?
Speaker 9 (26:28):
So I think the parliamentarian is going to allow most
of what the investable angle or the investment.
Speaker 10 (26:33):
Community cares about.
Speaker 9 (26:34):
Obviously, these tax cuts, the extensions, the Custom Medicaid Inflation
Reduction Act, extent benefits. You know, we think it's going
to be more structural things, things like where they're trying
to get rid of the Office of Financial Research, or
maybe changing the funding mechanism of the Consumer Financial Protection Bureau,
things that are very important for us to hear in
the Washington But for the New York community that's investing
in this, we'd say it's probably most likely going to
(26:55):
be out because the general rule of thumb is is
that if it impacts the budget, then it's allowed. But
you know, every single party, any single time they do
a reconciliation package, they throw in the kitchen sink and
they say, let's try and do this. So the Senate
Parliamentarian is going to come out later today, she's going
to say, no, you can't do that. I don't think
there's going to be a lot of fireworks here. And
obviously the Senate does have the ability to just fire
(27:15):
the parliamentarian or ignore the parliamentarian. Yeah right, But you know,
I don't think that's going to happen in this case
because I don't think they're going to get any major controversy.
Speaker 3 (27:22):
I'm waiting to hear when Donald Trump tells John Thune,
what happens with you ignore the parliamentarian. But we'll deal
with that when it happens. That could be an interesting standoff.
No tax on tips, no tax on overtime. This gets
through the bird bath. It's more lawmakers who are concerned
about those.
Speaker 10 (27:39):
Yeah, I think it does.
Speaker 9 (27:40):
I mean, I think it's one of those things where
you know, it's not going to become so much of
a parliamentarian decision. It's going to be a deficit condition question.
Speaker 10 (27:48):
And that's where we're going at with all this.
Speaker 9 (27:50):
And in fact, we put a note out just this
morning to our clients and it always is going to
come down to the deficit because you know, and I
should have said earlier, the biggest question we're waiting for
is what then not the parliamentarian is going to allow
the Senate to use current baseline policy as zero, meaning
to extend the trumpe of tax cuts, the cost is
effectively zero. If the parliamentarian improves that, which I think
(28:10):
she will. If the Parliamentarian improves it, then you know,
you don't really have to cut all that much to
actually keep this package going forward. And that's why we
always think that the deficit is the most likely impacted
entity here from this package. Looking at Medicaid, the inflationial reduction,
extent benefits, it's much easier for the Senate to say,
you know what, let's not cut those to the extent
(28:32):
that the House proposed.
Speaker 10 (28:33):
Yep, let's pull that back a little bit.
Speaker 9 (28:35):
We'll borrow today and we'll vote for something that will
actually be tomorrow's pain as opposed to voting for.
Speaker 10 (28:41):
Something that's going to hurt our constituents in the next year.
Speaker 3 (28:43):
So understood. So let's lay out the concerns. You could
really count them on one hand, right, what actually is
going to be a concern for senators and then when
it comes back to the House could be deal breakers.
You change the cap on salt, yep, you could lose
a couple of lawmakers. The revenge tax is something we
(29:04):
keep hearing about banks are calling you about it, Nathan,
what is it?
Speaker 9 (29:07):
Yeah, so this is section eight ninety nine. This is
something that hasn't gotten a ton of press. I mean,
Limberg News has done some extensive reporting on this. But
it's called the Revenge tax. It essentially allows the Treasury
Department to deem a foreign country a unfair foreign country
or a discriminatory tax environment, and then allows the Treasury
Department to put essentially a five percent tariff on sorry,
(29:27):
five percent tax levy on essentially all passive income, real estate,
you know, income.
Speaker 10 (29:33):
From foreign countries and so forth.
Speaker 9 (29:35):
So if you think if you're a US entity or
a foreign bank here in the United States and your
income's going back to HQ, well, now all of a sudden,
you have an additional tax on that. It's five percent,
It goes up annually, up till about twenty percent, unless
that's essentially deemed you know, that country gets off. It's
designed as a way to combat what they could consider
digital foreign sorry, discriminatory digital taxes, mostly in the tech space.
(29:58):
My colleague Andrew silver and I Silverman and I looked
at it. It's going to most likely impact banks in
the tech companies, the tech companies in particular, because if
or overseas firms decides that they're not going to play
in the United States anymore, then that's that's actually somewhat
somewhat bad. So the main question we've been getting is
is the Senate going to pull this out? Senator Thune
said that he's been looking at it. We think it's
either going to be pulled out or it's going to
(30:19):
be watered significantly.
Speaker 3 (30:21):
So we'll see very important. Who does that offend if
they take it out. Is there a constituency behind this
in the House that thun needs to worry about.
Speaker 9 (30:28):
Well, I don't think if there's a constituency as to
the point where you're going to see a coalition coming
together and trying to, you know, fight like a salt
caucus exactly. I don't think you're going to see a
salt caucus. I actually don't think it was all that
controversial when the House lawmakers put it in there, because
in their eyes, it just gives the Treasury Department flexibility.
Speaker 10 (30:44):
Doesn't say that this has to happen. It just says
that this is another another tool.
Speaker 9 (30:48):
I almost said weapon, you know, another tool that would
allow the Treasury Department in the White House to actually
use when conducting its negotiations. I don't think it was
all that controversial when it was put in. I think
it was one of those unattended consequences that was coming
especially from the non US foreign community.
Speaker 3 (31:04):
Would be kind of cool if there was a revenge caucus.
Just I mean, if there was something called that, all right,
then we've got green incentives, tax credits. Tom Tillis is
calling if some of these are put back in, who
do you lose in the House.
Speaker 9 (31:18):
So I think this is one of those where the
you know, if you look at the original bill that
came up from the House Ways and Means Committee, the
electric vehicle tax credit was gone.
Speaker 3 (31:25):
Yep.
Speaker 9 (31:26):
I think that's still gone, despite Elon Musk's you know,
discussions about it. I think if you're Tesla or any
other car companies relying on it, you know, and I
don't know, our view is is that Tesla isn't so
much relying on it, But I think that's gone. The
bigger question is when it comes to wind and solar
and a lot of these tax credits, there was a
phase out, and that phase out was pushed up.
Speaker 10 (31:44):
Yes, we think the phase out will get pushed.
Speaker 9 (31:46):
Back, maybe not to the original house in ways means
text where the Solar, for example, was twenty twenty eight
from twenty thirty one. But you know it will get
pushed back a little bit, just because the Inflation Reduction
Act is very important to states like North Carolina because
there's a lot of foreign CAPACX money coming into the
United States, and there's a lot of constituents out there
are lawmakers who saying, look, I got sevenard jobs being
(32:07):
built in this district. I got a plant being built
in this district. So we think it's going to get
pushed back. So keep in mind for like stocks like
First Solar and end Phase, these things have hot sauce.
Speaker 10 (32:17):
They're almost like what we call the marijuana hot sauce stocks.
These things have been.
Speaker 9 (32:20):
Bouncing up and down based off of what's in this language.
So definitely watch this later this week because those those
stocks have.
Speaker 3 (32:26):
Hot sauce, not always based on fundies. As they say,
we've got a minute left here, Nathan, you're running odds
fourth of July August.
Speaker 9 (32:35):
We think the Senate can get it done around the
fourth of July. I like the joke, it's gonna come
a little bit later because I'll be on vacation. But
I think we're saying eighty percent chance. By the August recession,
we're actually feeling fairly confident they get this done.
Speaker 10 (32:47):
In late July.
Speaker 3 (32:47):
You kick out a great note to clients every week
with little inside something about what's going on in Washington.
I always love these What are you telling people to do?
If they want to watch this parade? Is there any
way to get in and out of tests? They're like
a Nathan Dean angle on this mass of parade, the
army parade on just.
Speaker 10 (33:01):
Like with the NFL. It's great for my couch.
Speaker 3 (33:03):
That's a good answer. Buy a blimp. Right, We're not
even gonna be able to get to work in a
couple days.
Speaker 10 (33:08):
You see this closures driving in this morning. It is difficult.
Speaker 3 (33:11):
It has begun, YEA, sounds like it might be quite
a show, though, Nathan Great Nathan Dean Bloomberg Intelligence, our
senior US policy analyst. How's that for a deep dive?
What goes in what stays out? Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if
you haven't already, at Apple, Spotify, or wherever you get
(33:32):
your podcasts. And you can find us live every weekday
from Washington, DC at noontime Eastern at Bloomberg dot com.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Balance of Power podcast. Catch us live weekdays at
noon and five pm Eastern on Apple Cockley and Android
Auto with the Bloomberg Business App. Listen on demand wherever
(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
The Treasury Secretary Scott Besson, who's currently still in London
at these talks, is technically scheduled to testify before the
House Ways and Means Committee tomorrow morning on the budget
from the play school year.
Speaker 3 (00:35):
Yeah. I'm not sure how we're going to do that. Yeah,
it does bring us to matters of course on Capitol
Hill though, Kaylee, and some big questions about what happens
to the big beautiful bill, if we are going to
be in store for some changes as soon.
Speaker 2 (00:46):
As today indeed, and it's on that note we turn
to Capitol Hill now, where we're joined live by the
chair of the House Ways and Means Committee, the Republican
Congressman from Missouri, Jason Smith. Back with us on Bloomberg
TV and Radio. Mister Chairman, we appreciate you being here
on Balance of Power as we consider the changes that
are underway in the Senate. Have you been read in
to what the Senate Parliamentarian is saying needs to be
(01:09):
stripped from this package.
Speaker 4 (01:12):
Yeah, the Senate Parliamentarian has been ruling on various different items.
It's really have not been that many, especially when it
comes to the tax policy. These are things that we
have been very careful that when we were trying to
draft the legislation over on the House side, that it
would be bird compliant and be able to follow the
rules of reconciliation and that would that would fly for
(01:35):
the parliamentarian. However, a few things that might have to
be changed will be done before we send the final
bill over.
Speaker 2 (01:45):
To well and what few things, mister Chairman, what are
we still waiting?
Speaker 4 (01:49):
We're still waiting for the final analysis. But when it
comes to some tax policies that were discussed, for example,
provisions that was in the bill that affect.
Speaker 5 (02:02):
Non for profits that.
Speaker 4 (02:04):
Are funding terrorism that was not a budgetary impact and
so it had to be taken out.
Speaker 5 (02:11):
It's things like that.
Speaker 4 (02:13):
Nothing of major significance that will alter the bill. The
biggest things that I think is still left to be
decided by the Senate Parliamentarian when it comes to tax
policy is eliminating the employment tax credit and also something
in regards to purple Heart designation.
Speaker 3 (02:35):
Interesting, mister Chairman. I know there's an important rules committee
meeting on the House side about an hour from now.
Will those changes be made in that session so you
can do this before it's technically in the hands of
the Senate.
Speaker 4 (02:48):
I don't serve on the Rules committee, but it's very
possibly those changes will be made before it is released
to the Senate. And the Senate is working around the
clock on this bill. They've been working with the fellow
their fellow colleagues over in the Senate and trying to
thread the needle that we thread over in the House Representatives.
Speaker 5 (03:10):
It's very, very tough to.
Speaker 4 (03:13):
Thread that needle when you look at the debt and
deficit hawks that some want to cut more money, others
think you're cutting too much. It's the same way with
all the green credits. Some folks want the green credits
eliminated immediately, others want to use a scalpel and look
at it approach. And it's the same way with the
state and local tax deduction. There's some senators over there
that they don't like it, but they know that they
(03:35):
have to balance it in order to make sure we
get two eighteen in the House and fifty one in
the Senate.
Speaker 2 (03:41):
Well, and it doesn't look like they're stopping it changes
to salt. We've heard talk as well of senators of
the Senate looking to make changes to the no tax
on tips and overtime measures that were included in the
House package. In fact, the Senate Budget Chair Lindsey Graham
told Semaphore in an interview earlier today that he thinks
those things may not fit in this megabill for there
might need to be another budget reconciliation package later down
(04:04):
the line. And mister Chairman, I wonder what your response
to that is.
Speaker 4 (04:07):
That's a no go. It would be dead on arrival.
The Senators need to know that we have followed through.
We pass this one big, beautiful bill.
Speaker 5 (04:16):
It's what the President is asked. They need to do
the same thing.
Speaker 4 (04:19):
There's no reason for those senators to kick the can
down the road on priorities that the President campaigned on.
Speaker 5 (04:27):
No tax on tips, no tax on overtime.
Speaker 4 (04:30):
These are items that the President spoke at every one
of his rallies and seventy seven million people voted for him.
The House delivered on it. The Senate will deliver on
it as well.
Speaker 3 (04:42):
Well, mister Chairman, we just arrived at one deal breaker
in your words here, and I wonder what some of
the others are. You hear all the same talk that
everybody here is. In fact, i'm sure you know a
lot more about it than we do, which is why
we're glad to have you with us today. When you
talk about changes to salts, you talk about pulling out
the so called revenge tax, maybe some of the green
incentives that are in there. What's the deal breaker on
(05:04):
the House side, Because the conventional wisdom we keep hearing
is the Freedom Caucus will deal with it if the
salt number stays where it is, for instance, that some
of the issues from the more conservative members of the
House will have to be dealt with because you need
to keep the moderates the New York, New Jersey, California
delegations happy, am I am I anywhere close to true
on this.
Speaker 4 (05:25):
The deal breaker is whenever you get out of balance.
We struck a very good balance of passing a bill
two hundred and fifteen to two point fourteen in the
House of Representatives, you have to thread a very narrow needle,
and that's what the deal breaker could be, is if.
Speaker 5 (05:43):
The Senate adjusts it too much one.
Speaker 4 (05:46):
Way or the other, you could either lose members of
the right flank or you could lose members on the
left flank. And so those are things that were balancing,
and that is what could be fatal. But failure's not
an option. We're going to get this done. Leader Thun,
Chairman Crapo. They are navigating it over on their side
(06:07):
the building, and they understand the huge dynamics that we
have within the House of Representatives, and they're going to
make some changes over there. But I don't see those
to be mega changes that are going to be catastrophic.
It's going to be changes that probably will make the
bill better.
Speaker 2 (06:24):
Well, what about the change specifically or the decision to
drop the AI regulation moratorium. Have you heard from colleagues
in the House as to whether or not that's a
deal breaker for any of them.
Speaker 4 (06:34):
We've had colleagues in the House that has raised a
lot of concerns about it. Of course, that was not
in the ways and means jurisdiction whenever it was it
was put in. But it's something I think that the
Senate or I know that the Senate is definitely addressing.
Speaker 3 (06:51):
I'm curious as well about some of the green incentives,
Mister Chairman. There's reporting that more than thirty owners of
rural energy companies are swarming the Hill to knocking on doors.
Maybe they've been knocking on yours to urge Republican lawmakers
to preserve clean energy tax credits. Let's put evs aside
and the whole Elon Musk conversation when it comes to
wind in solar, if those are restored in the Senate,
(07:14):
is that a deal breaker in the House.
Speaker 4 (07:17):
So we cut over half a trillion dollars of the
green energy credits. This is something that the President called for,
This is something that the majority of the House Republicans
called for. You have to understand, not one Republican in
the House or the Senate voted for these green credits
(07:37):
and the Inflation Reduction Act. And so we tried to
use a very balanced approach so that it didn't rip
the rug from underneath industries that have invested already within
the current tax policies, and we figured out a way
to phase it out over a period of time. You
just have to be balanced. We cannot be extreme and
(07:58):
just ripping them away. We cannot be extreme and not
taking them away. So it's right in the middle. You
have to be right in the middle, and that's what
we're doing well.
Speaker 2 (08:10):
And as you talk about needing to be right in
the middle, how this is a very difficult line to
walk for both chambers, mister Chairman, when we consider the
Congressional Budget Office yesterday released another estimate of when the
US will reach the X date when it can no
longer fulfill its debt obligations, guessing that could be as
soon as mid August, when you and your colleagues are
on recess. Can you rule out entirely that the debt
(08:31):
ceiling is not going to have to be addressed separately?
If by the end of July this bill has not
worked its way through both chambers, what odds would you put.
Speaker 4 (08:40):
Around that the House has increased the debt selling. We've
addressed that in the one big, beautiful bill the Senate
needs to act. We have said all along, let's put
this bill on the President's desk by July fourth, and
then you have nothing to worry about. The Senate trying
to break different items in fifteen different bills is a
no go. We have delivered in the House, they need
(09:03):
to deliver in the Senate.
Speaker 3 (09:06):
Mister Chairman, I wonder if you've had a chance to
speak with Elon Musk or any of his allies since
he took a position of opposition on this bill, and
whether he's giving members of the Freedom Coccus or anyone
in the Republican Conference in the House, or for that matter,
Republicans in the Senate cover to vote no.
Speaker 4 (09:26):
Let me just say this, the bill that we passed,
the One Big Beautiful Bill, is the largest cut to
spending in the history of our country, almost one point
seven trillion dollars. With all the great work that Elon
and Doge has done in cutting, they cut one hundred
and seventy five billion dollars in five months. The bill
(09:50):
that we passed out of the House cut.
Speaker 5 (09:52):
One point six y nine trillion. Could we cut more?
Speaker 4 (09:57):
I would love to cut more, but it's still the
largest cut.
Speaker 5 (10:01):
In the history of America.
Speaker 4 (10:02):
And that's what I like to point out whenever people
try to use the accounting measure sam that it's going
to add two plus trillion dollars to the deficit. I
believe that that is funny funny math, because what they
are referring to is existing tax policy is going to
cost roughly four trillion dollars, and that's not the case.
(10:25):
Our revenues into this country right now is seventeen point
two percent of GDP, and if you look at the
historic level over the last fifty years, revenues to GDP
has been right at seventeen percent. We don't have a
revenue problem, we have a spending problem.
Speaker 2 (10:42):
Well, finally, mister Chairman, on the revenue side, tariffs of
course factor into that equation, and just quickly, we have
a minute left here on tariffs. The Treasury Secretary Scott
Besson is currently still in London working on trade negotiations
with China that are expected to go late into the
light night local time. Are you still expecting him before
the committee for his testimony tomorrow more?
Speaker 4 (11:01):
I am still expecting him before the committee. It looks
like he may have a long night, But I'm grateful
for the work that he's doing. Howard Lutnik and Ambassador
Greer is doing because they are working and representing the
United States when it comes to China and all the
other countries coming to the table to make sure that
(11:21):
the American worker, American manufacturing, American farmer is treated fairly
on a world stage.
Speaker 3 (11:27):
You may need stronger coffee tomorrow morning, mister chairman. This
thought it'd be interesting.
Speaker 5 (11:33):
The energy drinks for them.
Speaker 3 (11:35):
Kiss all right, I guess we love. Congressman Jason Smith,
Republican chair of the House Ways and Means Committee, wanted
that last word. We'll assemble our panel next Yeah, Okay,
Rit Davis and Jeanie Shanzino are on the way in
here on the fastest show in politics. This is Bloomberg.
Speaker 1 (11:56):
You're listening to the Bloomberg Balance of Power podcast. Catch
live weekdays at noon and five pm. He's durn on
Apple Cockley and Android Auto with the Flooburg business app.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven.
Speaker 2 (12:13):
Thirty, continuing drama over protests in Los Angeles, where, of
course we've seen the deployment of another two thousand National
Guard members after the initial two thousand members deployed over
the weekend, and of course seven hundred marines active duty
Marines have now arrived in Los Angeles as well as
President Trump describes that as an effort necessary to keep
(12:34):
Los Angeles from burning into control the activity we're seeing.
But he also said in the Oval Office while speaking
to reporters in the last hour, that he spoke with
California's Governor Gavin Newsom a day ago, to quote, the
President called him up to tell him got to do
a better job. He's doing a bad job, to which
the governor is now responding, there was no call, Joe,
(12:54):
he says, not even a voicemail.
Speaker 3 (12:57):
Yeah, Gavin Newsome going on to write that American should
alarmed that a president deploying marines onto our streets doesn't
even know who he is talking to, kind of taking
a page from Trump the way he talks about Joe Biden.
Let's assemble our political tannel. Bloomberg Politics contributors Rick Davis
and Genie Shanzano are on board with us today, back
together for the first time in over a week. Rick
(13:17):
is our Republican strategist and partner at Stone Core Capital.
Genie senior democracy fellow with the Center for the Study
of the Presidency and Congress and Bloomberg Politics contributor Genie.
We keep hearing that this is good politics for Donald Trump.
This seems like it's pretty good politics for Gavin Newsom too,
What do you think it is?
Speaker 6 (13:39):
And you know, I share Gavin Newsom's use of the
word alarm, but probably not for the same reason he's
using it. I am alarmed that a president would say
just minutes ago in the Oval Office that if you're
going to protest on the two hundred and fiftieth anniversary,
you will be met with heavy force, without differentiating that
peaceful protest is one one of the lynchpins of being
(14:01):
an American, our right to speak and assemble. I'm alarmed
that he would send troops in without being asked by
the governor. But I'm also alarmed on the democratic side
that they are playing into this theatricality. The reality is
is that we do need a solution to immigration, and
the kind of solution we need is not this performative
(14:24):
back and forth of our leaders on social media yelling
at each other. It is a legislation out of Congress,
like Rick's former boss Don McCain put together. That's what
we need. And what's alarming is we are nowhere close
to their And oh, by the way, we have a
director of Homeland Security who went on TV last night
(14:44):
and said everybody in LA is a criminal. That kind
of performative nonsense is not what we need. We need solutions.
Speaker 2 (14:54):
Well, when we consider the performance, if you will, Rick,
in the continued escalation we see p and Trump was
asked in the Oval office by a reporter if he
would consider invoking the Insurrection Act, and he said, if
there's an insurrection, I will invoke the Insurrection Act. That
of course would carve out what is not allowed thanks
to the Possecommitatus Act, which is the US military acting
(15:16):
in a law enforcement capacity. Do you really believe the
President would go there?
Speaker 7 (15:22):
You know, it's hard to tell in these circumstances.
Speaker 8 (15:24):
You know, he gets a question, he feels like he's
got to answer the question.
Speaker 7 (15:28):
And I thought it was actually pretty noncommittal.
Speaker 8 (15:32):
But look, I mean, the difference between the Marines going
to California and protecting the assets of the federal government,
you know, courthouses and federal government centers where some of
the deportees are being held, that's one thing. But then
you know, basically them acting as a police squad in
any jurisdiction of America is going to have a different reaction.
Speaker 7 (15:53):
Right now, we're.
Speaker 8 (15:53):
Debating whether or not a phone call was made or
who asked for what? In that case, when you take
that kind of constitutional action where you suspend passe comatatis,
I think you would see a national dialogue erupt of
epic proportions, because you really wonder at what point does
(16:13):
the violence have to occur to have that triggered in
a Donald Trump administration. And I don't think we know
the answer to that question, and pretty much I don't
think he did either when he answered the question today,
So stay tuned on this. Luckily, it looks like some
of the riots have dispelled in LA and it's starting
to quiet down, so hopefully it won't matter in this instance.
(16:35):
But I think it's definitely a page to watch.
Speaker 3 (16:39):
Interesting as we learn more about some of the folks
who are arrested. Genie, isn't that interesting? We're not hearing
very much about what went behind these arrests. In some
cases there were violent criminals. We heard about a handful
of them, but we're learning more now as well about
for instance, Juan Fernando, detained by ice at his job
at a CLI clothing factory, transported back to the country
(17:03):
he had left behind without much time past to be
the same day he was pulled out of his job
and immediately deported. His family is asking for due process.
So we're going to go through this all over again
with this group, like we did with those deported to
El Salvador.
Speaker 6 (17:22):
I think we probably will. The reality is Donald Trump
deserves credit for shutting the border. We need common sense
immigration reform and it is neither cost effective nor enforceable
for the United States to deport people who have been here,
many of them brought as young people for their entire lives,
(17:44):
who are working in paying taxes, to pick them up
at home, depot or like you're talking about these people criminals. Absolutely,
but that was part of the DAKA and Donald Trump
had embraced some of that in the past. Now he
is being pushed by the likes of Stephen as is
Ice to deport two to three thousand people per day.
(18:04):
That means you go to peaceful, tax paying people who,
by the way, are paying taxes and helping our economy.
It is not a common sense solution to a real
crisis and problem we've long had, and the President should
be called out for not working with Congress to get
a deal done. This is the same person for electoral
reasons in January blew up, much to the dismay of Republicans,
(18:29):
a very strong immigration bill that could have moved us forward.
That's what Americans should be alarmed about.
Speaker 2 (18:37):
Well when we consider immigration related legislation, though Rick the
White House in recent days has been very quick to
point every one to you the fact that the one
big beautiful bill working its way through the Hill right
now does include funding for more ice agents, more customs agents,
more border patrol agents. How does that factor into the
overall likelihood of the bill sailing through or at least
(18:57):
getting through easier?
Speaker 5 (19:00):
Shall we say?
Speaker 8 (19:01):
Yeah? I would say the one item that has not
generated much controversy at this point in time, and the
big beautiful bill, the Reconciliation Bill, has been money for
the Homeland Security and for Department of Defense and their
portion on things like building the wall. So the reality
is this is one there. Most Republicans have been jumping
(19:23):
on board. It's gotten some criticism for being a big
spending item.
Speaker 7 (19:27):
And we just talked to the chairman of the Ways
and Means Committee.
Speaker 8 (19:31):
Basically from what I could tell, what he was saying
is we've cut enough, don't need to cut anymore, and
so probably no appetite in the House side.
Speaker 7 (19:40):
I guess to go after those funds.
Speaker 8 (19:42):
But the reality is it's a significant, over three hundred
billion dollars commitment at a time when border security seems
to be handled pretty well.
Speaker 7 (19:50):
And so it's really deportations.
Speaker 8 (19:52):
And I could just add there have been more deportations
in the first year at this point in time in
the bidendministration than it is today. Donald Trump's deporting fewer people.
So it's not the issue of deportation as it exists,
that's happened throughout all the administrations. It's the tactics under
which they're using the deportation rules to their advantage.
Speaker 3 (20:14):
Well, that's a really important point to make, Rick, It's
kind of ironic, Genie. Remember the big argument was do
we do this in one big beautiful bill. That's why
we call it that, because the other option was to
break it in two. That was the John Thune option.
Get the border money out the door, and we'll spend
time on taxes and the rest, which will be more
difficult to debate. Well, here we are, one big beautiful
(20:35):
bill was the answer. And it kind of ironic that,
based on current events, it is in fact the border
component that could help push this over the finish line,
isn't it.
Speaker 6 (20:43):
Yeah, it's ironic, or it is something that the administration
helped to sort of push forward. But the reality a part.
Speaker 3 (20:53):
Of the plan is what you're saying.
Speaker 6 (20:55):
I don't know, but you know, I'm not sure it's ironic.
But the reality is is that this bill funds the border.
That is fine, But what we need is immigration reform.
We have six to seven million people in this country
the government doesn't even know, They can't tell you who
are brought here as babies and children. Are we really
(21:17):
going to pick these people up, take them to a
place or push them out to a place they've never
been and know nothing about while they have done nothing wrong.
Very few Americans support that tactic. We have to find
a common sense pathway to citizenship. Yes, close the border, Yes,
fund border security. Yes, deal with people who are committing crimes.
(21:39):
But yes, also find a common sense way to keep
people who are working and contributing in this country, especially
people who are brought here who work with many of us,
and we know many personally. They are friends, neighbors, and
family members. They are here and they should be supported
in an effort to stay here and to continue contributing
(22:01):
to this great country. That's where the President's planned here
and Stephen Miller's quite frankly falls very short.
Speaker 2 (22:09):
Rick, in our final minute, your degree of confidence that
that common sense solution can be found in the near term, Well.
Speaker 8 (22:15):
I certainly worked hard enough with John McCain to try
and have a comprehensive immigration bill passed and didn't work
out so well. But it is the way to actually
have all these jobs that people are getting deported from
to be filled with people who actually come in legally.
And of course I think there's a broad bipartisan support
for legal immigration reform, and it's just not the administration
(22:39):
it's likely to pass it, but it would be a
very good thing in the heels of this current debate
to be contemplating.
Speaker 7 (22:47):
If you're the Trump administration.
Speaker 3 (22:49):
Talking about motivations here on both sides of the Aisle Genie,
Would it help Democrats if this did not fizzle out
and in fact spread to other cities as we consider
messaging ahead of the mids.
Speaker 6 (23:01):
You know, maybe politically, but you know, I think many
Americans are tired of thinking about this from a political lens.
I mean, we need solutions, and so yeah, that helps democrats.
That's fine for democrats, but it doesn't help the United
States as a whole, not to treat people the way
they should be treated and to keep people brought here
(23:22):
as children here contributing to society and making us the
best we can. So I think that's also important in
addition to the political end.
Speaker 2 (23:31):
All right, Jeanie Shanzano and Rick Davis, Bloomberg Politics contributors
in our political panel on this Tuesday, thanks for joining
us on Balance of Power, and we'll have more head
here on Bloomberg TV than treat.
Speaker 1 (23:41):
You than you're listening to the Bloomberg Balance of Power podcast.
Catch us live weekdays at noon and five pm Eastern
on Apple Cocklay and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 3 (24:00):
Bloomberg Radio Satellite radio channel one twenty one. Maybe you're
watching us on YouTube right now. If not, this is
the coolest thing we have going search Bloomberg Business News Live.
It's not just this show, it's all the way, surveillance
through the day, Bloomberg Business Week Daily, and we were
always live for you in the studio with our great
guests here in Washington as we try to get our
arms around reconciliation, kind of like the Senate's trying to
(24:22):
do as we speak. Some important things are going to
take place today. All procedural, but if you want to
sound smart at the cocktail party, we're about to get
you ready on this Tuesday edition. Right, it's Tuesday, which
means we have about three and a half weeks until
the fake deadline of the fourth of July that even
the President doesn't seem to care about. Yesterday, at this
(24:44):
invest event, he's sitting next to speaker Johnson, fourth of July.
He said, yeah, or it might take a little longer.
Is something going on over there, James. They're gathering the pool.
This is It's noontime. This happens every day. We can
just talk amongst ourselves. I get up in the morning,
I do my reading, I talk to the people I trust,
(25:06):
try to figure out what's going on in the world.
We start mapping out the show that I connect with
producer James Booker, Matt co anchor Kayley. We come up
with a plan. Different people to call you book some things.
You map out a show. This is what we're going
to have for our viewers and listeners. And then at
high noon they assemble the press pool, Donald Trump starts
(25:27):
talking and it all goes off the rails. Maybe we'll
do this again together. At least we enjoy each other. Right,
this is the new world we're in, and a big
part of this new world is the effort that's unfolding
right now on Capitol Hill. Yeah, CC is part of
this mix too. It's a big family behind this show.
(25:48):
The Rules Committee is going to get down to brass
tacks today in the House at two o'clock. That's right
around the time we got off there, two hours from now.
In the meantime, they're expecting a report from the Parliamentarian
and the Senate. Right, this is the ref who says
you can do this in reconciliation. You're not allowed to
do that. Budget matters, yes, everything else. No, this is
the bird bath, the bird rule we talk about. And
(26:09):
so by the end of this day, I suspect we're
going to have a much better idea of what's going
to end up in the Senate version of this bill.
And that's why we have Nathan Dean with US senior
US policy analyst at Bloomberg Intelligence. His phone is ringing
because we're actually getting into something here. Nathan is great
to see you. What's the parliamentary going to tell us today?
Speaker 9 (26:28):
So I think the parliamentarian is going to allow most
of what the investable angle or the investment.
Speaker 10 (26:33):
Community cares about.
Speaker 9 (26:34):
Obviously, these tax cuts, the extensions, the Custom Medicaid Inflation
Reduction Act, extent benefits. You know, we think it's going
to be more structural things, things like where they're trying
to get rid of the Office of Financial Research, or
maybe changing the funding mechanism of the Consumer Financial Protection Bureau,
things that are very important for us to hear in
the Washington But for the New York community that's investing
in this, we'd say it's probably most likely going to
(26:55):
be out because the general rule of thumb is is
that if it impacts the budget, then it's allowed. But
you know, every single party, any single time they do
a reconciliation package, they throw in the kitchen sink and
they say, let's try and do this. So the Senate
Parliamentarian is going to come out later today, she's going
to say, no, you can't do that. I don't think
there's going to be a lot of fireworks here. And
obviously the Senate does have the ability to just fire
(27:15):
the parliamentarian or ignore the parliamentarian. Yeah right, But you know,
I don't think that's going to happen in this case
because I don't think they're going to get any major controversy.
Speaker 3 (27:22):
I'm waiting to hear when Donald Trump tells John Thune,
what happens with you ignore the parliamentarian. But we'll deal
with that when it happens. That could be an interesting standoff.
No tax on tips, no tax on overtime. This gets
through the bird bath. It's more lawmakers who are concerned
about those.
Speaker 10 (27:39):
Yeah, I think it does.
Speaker 9 (27:40):
I mean, I think it's one of those things where
you know, it's not going to become so much of
a parliamentarian decision. It's going to be a deficit condition question.
Speaker 10 (27:48):
And that's where we're going at with all this.
Speaker 9 (27:50):
And in fact, we put a note out just this
morning to our clients and it always is going to
come down to the deficit because you know, and I
should have said earlier, the biggest question we're waiting for
is what then not the parliamentarian is going to allow
the Senate to use current baseline policy as zero, meaning
to extend the trumpe of tax cuts, the cost is
effectively zero. If the parliamentarian improves that, which I think
(28:10):
she will. If the Parliamentarian improves it, then you know,
you don't really have to cut all that much to
actually keep this package going forward. And that's why we
always think that the deficit is the most likely impacted
entity here from this package. Looking at Medicaid, the inflationial reduction,
extent benefits, it's much easier for the Senate to say,
you know what, let's not cut those to the extent
(28:32):
that the House proposed.
Speaker 10 (28:33):
Yep, let's pull that back a little bit.
Speaker 9 (28:35):
We'll borrow today and we'll vote for something that will
actually be tomorrow's pain as opposed to voting for.
Speaker 10 (28:41):
Something that's going to hurt our constituents in the next year.
Speaker 3 (28:43):
So understood. So let's lay out the concerns. You could
really count them on one hand, right, what actually is
going to be a concern for senators and then when
it comes back to the House could be deal breakers.
You change the cap on salt, yep, you could lose
a couple of lawmakers. The revenge tax is something we
(29:04):
keep hearing about banks are calling you about it, Nathan,
what is it?
Speaker 9 (29:07):
Yeah, so this is section eight ninety nine. This is
something that hasn't gotten a ton of press. I mean,
Limberg News has done some extensive reporting on this. But
it's called the Revenge tax. It essentially allows the Treasury
Department to deem a foreign country a unfair foreign country
or a discriminatory tax environment, and then allows the Treasury
Department to put essentially a five percent tariff on sorry,
(29:27):
five percent tax levy on essentially all passive income, real estate,
you know, income.
Speaker 10 (29:33):
From foreign countries and so forth.
Speaker 9 (29:35):
So if you think if you're a US entity or
a foreign bank here in the United States and your
income's going back to HQ, well, now all of a sudden,
you have an additional tax on that. It's five percent,
It goes up annually, up till about twenty percent, unless
that's essentially deemed you know, that country gets off. It's
designed as a way to combat what they could consider
digital foreign sorry, discriminatory digital taxes, mostly in the tech space.
(29:58):
My colleague Andrew silver and I Silverman and I looked
at it. It's going to most likely impact banks in
the tech companies, the tech companies in particular, because if
or overseas firms decides that they're not going to play
in the United States anymore, then that's that's actually somewhat
somewhat bad. So the main question we've been getting is
is the Senate going to pull this out? Senator Thune
said that he's been looking at it. We think it's
either going to be pulled out or it's going to
(30:19):
be watered significantly.
Speaker 3 (30:21):
So we'll see very important. Who does that offend if
they take it out. Is there a constituency behind this
in the House that thun needs to worry about.
Speaker 9 (30:28):
Well, I don't think if there's a constituency as to
the point where you're going to see a coalition coming
together and trying to, you know, fight like a salt
caucus exactly. I don't think you're going to see a
salt caucus. I actually don't think it was all that
controversial when the House lawmakers put it in there, because
in their eyes, it just gives the Treasury Department flexibility.
Speaker 10 (30:44):
Doesn't say that this has to happen. It just says
that this is another another tool.
Speaker 9 (30:48):
I almost said weapon, you know, another tool that would
allow the Treasury Department in the White House to actually
use when conducting its negotiations. I don't think it was
all that controversial when it was put in. I think
it was one of those unattended consequences that was coming
especially from the non US foreign community.
Speaker 3 (31:04):
Would be kind of cool if there was a revenge caucus.
Just I mean, if there was something called that, all right,
then we've got green incentives, tax credits. Tom Tillis is
calling if some of these are put back in, who
do you lose in the House.
Speaker 9 (31:18):
So I think this is one of those where the
you know, if you look at the original bill that
came up from the House Ways and Means Committee, the
electric vehicle tax credit was gone.
Speaker 3 (31:25):
Yep.
Speaker 9 (31:26):
I think that's still gone, despite Elon Musk's you know,
discussions about it. I think if you're Tesla or any
other car companies relying on it, you know, and I
don't know, our view is is that Tesla isn't so
much relying on it, But I think that's gone. The
bigger question is when it comes to wind and solar
and a lot of these tax credits, there was a
phase out, and that phase out was pushed up.
Speaker 10 (31:44):
Yes, we think the phase out will get pushed.
Speaker 9 (31:46):
Back, maybe not to the original house in ways means
text where the Solar, for example, was twenty twenty eight
from twenty thirty one. But you know it will get
pushed back a little bit, just because the Inflation Reduction
Act is very important to states like North Carolina because
there's a lot of foreign CAPACX money coming into the
United States, and there's a lot of constituents out there
are lawmakers who saying, look, I got sevenard jobs being
(32:07):
built in this district. I got a plant being built
in this district. So we think it's going to get
pushed back. So keep in mind for like stocks like
First Solar and end Phase, these things have hot sauce.
Speaker 10 (32:17):
They're almost like what we call the marijuana hot sauce stocks.
These things have been.
Speaker 9 (32:20):
Bouncing up and down based off of what's in this language.
So definitely watch this later this week because those those
stocks have.
Speaker 3 (32:26):
Hot sauce, not always based on fundies. As they say,
we've got a minute left here, Nathan, you're running odds
fourth of July August.
Speaker 9 (32:35):
We think the Senate can get it done around the
fourth of July. I like the joke, it's gonna come
a little bit later because I'll be on vacation. But
I think we're saying eighty percent chance. By the August recession,
we're actually feeling fairly confident they get this done.
Speaker 10 (32:47):
In late July.
Speaker 3 (32:47):
You kick out a great note to clients every week
with little inside something about what's going on in Washington.
I always love these What are you telling people to do?
If they want to watch this parade? Is there any
way to get in and out of tests? They're like
a Nathan Dean angle on this mass of parade, the
army parade on just.
Speaker 10 (33:01):
Like with the NFL. It's great for my couch.
Speaker 3 (33:03):
That's a good answer. Buy a blimp. Right, We're not
even gonna be able to get to work in a
couple days.
Speaker 10 (33:08):
You see this closures driving in this morning. It is difficult.
Speaker 3 (33:11):
It has begun, YEA, sounds like it might be quite
a show, though, Nathan Great Nathan Dean Bloomberg Intelligence, our
senior US policy analyst. How's that for a deep dive?
What goes in what stays out? Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if
you haven't already, at Apple, Spotify, or wherever you get
(33:32):
your podcasts. And you can find us live every weekday
from Washington, DC at noontime Eastern at Bloomberg dot com.
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