June 12, 2025 • 35 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said Israel “could very well” strike Iran but that he had advised against an attack while negotiations were ongoing, as the departure of US staff from the region fans concerns about a coming assault.
“I don’t want to say imminent, but it looks like it’s something that could very well happen,” Trump told reporters at an event Thursday at the White House.
In recent days, Trump has said he is less confident the US will reach a deal with Iran to curb its nuclear ambitions in exchange for sanctions relief. The president has repeatedly said that while he wants a diplomatic solution, he does not want Tehran to acquire nuclear weapons and warned the US could resort to military action if a deal is not reached.
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:
- Center for Strategic and International Studies Senior Associate Natasha Hall.
- Beacon Global Strategies Managing Director Michael Allen.
- Bloomberg US Transport Deputy Team Lead Ryan Beene.
- Bloomberg Consumer Finance Reporter Paige Smith.
- Former Republican Congressman and Bloomberg Contributor Patrick McHenry.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
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Speaker 2 (00:25):
Got a couple of plates that we're spinning today as always,
so welcome. It's great to have you aboard with our
eyes on the White House. President Trump has been speaking
for a little while right now in an effort to
actually he's got some business at hand. He's now talking
about tariffs and a few other matters, but in fact
was signing a couple of resolutions. White House called them bills,
resolutions that target California's ev incentives. They repeal the state
(00:50):
level mandates that have been in place now supported by
the Biden administration. GM Toyota among those lobbying against California's rules.
If he makes some new here on the story that
we're about to tackle, we'll bring you to the White House.
Because this is a precarious moment ahead of more talks
that are scheduled for this weekend. May not be an
(01:11):
accident considering the timing with what we're seeing here, but
a stark headline at the top of the New York Times,
Israel appears ready to attack Iran. Knowing that this has
been in the air for some time, and we've talked
about it, certainly quite a bit since Benjaminett Yahoo made
his most recent visit to the White House, a visit
in which President Trump reportedly waived him off, and it
(01:34):
might be a little bit different this time. With what
we're hearing, Israel appears to be preparing to launch the
attack soon, according to officials in the US and Europe,
obviously at a very sensitive time here in the Middle East.
But as I mentioned, American and Iranian negotiators are supposed
to get back to the table here on Sunday for
another round of talks. And that's where we begin our
(01:55):
conversation with Natasha Hall. Delighted to say she could join
us today at this moment, non resident Senior Associate Geopolitics,
Foreign Policy Department at CSIS, the Center for Strategic and
International Studies.
Speaker 3 (02:08):
Natasha, it's great to see you.
Speaker 2 (02:09):
How much of this do we think is bluster ahead
of the next round of talks or is this a
real attack that could be in the offinge.
Speaker 4 (02:16):
Thank you so much for having me.
Speaker 5 (02:18):
It's a very tense moment, I have to say, And
I think that's really the question whether or not this
is a negotiating tactic. As you mentioned, Witkoff is heading
to Oman on Sunday for the sixth round of negotiations
with Iranian officials, both direct and indirect, and also tomorrow
on Friday, Witkoff.
Speaker 4 (02:35):
Will meet with Israeli officials.
Speaker 5 (02:37):
So do Israeli officials can talk about their concerns with
regards to the Iranian nuclear program, and one would think
it's also about a potential attack. Now, whether or not
that attack actually takes place, I think remains to be seen,
because I for sure Trump does not want a never
ending war. The issue is that Nettagnahu does. It protects
(02:59):
him politically, and surely there are fears in Israel of
any kind of Iranian nuclear activity. But the question again,
and I think I mentioned this last time I was
on the program, is on enrichment. Israel does not want
Iran to be able to enrich and Iran sees it
as an issue of sovereignty that they can't.
Speaker 2 (03:21):
Well, so we were just looking at images of Steve Witkoff,
who is still planning to attend the negotiations. He certainly
knows this, Natasha. Is he capable of walking Iran back
from that line or have we in fact found ourselves
at a standoff here.
Speaker 5 (03:39):
Well, what's interesting is is just yesterday he said that
Iran can't enriched uranium, and the US has been back
and forth on this, including President Trump. It's unclear if
they understand the details of uranium and enrichment and a
nuclear program for Iran, and I suspect that they're getting
a lot of their advice from Israel. The big question
(04:01):
is if they are willing to go along with an
Israeli attack, because certainly a coordinated US Israeli attack on
Iranian nuclear facilities would be more profound than Israel going
it alone, so to speak, but they would have to
at least get the green light. Obviously Wickkoff knows all
of this, So potentially we're seeing the evacuation of personnel.
(04:24):
We're seeing a lot of this bluster as a means
to sort of up the anti prior to these negotiations
to really push Iran to the edge.
Speaker 4 (04:33):
It's still totally well.
Speaker 2 (04:35):
Accepted, seems like a lot of trouble to be moving
all these people to just put on a show. But Natasha,
we do have a really important piece of news here
that Steve Witkoff will have with him at the table.
This is the hook the administration, I guess, could lean
on if in fact an attack move forward. Here the
IAEA declaring Thursday Iran is not complying with nuclear non
(04:56):
proliferation obligations, the first time the UN's watchdog has passed
a resolution against the country in twenty years. What did
you think when you saw that headline?
Speaker 4 (05:07):
Yeah, I thought it.
Speaker 5 (05:08):
Was interesting because again you said it's unprecedented. It is unprecedented,
and it shows that the US is working with the
E three and with the IAEA on really putting the
pressure on Iran to move forward with this. So, I mean,
we could be hopeful, but again, you know, last year
we saw something like one hundred and seventy Iranian and
(05:30):
Iranian praxy attacks on US assets.
Speaker 4 (05:32):
In the region, so very very scary times.
Speaker 5 (05:36):
I think we'll see a lot of tensions, especially in
some of these other countries like Iraq, where there are
softer targets as well. But the ia can't do much
but it is another negotiating tactic.
Speaker 2 (05:50):
I think, well, you make an interesting point here about
US involvement, because it does seem that Israel would need
some help based on some of the that we've done here.
You consider the use of bunker busters, air defenses, refueling.
How far would the US go and taking part here,
(06:12):
I mean, that's.
Speaker 4 (06:12):
The I think that's the million dollar question.
Speaker 5 (06:15):
It's unclear if the US would even be public about
coordination with Israel. I think most people would agree that
they would be green lighted and in order to do
the attack, it would be quite reason for Israel to
go it alone. But judging by the statements of Witcough
and of Trump in recent days, it looks like they
(06:35):
are very publicly giving the green light, which is again
why they're evacuating personnel.
Speaker 4 (06:40):
But I would just say one more thing for your listeners.
An attack on an.
Speaker 5 (06:44):
Iranian nuclear facility has happened before, but Israel are sorry.
Iran just goes back to enriching uranium at another level
and accelerates potentially, so we could see that again. And
you know, quite we've been talking about rising tensions in
the Middle East quite a bit for two years and
(07:04):
It's unclear where this ends, but hopefully it will come
to some kind of de escalation by next week, because
I think everyone is on the edge of their seats
at this moment in the region.
Speaker 2 (07:17):
Israel certainly believes it's in the position of power here
right Natasha. As we've discussed, there are a couple of
reasons why we've found ourselves at this moment, and a
lot of it has to do with the lack of
air defenses right now that Iran has following the most
recent back and forth with Israel, but also an emboldened
Benjamin net and Yahoo following some of the strife.
Speaker 3 (07:37):
That we've seen in the region. Here.
Speaker 2 (07:40):
The idea as well that Iran would respond with hundreds
of ballistic missiles, as I read in this story in
the New York Times, being laughed at by Israel because
last time they tried that, most of them were knocked down. Natasha,
Israel not have the moment that it was looking for.
Speaker 5 (07:57):
Iran is in a very vulnerable position. As you point
out that there was many different Israeli attacks on Iran
and Iranian proxies last year that's severely degraded Iran, including Hasbudlah,
which Iran uses to essentially launch attacks onto Israel and
neighboring Lebanon. It doesn't really have that as much anymore,
(08:18):
and certainly not Iran in Syria, and so Iran is
in a very very vulnerable position. That said, again, Iran
doesn't go to war toud to with the US or Israel.
It sort of negotiates itself in the weeds of these
various countries like Iraq, and I would have you know that,
you know, the one hundred and seventy attacks also last year,
(08:39):
Iranian attacks, very few casualties of US airmen, of US servicemen,
and so you know, I mean it's weak attacks, but
it does, you know, up the anti considerably, and it
makes it much much harder for the US to have
a presence in the peast as well.
Speaker 2 (08:57):
We're at a time, Natasha, if this happens would be
after Sunday.
Speaker 4 (09:02):
I would suspect this would be after Sunday.
Speaker 5 (09:04):
Yes, for sure, I think again, you know whether or
not this is for real or not, it's certainly negotiating tactic.
Speaker 2 (09:13):
This next round of talk is going to be critically important. Natasha,
hall I'm so glad that you could join us from
the Center for strategic and international studies, a real voice
of expertise that we can bring you here.
Speaker 1 (09:26):
You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 6 (09:45):
Or essentially flat at least on WTI crew today, but
both for WTI and Brent yesterday we saw a very
big move to the upside, more than four percent on each,
in part after the US decision to pull US diplomats
essentially out of Baghdad, as well as issue warnings to
family members of military members in the Middle East, all
(10:07):
feeding into concern of something that might be coming. Is
there were reports last night that Israel could be ready
to strike Iron's nuclear facilities. And that's something that President
Trump today, when speaking and answering questions from reporters at
the White House, did not necessarily play down Joe. He
suggested there could be massive conflict coming.
Speaker 2 (10:25):
That's right, he said, it could well happen, knowing of
course that talks are still set for Sunday. Steve Whitcoff
will be in Oman, and there could be some posturing
ahead of those talks. But this is a precarious moment
and Michael Allen from Beacon Global Strategies was the first
to float the idea here on the program when Benjaminett
and Yah who came to town that that is in
fact what they were talking about. Michael, we know that
(10:47):
President Trump waved off that attack at the time.
Speaker 3 (10:50):
It's become known since then at least is he going
to wave off this one?
Speaker 7 (10:54):
I think he might try.
Speaker 8 (10:55):
I think he sees some benefit right now and holding
out the prospect that the Israelis might go for it
because he wants to strengthen Steve Whitcoff's hand as he
goes to Aman this weekend. But when you really start
to look at some of the factors that are going
Israel's way today, just this morning, the International Atomic Energy Agency,
the UN Watchdon Group declared Iran in breach of the
(11:19):
Non Proliferation Treaty. That's the first time in twenty years
rice has happened. That is significant around the globe. It's
not that I think Israel would be toasted if they
were to bomb Iran. But it's sort of more understandable
in the aftermath of this than it would be otherwise,
especially when you consider that the next step might be
to refer this to the UN Security Council, which also
(11:41):
would trigger additional sanctions from around the world. And if
Iran gets out of the Non Proliferation Treaty altogether, that
could almost be an invitation for Israel.
Speaker 7 (11:50):
To go for it.
Speaker 6 (11:51):
Okay, so may provide Israel some cover, But at the
same time, wouldn't those very same things you're talking about
signal that the US has no real hope of getting
a nuclear deal with Iran when Iran is doing such things.
Speaker 8 (12:01):
I think it's really really tough because when you think
about enrichment, our position is no enrichment in Iran. Their
position is this is one of our red lines that
we can't give it up. And we're talking about a consortium.
Could we do nuclear fuel rods of somewhere else in
the Middle East? And Iran, I think, is basically saying no,
it needs to be inside of our own territory, and
(12:24):
I think that's why the talks have foundered so far.
Speaker 3 (12:27):
So let's say this happens.
Speaker 2 (12:29):
Does the US provide logistical support, actual hardware, what would
be the relationship, or do we sit back and watch
this happen.
Speaker 7 (12:36):
So this is the million dollar question.
Speaker 8 (12:38):
Have we turned over already the types of munitions that
the Israelis would need. Presumably they would want the MOAB,
the Mother of All bombs, other bunker busters, They would
probably want some refueling help from the United States.
Speaker 7 (12:50):
But what they really need is what we did the
last two.
Speaker 8 (12:53):
Times there were missiles and drones going between the two countries.
They need the US Navy out there with IEJIS destroyers
knocking down some of these Iranian incoming. And I don't
know if President Trump is ready to do these three
things now.
Speaker 7 (13:07):
The Israelis may go for it anyway.
Speaker 8 (13:08):
They're famously creative and think pager operation and a million
other things, so they may not need the bucker Buster,
or they may have an alternative plan.
Speaker 7 (13:17):
But these are some big question marks.
Speaker 6 (13:20):
Well, And as you bring us back to what we've
seen in the past, when Iran has sent drones and
missiles toward Israel, those were largely intercepted, not just with
help of the US but with Jordan as well. So
when we consider the potential for Iranian retaliation here, is
there some major damage that they actually can successfully inflict,
considering they weren't successful in past iterations.
Speaker 8 (13:41):
They might be able to get I presumably they would
throw a lot more ballistic missiles and whatever into Israel,
so it may well hit this time. But I think
what they're really worried about the United States in particular,
is would the Iranians hit the golf allies of Israel
and the United States. What would happen in Saudi Arabia?
(14:01):
Remember they hit Abcake last time, the big gigantic oil facility.
They've also take at least the who needs have taken
shots in the UAE before. So I think the Iranians
have signaled you know what, if we get hit, don't
think that it's just coming back at Israel. It may
come also to your gold ally. So that's a big
conflagration right there.
Speaker 2 (14:22):
What do you make of the move in Iraq? We're
trying to get US personnel out of the way already.
What is the target in Iraq that would be of
value to Iran?
Speaker 8 (14:29):
Well, just any place where there are concentrations of Americans
in the Middle East that are within sort of this
is symbolic, then it is we have troops there, We
have a bigger American presence generally speaking, and so I
think it's proodent for us to take non essential personnel
and give them the opportunity to leave.
Speaker 7 (14:46):
But it's a it's a quality, it's something that we
need to look at. It's a factor.
Speaker 8 (14:50):
It's a signal for thinking about, well, the United States
has starting to take precautionary measures.
Speaker 6 (14:55):
Well, and how far in advance do we typically take those?
Does that signal that it could be within days what
we're talking about here, before Sunday, before Witcoff even gets
to theman to try to deal with things diplomatically.
Speaker 8 (15:07):
So I have a feeling that Trump is probably said
to the Israelis, let what cough go in Sunday. But
I think it's very very soon, you know what. I
think the Israelis are also operationally ready. They made a
bunch of bombing runs down to hit the Huthi. The
way I understand that is they're able to practice some refueling. Certainly,
(15:28):
the distance that it takes to get down there otherwise
get into the nice right formations have some operational readiness
concerns addressed by that operation, so diplomatically, the air defenses
being down in Israel, the military and Israel being really ready,
you could read into this that something's going to happen soon.
Speaker 2 (15:49):
You were a special Assistant for National Security in the
George W. Bush administration, would you be telling the president
now that there's still an opportunity for a diplomatic solution
or prepare for war.
Speaker 8 (16:00):
I would say prepare for war, but that is the
moment at which you could have a diplomatic solution.
Speaker 7 (16:07):
You got really really close up to the line.
Speaker 8 (16:09):
So I would never rule it out completely, but I
definitely think the United States needs to be thinking through
and apparently we are. What would the third order, second
third order implications be.
Speaker 7 (16:20):
Of this type of strike. It would be big.
Speaker 8 (16:23):
Now Israel has got a lot of creative ways to
go after all these different sites across Iran, so this
could be a really multi day, maybe even multi week
type of operation.
Speaker 6 (16:36):
We'll plan to stay in touch with you as things developed.
Michael Allen, Beacon Global Strategies, Thank you as always for
joining us as we continue to track this story for
you here on Bloomberg TV and Radio. One of just
many stories around the world we have our eye on today.
We're also watching, of course, a tragedy unfolding in India
after a crash a blowing seven eighty seven Dreamliner with
(16:57):
two hundred and forty two people aboard an Air India flight.
More than two hundred bodies have been recovered after that
aircraft crashed shortly after takeoff en route to London, and
we want to get the latest now from Ryan bean Bloomberg,
US Transport Deputy team leader, who's here with us on
balance of power. Ryan, do we have any indication yet,
knowing it's obviously very early into the investigation of what
(17:18):
actually went wrong here, what happened.
Speaker 9 (17:22):
Unfortunately, no, we do not. This crash is just still
hours old. Recovery efforts are underway. The first phase of
a major disaster like this is largely dominated by search
and rescue and efforts. Investigators from the US and from
other countries are planning to travel to India to assist
with the local authorities and their National Aviation Safety Investigative
(17:46):
Team to begin that work. But that's going to still
take some time before we really learn what actually happened
in this tragedy.
Speaker 2 (17:54):
Yeah, well, we're hearing a lot of speculation, as is
often the case. Ryan, the President of the United States,
at a podium a short time ago, suggested some sort
of engine failure, and there are eyes on Boeing, there
are eyes on GE with the potential for major implications.
Boeing CEO, though, says the company's team stands ready to
(18:14):
support the investigation. I wonder to what extent the NTSB
will be involved here, knowing that it happened in another country.
Speaker 9 (18:22):
They will be involved under Annex thirteen the home country
where an aircraft crash occurs. They take the lead, but
they are supported by their counterparts from countries where where
aircraft are manufactured and where engines are manufactured. So the NTS,
(18:43):
being the sort of pre eminent global authority on these
types of investigations, will absolutely have a role, as will Boeing,
and as will personnel from General GE who have said
that they're both sending personnel to assist and they stand
ready to help the authorities.
Speaker 6 (19:02):
Yeah, we just had headlines crossing the Bloomberg terminal that
the CEO of Boeing has spoken to the chair of
Air India saying that Boeing's team stands ready to support
the investigation. When we consider this Boeing aircraft specifically, Ryan,
knowing all of the difficulty that Boeing has had specifically
with the seven thirty seven model after several fatal crashes
(19:22):
and of course the blowout of one part of the
aircraft last year on that flight in the US, talk
to us about the seven eighty seven. This is obviously
a wide body aircraft. What is its track record? How
reliable is this aircraft? Has Boeing had issues with this
model in.
Speaker 9 (19:39):
The past, This aircraft has had heretofore a sterling track record.
This is the first fatal accident involving a seven eighty
seven and this model of aircraft has been on the
market for about fifteen years. There are over a thousand
in service today. It has it's a.
Speaker 7 (19:56):
Workhorse for global.
Speaker 9 (19:58):
Airline fleets connecting international destination around the world. So this
is uh, this is sort of uncharted territory.
Speaker 5 (20:07):
Now.
Speaker 9 (20:07):
The seven eighty seven has been under scrutiny for some
quality concerns on the part of the FAA in recent
years that prompted about a year plus halts to deliveries
while Boeing employees, you know, reworked elements of the fuselage
that the FAA was concerned work being the work wasn't
being properly done on it, But those planes have largely
(20:29):
been through that process. Deliveries have resumed, and there has
not been a major stafety incident involving the plane itself.
So this is sort of uncharted territory. And you mentioned
you know, Boeing's you know, recent track record and the
previous incidents that they've been involved in. This certainly doesn't
help what Boeing's trying to do right now, which is
(20:53):
get quality under control, you know, resumed deliveries, get cash
flows bigot going. We don't know, again to emphasize, we
don't know if there is any issue with this plane whatsoever,
or if there are other factors that play here, but
you certainly it certainly doesn't help the company and CEO
Kelly Orberg in trying to move Boeing beyond the difficult
(21:20):
chapter that it's been in for the last several years.
Speaker 2 (21:24):
Yeah, timing is terrible for these companies all the way around. Ryan,
Thank you so much. Ryan Bean is Bloomberg's US Transport
deputy team leader with his eyes on a developing story overseas.
I'm Joe Matthew alongside Kaylee Lines. We'll keep tabs on
this as well as the IPO of Chime. A conversation
later with Paige Smith, our finance reporter, Consumer finance looming
(21:46):
large today on Wall Street, and we'll have more on
that straight ahead on Bloomberg.
Speaker 1 (21:53):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Easter 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 6 (22:10):
Kaylee Lines alongside Joe Matthew for Balance of Power today,
and as Charlie checks on Chime for us of course
doing pretty well on its first day of trading, having
already had its IPO priced above the marketed range, opening
substantially a forty nine percent above that price, even if
we're trading a little below that level now at thirty
eight dollars a share. As Charlie was just mentioning, but
this is just the latest in what have been a
(22:31):
series of relatively successful IPOs, thinking back to Circle last week, Joe,
and of course all of it, keeping our focus on
financial technology in the fintech space.
Speaker 3 (22:40):
Really compelling stories.
Speaker 2 (22:42):
The CEO at Chime, Chris Britt, was talking to Ed
Ludlow earlier today on Bloomberg TV and Radio. Just a
fascinating story about how we got here and why there's
so much buzz around it, fee free banking, payments driven revenue,
and an audience that may not typically be banked. As
they say, there's a really interesting trend here with many
(23:04):
people who are of lower income, lower means, living paycheck
to paycheck, but suddenly have a platform that they can
do business on here, and we wanted to talk about
it with Paige Smith, Bloomberg's consumer finance reporter. So you
get a slightly different wrinkle on this story page. A
third of the customers are women. What does this tell
us about the state of the consumer and its relationship
(23:24):
to banking.
Speaker 10 (23:25):
I think that's a really good point. This company in particular,
which to be clear, is not a bank, but offers
a heck of a lot of bank like services to
consumers that, like you said, mostly make under one hundred
thousand dollars a year and are turning to this financial
technology company, as you know, for things like bread and butter,
savings accounts and checking accounts and places to put their paycheck,
(23:49):
and as you said, it caters to folks that are
you know, maybe would would go to a Bank of America,
would go to a Wells Fargo, but is actually there
instead going to try.
Speaker 5 (24:02):
Well.
Speaker 6 (24:02):
And to your point about this not being a bank,
just a fintech firm that partners with banks in order
to offer these services, is there a kind of regulatory
risk embedded in this story page? Is there a risk
that that kind of relationship actually gets more difficult for
Chime to execute and specifically make money off of.
Speaker 10 (24:18):
Well, I would say to use Chris Britzworts. You know,
he has said repeatedly that the company has prioritized playing
by the rules. But you know, again, they are not
a bank. They work very closely with banks. They have
two bank partners stride in a bank or bank, and
you know, it's it's These relationships are common in the
(24:40):
fintech space, and yes, regulators have looked at them in
the past, but they have not looked at Chime in particular,
I believe, and this is it's certainly something to keep
in mind, but I don't I would say that just
to be clear, they are not a bank, but they're
a fintech that provides bank like services, works closely with them, and.
Speaker 2 (25:01):
They're to give it the big banks a run for
their money. Here, when you start hearing about Chime in
the same conversation as Bank of America or JP Morgan Chase,
what does that tell us about the potential headroom for
this company to grow?
Speaker 10 (25:13):
They've said they have. They're eyeing a number of different
revenue opportunities. But the company is, as they've made very clear,
they are payments revenue focused company. So they basically make
money every time their customers use their Chime branded credit
or debit cards. That's how they make money. It's a
little bit different than how your standard Bank of America
(25:33):
or wellsbargo makes money. And as they've said, there's more
opportunity to sort of take some of those existing customers
away from the biggest banks, but also expand on folks
who have maybe never had a relationship with a bank
of any kind.
Speaker 6 (25:47):
All right, page, we appreciate it. Bloomberg Consumer finance reporter
Paige Smith reporting on Schime's IPO again the debut of trading.
It has been trading just under an hour. C HYM
is the ticker we're at thirty eight dollars and seventy
five cents a share after an IPO which again priced
at the beyond the upper end of the range at
twenty seven dollars a share. So very healthy debut pop.
(26:08):
We are seeing for chime here and as we keep
one eye on the Nasdaq and on Wall Street overall,
of course, we're keeping another eye on the happenings here
in Washington, including a meeting that will happen at the
White House later this afternoon between President Trump and two
very important people in the budget reconciliation debate right now,
the Senate Majority Leader John Thune and the Senate Finance
Chairman Mike Crapo, who, of course Joe is charged with
(26:29):
making any tweaks to the tax policies and medicaid policies
specifically of the House past reconciliation.
Speaker 2 (26:36):
Yeah, all the fun stuff here that's going to upset
everyone in the House is going to probably come out
of the Senate Finance Committee. So they do have some
things to talk about here, and it's great to be
joined by somebody who knows a thing or two about this.
Patrick McHenry is back with us Bloomberg Politics, contributor of course,
former Chair of the House Financial Services Committee, former Speaker
pro Ten.
Speaker 7 (26:54):
Great to see you, Great to see you.
Speaker 11 (26:55):
I'm smiling because yes, the natural at tension between the
House else in the Senate will be highlighted in the
coming week.
Speaker 3 (27:02):
I bet that's right.
Speaker 2 (27:04):
You know, we've talked about permanence a lot lately, Kaylee
and I and whether that's going to tip the cart
over if you make these cuts permanent, you got to
find the money somewhere. If it comes out of salt,
that we're dead in the water. Is the conventional wisdom
right here? Or would you be very hard pressed.
Speaker 3 (27:18):
To find a Republican who votes for a tax hike.
Speaker 11 (27:21):
You're hard pressed to find a Republican for a tax hike.
But we've got narrow majorities here. You see the tension
between the White House and Senator Ran Paul highlighted that
he would otherwise be for a tax cut, but because
the debt ceilings included, he won't play ball. That makes
it more precarious for the Senate to produce a reasonable
tax package. Probably means less tax cuts in fact, because
(27:45):
he's not participating, more spending overall. Because he's not participating.
That's quite frustrating when you're trying to make policy and
actually have a more physically sound outcome. But I do
think you're look looking at permanence as a baseline conversation
for the Senate. I think that is a net plus
the fact that we have a tax cod that's expiring
(28:09):
for individuals, and individuals are facing in small businesses facing
a massive tax increase. Secretary Bessett said it very well
before the before the Congress this week. This could be
the largest tax increase in American history. So action is
really is quite necessary for economic growth and economic activity.
The debate has gotten become an abstraction from that fact point,
(28:33):
which they're trying to draw it back to those really
basic principles.
Speaker 6 (28:37):
Yeah, and yet the debate has migrated onto very specific,
narrow issues like the state and local tax deduction, which
affects just a handful of lawmakers in the House who
happen to have read state or red districts in a
blue state. Mike Johnson was asked when he was leaving
the White House about salt changes, and he says he
hopes the Senate changes it in a very small way.
(28:57):
How do we translate? He'll speak very small way into
an actual number. Reducing that amount by ten thousand dollars,
for example, be considered very small.
Speaker 11 (29:04):
They're going to risk it, Okay, the Senate, it's going
to test it. This is a massive So when you
see the scoring. There are two pieces of the debate
right now. Is that there is those on the lower
end of the scale are going to see their net
benefits from government be reduced, and at the top end
of the scale, you're going to see a greater tax cut.
(29:27):
That is driven around salts, and a debate about medicaid.
If you are working poor and you're not on medicaid,
this is a tax cut for you. If you're receiving
medicaid and you're gaming the system, yes, that's a huge loss.
Speaker 7 (29:40):
So work requirements are.
Speaker 11 (29:42):
Always going to skew. Is this is this you're cutting people.
What you're saying is if you're able bodied, you should
not be on governmental services. So that becomes a point
of debate. The second piece of that is the salt deduction.
A salt deduction has the greatest impact on the higher
end of the distribution for high income individuals in blue states.
(30:05):
The reason why we have the AsSalt deduction at ten
thousand dollars capped at ten thousand dollars for the first
time in American history. Is because in twenty seventeen, Republicans
had sufficient votes to go beyond blue state Republicans in
the House. This time around, that is not the case.
The Republican majority in the House is driven out of
(30:25):
Republicans from New Jersey and New York without them. Hakeem
Jeffries a Speaker of the House, not Mike Johnson, so
they do they do have a serious role here. The
Senate cares not one whit this debate. So the tension
here is going to be a lot of performative acts
(30:46):
around what is actually going to happen. I think we
can fast forward here. This is going to be basically
the House trying to be the sheep dog to steer
the Senate, steer the Senate to a package that the
South that the House will consume and pass and put
to the presence desk. That is actually what we're hearing
here between congressional leaders.
Speaker 2 (31:08):
The House as sheep dog, not the Senate jamming the House.
Speaker 11 (31:11):
Well, this is assuming the jam yeah, and trying.
Speaker 7 (31:16):
To assume the gym, trying to limit.
Speaker 11 (31:18):
The jym, try to massage the productage the gym such.
Speaker 7 (31:21):
That you can consume the jam.
Speaker 11 (31:23):
Okay, wow, this is matahan is a lot No, all right,
but this is much more of a Friday afternoon conversation.
Speaker 3 (31:30):
Let's make sorry, I'll take it that way.
Speaker 2 (31:31):
Bring us inside the minds of the Salt Caucus. You
remember from New York. You're a tough guy. Hell no,
is what we're hearing. Not a dollar less than forty
thousand dollars. You dealt with this all the time, though,
how much of this is bluster when you're alone in
a room?
Speaker 3 (31:48):
Are we really voting for the taxi?
Speaker 2 (31:49):
Like, if you bring this down to thirty thousand dollars,
maybe you're gonna tell me yes, because you can't primary
them with a maga candidate.
Speaker 11 (31:56):
Okay, So the difficulty here is, if you're a Republican
and you're in the New York media market, you are
one of the most sound active politicians you can possibly be.
You've been put through a meat grinder. You know what
it's like to have the media blaring at you and
to be like a unicorn in this space. So they're
(32:19):
professional and how they're taking this. They're going to fight
for as high a deduction as they possibly can because
it benefits their constituents, that's really, and therefore benefits their
politics and re electability. And they are really proficient in
how they act. They're sticking together and they know how
to negotiate. So is it going to be thirty thousand
(32:40):
dollars or is it going to be some number between
thirty and forty?
Speaker 7 (32:43):
We're going to see.
Speaker 11 (32:44):
But there's going to be a lot of performance between
now and then, and a lot of heartache before the
vote as well.
Speaker 8 (32:50):
Well.
Speaker 6 (32:50):
In between now and then, there's other legislative efforts underway
on the Hill and in the House specifically where we
saw a markup this week of the Clarity Act. This
is the long awaited market structure and iteration, shall we say,
of the Fit twenty one Act that passed while you
were still in the Chamber trying to delineate authority between
the SEC and CFTC.
Speaker 10 (33:08):
Here.
Speaker 6 (33:09):
Some concerns are being raised about this though, and I
wonder how you view the prospects, specifically the prospects of
ultimately reconciling it with whatever the Senate would like to do.
Speaker 11 (33:17):
So a French Hill constructed with this Market Structure Bill
in the House took what we did last Congress, built
on it, refined it. I think it's a better product,
and much more balanced product than it was last Congress,
and durable. I mean, this is a set of policy
that can make its way unchanged, signed in law. What
we saw with a markup yesterday is that the actions
(33:40):
of the Trump family engaged in crypto has made it
very difficult for pro crypto Democratic members to participate in
the policy making here. So you saw complete performative acts
around the president's family and their actions in crypto. That
was what the whole market was about, not about the
the policy or some concern about the substance of the policy,
(34:03):
but it was all about the politics of the Democratic
politicians visa vis the president and the president's family. That
tells me it's not actually the legislation that's the problem.
It's going to be giving Democratic members enough cover that
they can actually participate and cast the votes they want
to participate. And there are a lot of Democratic members
at the House and the Senate that want to do that. Still,
(34:27):
we saw sixty nine Democratic votes in the Senate, very
high vote total for the for the Stable Quinn bill.
I think the pairing of those two is inevitable post
tax bill, and I think those two getting pushed together
as a single vote to go to a single bill
to the President's desk is the most reasonable outcome of
(34:48):
this summer.
Speaker 6 (34:49):
So post tax bill, meaning it happens this fall.
Speaker 11 (34:52):
No, I basically or really, I'm a I think what
we're going to see is a major push to take
the Senate tax bill through the House before fourth of July,
and then July becomes crypto month. You can the president
have a bill at the end of the month.
Speaker 3 (35:09):
Wow, we just named July crypto month. Fantastic. Patrick McHenry,
thank you so much.
Speaker 2 (35:13):
I didn't get a chance to ask you what would
happen at the Congressional dinner tonight at the White House.
Speaker 3 (35:18):
We'll do that next time you're with us.
Speaker 2 (35:20):
The great Patrick McHenry, Bloomberg Politics contributor see on the
late edition of Ballance of Power. Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if
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Speaker 2 (00:25):
Got a couple of plates that we're spinning today as always,
so welcome. It's great to have you aboard with our
eyes on the White House. President Trump has been speaking
for a little while right now in an effort to
actually he's got some business at hand. He's now talking
about tariffs and a few other matters, but in fact
was signing a couple of resolutions. White House called them bills,
resolutions that target California's ev incentives. They repeal the state
(00:50):
level mandates that have been in place now supported by
the Biden administration. GM Toyota among those lobbying against California's rules.
If he makes some new here on the story that
we're about to tackle, we'll bring you to the White House.
Because this is a precarious moment ahead of more talks
that are scheduled for this weekend. May not be an
(01:11):
accident considering the timing with what we're seeing here, but
a stark headline at the top of the New York Times,
Israel appears ready to attack Iran. Knowing that this has
been in the air for some time, and we've talked
about it, certainly quite a bit since Benjaminett Yahoo made
his most recent visit to the White House, a visit
in which President Trump reportedly waived him off, and it
(01:34):
might be a little bit different this time. With what
we're hearing, Israel appears to be preparing to launch the
attack soon, according to officials in the US and Europe,
obviously at a very sensitive time here in the Middle East.
But as I mentioned, American and Iranian negotiators are supposed
to get back to the table here on Sunday for
another round of talks. And that's where we begin our
(01:55):
conversation with Natasha Hall. Delighted to say she could join
us today at this moment, non resident Senior Associate Geopolitics,
Foreign Policy Department at CSIS, the Center for Strategic and
International Studies.
Speaker 3 (02:08):
Natasha, it's great to see you.
Speaker 2 (02:09):
How much of this do we think is bluster ahead
of the next round of talks or is this a
real attack that could be in the offinge.
Speaker 4 (02:16):
Thank you so much for having me.
Speaker 5 (02:18):
It's a very tense moment, I have to say, And
I think that's really the question whether or not this
is a negotiating tactic. As you mentioned, Witkoff is heading
to Oman on Sunday for the sixth round of negotiations
with Iranian officials, both direct and indirect, and also tomorrow
on Friday, Witkoff.
Speaker 4 (02:35):
Will meet with Israeli officials.
Speaker 5 (02:37):
So do Israeli officials can talk about their concerns with
regards to the Iranian nuclear program, and one would think
it's also about a potential attack. Now, whether or not
that attack actually takes place, I think remains to be seen,
because I for sure Trump does not want a never
ending war. The issue is that Nettagnahu does. It protects
(02:59):
him politically, and surely there are fears in Israel of
any kind of Iranian nuclear activity. But the question again,
and I think I mentioned this last time I was
on the program, is on enrichment. Israel does not want
Iran to be able to enrich and Iran sees it
as an issue of sovereignty that they can't.
Speaker 2 (03:21):
Well, so we were just looking at images of Steve Witkoff,
who is still planning to attend the negotiations. He certainly
knows this, Natasha. Is he capable of walking Iran back
from that line or have we in fact found ourselves
at a standoff here.
Speaker 5 (03:39):
Well, what's interesting is is just yesterday he said that
Iran can't enriched uranium, and the US has been back
and forth on this, including President Trump. It's unclear if
they understand the details of uranium and enrichment and a
nuclear program for Iran, and I suspect that they're getting
a lot of their advice from Israel. The big question
(04:01):
is if they are willing to go along with an
Israeli attack, because certainly a coordinated US Israeli attack on
Iranian nuclear facilities would be more profound than Israel going
it alone, so to speak, but they would have to
at least get the green light. Obviously Wickkoff knows all
of this, So potentially we're seeing the evacuation of personnel.
(04:24):
We're seeing a lot of this bluster as a means
to sort of up the anti prior to these negotiations
to really push Iran to the edge.
Speaker 4 (04:33):
It's still totally well.
Speaker 2 (04:35):
Accepted, seems like a lot of trouble to be moving
all these people to just put on a show. But Natasha,
we do have a really important piece of news here
that Steve Witkoff will have with him at the table.
This is the hook the administration, I guess, could lean
on if in fact an attack move forward. Here the
IAEA declaring Thursday Iran is not complying with nuclear non
(04:56):
proliferation obligations, the first time the UN's watchdog has passed
a resolution against the country in twenty years. What did
you think when you saw that headline?
Speaker 4 (05:07):
Yeah, I thought it.
Speaker 5 (05:08):
Was interesting because again you said it's unprecedented. It is unprecedented,
and it shows that the US is working with the
E three and with the IAEA on really putting the
pressure on Iran to move forward with this. So, I mean,
we could be hopeful, but again, you know, last year
we saw something like one hundred and seventy Iranian and
(05:30):
Iranian praxy attacks on US assets.
Speaker 4 (05:32):
In the region, so very very scary times.
Speaker 5 (05:36):
I think we'll see a lot of tensions, especially in
some of these other countries like Iraq, where there are
softer targets as well. But the ia can't do much
but it is another negotiating tactic.
Speaker 2 (05:50):
I think, well, you make an interesting point here about
US involvement, because it does seem that Israel would need
some help based on some of the that we've done here.
You consider the use of bunker busters, air defenses, refueling.
How far would the US go and taking part here,
(06:12):
I mean, that's.
Speaker 4 (06:12):
The I think that's the million dollar question.
Speaker 5 (06:15):
It's unclear if the US would even be public about
coordination with Israel. I think most people would agree that
they would be green lighted and in order to do
the attack, it would be quite reason for Israel to
go it alone. But judging by the statements of Witcough
and of Trump in recent days, it looks like they
(06:35):
are very publicly giving the green light, which is again
why they're evacuating personnel.
Speaker 4 (06:40):
But I would just say one more thing for your listeners.
An attack on an.
Speaker 5 (06:44):
Iranian nuclear facility has happened before, but Israel are sorry.
Iran just goes back to enriching uranium at another level
and accelerates potentially, so we could see that again. And
you know, quite we've been talking about rising tensions in
the Middle East quite a bit for two years and
(07:04):
It's unclear where this ends, but hopefully it will come
to some kind of de escalation by next week, because
I think everyone is on the edge of their seats
at this moment in the region.
Speaker 2 (07:17):
Israel certainly believes it's in the position of power here
right Natasha. As we've discussed, there are a couple of
reasons why we've found ourselves at this moment, and a
lot of it has to do with the lack of
air defenses right now that Iran has following the most
recent back and forth with Israel, but also an emboldened
Benjamin net and Yahoo following some of the strife.
Speaker 3 (07:37):
That we've seen in the region. Here.
Speaker 2 (07:40):
The idea as well that Iran would respond with hundreds
of ballistic missiles, as I read in this story in
the New York Times, being laughed at by Israel because
last time they tried that, most of them were knocked down. Natasha,
Israel not have the moment that it was looking for.
Speaker 5 (07:57):
Iran is in a very vulnerable position. As you point
out that there was many different Israeli attacks on Iran
and Iranian proxies last year that's severely degraded Iran, including Hasbudlah,
which Iran uses to essentially launch attacks onto Israel and
neighboring Lebanon. It doesn't really have that as much anymore,
(08:18):
and certainly not Iran in Syria, and so Iran is
in a very very vulnerable position. That said, again, Iran
doesn't go to war toud to with the US or Israel.
It sort of negotiates itself in the weeds of these
various countries like Iraq, and I would have you know that,
you know, the one hundred and seventy attacks also last year,
(08:39):
Iranian attacks, very few casualties of US airmen, of US servicemen,
and so you know, I mean it's weak attacks, but
it does, you know, up the anti considerably, and it
makes it much much harder for the US to have
a presence in the peast as well.
Speaker 2 (08:57):
We're at a time, Natasha, if this happens would be
after Sunday.
Speaker 4 (09:02):
I would suspect this would be after Sunday.
Speaker 5 (09:04):
Yes, for sure, I think again, you know whether or
not this is for real or not, it's certainly negotiating tactic.
Speaker 2 (09:13):
This next round of talk is going to be critically important. Natasha,
hall I'm so glad that you could join us from
the Center for strategic and international studies, a real voice
of expertise that we can bring you here.
Speaker 1 (09:26):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm e's durn
on Apple Cocklay and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 6 (09:45):
Or essentially flat at least on WTI crew today, but
both for WTI and Brent yesterday we saw a very
big move to the upside, more than four percent on each,
in part after the US decision to pull US diplomats
essentially out of Baghdad, as well as issue warnings to
family members of military members in the Middle East, all
(10:07):
feeding into concern of something that might be coming. Is
there were reports last night that Israel could be ready
to strike Iron's nuclear facilities. And that's something that President
Trump today, when speaking and answering questions from reporters at
the White House, did not necessarily play down Joe. He
suggested there could be massive conflict coming.
Speaker 2 (10:25):
That's right, he said, it could well happen, knowing of
course that talks are still set for Sunday. Steve Whitcoff
will be in Oman, and there could be some posturing
ahead of those talks. But this is a precarious moment
and Michael Allen from Beacon Global Strategies was the first
to float the idea here on the program when Benjaminett
and Yah who came to town that that is in
fact what they were talking about. Michael, we know that
(10:47):
President Trump waved off that attack at the time.
Speaker 3 (10:50):
It's become known since then at least is he going
to wave off this one?
Speaker 7 (10:54):
I think he might try.
Speaker 8 (10:55):
I think he sees some benefit right now and holding
out the prospect that the Israelis might go for it
because he wants to strengthen Steve Whitcoff's hand as he
goes to Aman this weekend. But when you really start
to look at some of the factors that are going
Israel's way today, just this morning, the International Atomic Energy Agency,
the UN Watchdon Group declared Iran in breach of the
(11:19):
Non Proliferation Treaty. That's the first time in twenty years
rice has happened. That is significant around the globe. It's
not that I think Israel would be toasted if they
were to bomb Iran. But it's sort of more understandable
in the aftermath of this than it would be otherwise,
especially when you consider that the next step might be
to refer this to the UN Security Council, which also
(11:41):
would trigger additional sanctions from around the world. And if
Iran gets out of the Non Proliferation Treaty altogether, that
could almost be an invitation for Israel.
Speaker 7 (11:50):
To go for it.
Speaker 6 (11:51):
Okay, so may provide Israel some cover, But at the
same time, wouldn't those very same things you're talking about
signal that the US has no real hope of getting
a nuclear deal with Iran when Iran is doing such things.
Speaker 8 (12:01):
I think it's really really tough because when you think
about enrichment, our position is no enrichment in Iran. Their
position is this is one of our red lines that
we can't give it up. And we're talking about a consortium.
Could we do nuclear fuel rods of somewhere else in
the Middle East? And Iran, I think, is basically saying no,
it needs to be inside of our own territory, and
(12:24):
I think that's why the talks have foundered so far.
Speaker 3 (12:27):
So let's say this happens.
Speaker 2 (12:29):
Does the US provide logistical support, actual hardware, what would
be the relationship, or do we sit back and watch
this happen.
Speaker 7 (12:36):
So this is the million dollar question.
Speaker 8 (12:38):
Have we turned over already the types of munitions that
the Israelis would need. Presumably they would want the MOAB,
the Mother of All bombs, other bunker busters, They would
probably want some refueling help from the United States.
Speaker 7 (12:50):
But what they really need is what we did the
last two.
Speaker 8 (12:53):
Times there were missiles and drones going between the two countries.
They need the US Navy out there with IEJIS destroyers
knocking down some of these Iranian incoming. And I don't
know if President Trump is ready to do these three
things now.
Speaker 7 (13:07):
The Israelis may go for it anyway.
Speaker 8 (13:08):
They're famously creative and think pager operation and a million
other things, so they may not need the bucker Buster,
or they may have an alternative plan.
Speaker 7 (13:17):
But these are some big question marks.
Speaker 6 (13:20):
Well, And as you bring us back to what we've
seen in the past, when Iran has sent drones and
missiles toward Israel, those were largely intercepted, not just with
help of the US but with Jordan as well. So
when we consider the potential for Iranian retaliation here, is
there some major damage that they actually can successfully inflict,
considering they weren't successful in past iterations.
Speaker 8 (13:41):
They might be able to get I presumably they would
throw a lot more ballistic missiles and whatever into Israel,
so it may well hit this time. But I think
what they're really worried about the United States in particular,
is would the Iranians hit the golf allies of Israel
and the United States. What would happen in Saudi Arabia?
(14:01):
Remember they hit Abcake last time, the big gigantic oil facility.
They've also take at least the who needs have taken
shots in the UAE before. So I think the Iranians
have signaled you know what, if we get hit, don't
think that it's just coming back at Israel. It may
come also to your gold ally. So that's a big
conflagration right there.
Speaker 2 (14:22):
What do you make of the move in Iraq? We're
trying to get US personnel out of the way already.
What is the target in Iraq that would be of
value to Iran?
Speaker 8 (14:29):
Well, just any place where there are concentrations of Americans
in the Middle East that are within sort of this
is symbolic, then it is we have troops there, We
have a bigger American presence generally speaking, and so I
think it's proodent for us to take non essential personnel
and give them the opportunity to leave.
Speaker 7 (14:46):
But it's a it's a quality, it's something that we
need to look at. It's a factor.
Speaker 8 (14:50):
It's a signal for thinking about, well, the United States
has starting to take precautionary measures.
Speaker 6 (14:55):
Well, and how far in advance do we typically take those?
Does that signal that it could be within days what
we're talking about here, before Sunday, before Witcoff even gets
to theman to try to deal with things diplomatically.
Speaker 8 (15:07):
So I have a feeling that Trump is probably said
to the Israelis, let what cough go in Sunday. But
I think it's very very soon, you know what. I
think the Israelis are also operationally ready. They made a
bunch of bombing runs down to hit the Huthi. The
way I understand that is they're able to practice some refueling. Certainly,
(15:28):
the distance that it takes to get down there otherwise
get into the nice right formations have some operational readiness
concerns addressed by that operation, so diplomatically, the air defenses
being down in Israel, the military and Israel being really ready,
you could read into this that something's going to happen soon.
Speaker 2 (15:49):
You were a special Assistant for National Security in the
George W. Bush administration, would you be telling the president
now that there's still an opportunity for a diplomatic solution
or prepare for war.
Speaker 8 (16:00):
I would say prepare for war, but that is the
moment at which you could have a diplomatic solution.
Speaker 7 (16:07):
You got really really close up to the line.
Speaker 8 (16:09):
So I would never rule it out completely, but I
definitely think the United States needs to be thinking through
and apparently we are. What would the third order, second
third order implications be.
Speaker 7 (16:20):
Of this type of strike. It would be big.
Speaker 8 (16:23):
Now Israel has got a lot of creative ways to
go after all these different sites across Iran, so this
could be a really multi day, maybe even multi week
type of operation.
Speaker 6 (16:36):
We'll plan to stay in touch with you as things developed.
Michael Allen, Beacon Global Strategies, Thank you as always for
joining us as we continue to track this story for
you here on Bloomberg TV and Radio. One of just
many stories around the world we have our eye on today.
We're also watching, of course, a tragedy unfolding in India
after a crash a blowing seven eighty seven Dreamliner with
(16:57):
two hundred and forty two people aboard an Air India flight.
More than two hundred bodies have been recovered after that
aircraft crashed shortly after takeoff en route to London, and
we want to get the latest now from Ryan bean Bloomberg,
US Transport Deputy team leader, who's here with us on
balance of power. Ryan, do we have any indication yet,
knowing it's obviously very early into the investigation of what
(17:18):
actually went wrong here, what happened.
Speaker 9 (17:22):
Unfortunately, no, we do not. This crash is just still
hours old. Recovery efforts are underway. The first phase of
a major disaster like this is largely dominated by search
and rescue and efforts. Investigators from the US and from
other countries are planning to travel to India to assist
with the local authorities and their National Aviation Safety Investigative
(17:46):
Team to begin that work. But that's going to still
take some time before we really learn what actually happened
in this tragedy.
Speaker 2 (17:54):
Yeah, well, we're hearing a lot of speculation, as is
often the case. Ryan, the President of the United States,
at a podium a short time ago, suggested some sort
of engine failure, and there are eyes on Boeing, there
are eyes on GE with the potential for major implications.
Boeing CEO, though, says the company's team stands ready to
(18:14):
support the investigation. I wonder to what extent the NTSB
will be involved here, knowing that it happened in another country.
Speaker 9 (18:22):
They will be involved under Annex thirteen the home country
where an aircraft crash occurs. They take the lead, but
they are supported by their counterparts from countries where where
aircraft are manufactured and where engines are manufactured. So the NTS,
(18:43):
being the sort of pre eminent global authority on these
types of investigations, will absolutely have a role, as will Boeing,
and as will personnel from General GE who have said
that they're both sending personnel to assist and they stand
ready to help the authorities.
Speaker 6 (19:02):
Yeah, we just had headlines crossing the Bloomberg terminal that
the CEO of Boeing has spoken to the chair of
Air India saying that Boeing's team stands ready to support
the investigation. When we consider this Boeing aircraft specifically, Ryan,
knowing all of the difficulty that Boeing has had specifically
with the seven thirty seven model after several fatal crashes
(19:22):
and of course the blowout of one part of the
aircraft last year on that flight in the US, talk
to us about the seven eighty seven. This is obviously
a wide body aircraft. What is its track record? How
reliable is this aircraft? Has Boeing had issues with this
model in.
Speaker 9 (19:39):
The past, This aircraft has had heretofore a sterling track record.
This is the first fatal accident involving a seven eighty
seven and this model of aircraft has been on the
market for about fifteen years. There are over a thousand
in service today. It has it's a.
Speaker 7 (19:56):
Workhorse for global.
Speaker 9 (19:58):
Airline fleets connecting international destination around the world. So this
is uh, this is sort of uncharted territory.
Speaker 5 (20:07):
Now.
Speaker 9 (20:07):
The seven eighty seven has been under scrutiny for some
quality concerns on the part of the FAA in recent
years that prompted about a year plus halts to deliveries
while Boeing employees, you know, reworked elements of the fuselage
that the FAA was concerned work being the work wasn't
being properly done on it, But those planes have largely
(20:29):
been through that process. Deliveries have resumed, and there has
not been a major stafety incident involving the plane itself.
So this is sort of uncharted territory. And you mentioned
you know, Boeing's you know, recent track record and the
previous incidents that they've been involved in. This certainly doesn't
help what Boeing's trying to do right now, which is
(20:53):
get quality under control, you know, resumed deliveries, get cash
flows bigot going. We don't know, again to emphasize, we
don't know if there is any issue with this plane whatsoever,
or if there are other factors that play here, but
you certainly it certainly doesn't help the company and CEO
Kelly Orberg in trying to move Boeing beyond the difficult
(21:20):
chapter that it's been in for the last several years.
Speaker 2 (21:24):
Yeah, timing is terrible for these companies all the way around. Ryan,
Thank you so much. Ryan Bean is Bloomberg's US Transport
deputy team leader with his eyes on a developing story overseas.
I'm Joe Matthew alongside Kaylee Lines. We'll keep tabs on
this as well as the IPO of Chime. A conversation
later with Paige Smith, our finance reporter, Consumer finance looming
(21:46):
large today on Wall Street, and we'll have more on
that straight ahead on Bloomberg.
Speaker 1 (21:53):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Easter on Apple,
Cocklay and Android Auto with the Bloomberg Business App. Listen
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live on YouTube.
Speaker 6 (22:10):
Kaylee Lines alongside Joe Matthew for Balance of Power today,
and as Charlie checks on Chime for us of course
doing pretty well on its first day of trading, having
already had its IPO priced above the marketed range, opening
substantially a forty nine percent above that price, even if
we're trading a little below that level now at thirty
eight dollars a share. As Charlie was just mentioning, but
this is just the latest in what have been a
(22:31):
series of relatively successful IPOs, thinking back to Circle last week, Joe,
and of course all of it, keeping our focus on
financial technology in the fintech space.
Speaker 3 (22:40):
Really compelling stories.
Speaker 2 (22:42):
The CEO at Chime, Chris Britt, was talking to Ed
Ludlow earlier today on Bloomberg TV and Radio. Just a
fascinating story about how we got here and why there's
so much buzz around it, fee free banking, payments driven revenue,
and an audience that may not typically be banked. As
they say, there's a really interesting trend here with many
(23:04):
people who are of lower income, lower means, living paycheck
to paycheck, but suddenly have a platform that they can
do business on here, and we wanted to talk about
it with Paige Smith, Bloomberg's consumer finance reporter. So you
get a slightly different wrinkle on this story page. A
third of the customers are women. What does this tell
us about the state of the consumer and its relationship
(23:24):
to banking.
Speaker 10 (23:25):
I think that's a really good point. This company in particular,
which to be clear, is not a bank, but offers
a heck of a lot of bank like services to
consumers that, like you said, mostly make under one hundred
thousand dollars a year and are turning to this financial
technology company, as you know, for things like bread and butter,
savings accounts and checking accounts and places to put their paycheck,
(23:49):
and as you said, it caters to folks that are
you know, maybe would would go to a Bank of America,
would go to a Wells Fargo, but is actually there
instead going to try.
Speaker 5 (24:02):
Well.
Speaker 6 (24:02):
And to your point about this not being a bank,
just a fintech firm that partners with banks in order
to offer these services, is there a kind of regulatory
risk embedded in this story page? Is there a risk
that that kind of relationship actually gets more difficult for
Chime to execute and specifically make money off of.
Speaker 10 (24:18):
Well, I would say to use Chris Britzworts. You know,
he has said repeatedly that the company has prioritized playing
by the rules. But you know, again, they are not
a bank. They work very closely with banks. They have
two bank partners stride in a bank or bank, and
you know, it's it's These relationships are common in the
(24:40):
fintech space, and yes, regulators have looked at them in
the past, but they have not looked at Chime in particular,
I believe, and this is it's certainly something to keep
in mind, but I don't I would say that just
to be clear, they are not a bank, but they're
a fintech that provides bank like services, works closely with them, and.
Speaker 2 (25:01):
They're to give it the big banks a run for
their money. Here, when you start hearing about Chime in
the same conversation as Bank of America or JP Morgan Chase,
what does that tell us about the potential headroom for
this company to grow?
Speaker 10 (25:13):
They've said they have. They're eyeing a number of different
revenue opportunities. But the company is, as they've made very clear,
they are payments revenue focused company. So they basically make
money every time their customers use their Chime branded credit
or debit cards. That's how they make money. It's a
little bit different than how your standard Bank of America
(25:33):
or wellsbargo makes money. And as they've said, there's more
opportunity to sort of take some of those existing customers
away from the biggest banks, but also expand on folks
who have maybe never had a relationship with a bank
of any kind.
Speaker 6 (25:47):
All right, page, we appreciate it. Bloomberg Consumer finance reporter
Paige Smith reporting on Schime's IPO again the debut of trading.
It has been trading just under an hour. C HYM
is the ticker we're at thirty eight dollars and seventy
five cents a share after an IPO which again priced
at the beyond the upper end of the range at
twenty seven dollars a share. So very healthy debut pop.
(26:08):
We are seeing for chime here and as we keep
one eye on the Nasdaq and on Wall Street overall,
of course, we're keeping another eye on the happenings here
in Washington, including a meeting that will happen at the
White House later this afternoon between President Trump and two
very important people in the budget reconciliation debate right now,
the Senate Majority Leader John Thune and the Senate Finance
Chairman Mike Crapo, who, of course Joe is charged with
(26:29):
making any tweaks to the tax policies and medicaid policies
specifically of the House past reconciliation.
Speaker 2 (26:36):
Yeah, all the fun stuff here that's going to upset
everyone in the House is going to probably come out
of the Senate Finance Committee. So they do have some
things to talk about here, and it's great to be
joined by somebody who knows a thing or two about this.
Patrick McHenry is back with us Bloomberg Politics, contributor of course,
former Chair of the House Financial Services Committee, former Speaker
pro Ten.
Speaker 7 (26:54):
Great to see you, Great to see you.
Speaker 11 (26:55):
I'm smiling because yes, the natural at tension between the
House else in the Senate will be highlighted in the
coming week.
Speaker 3 (27:02):
I bet that's right.
Speaker 2 (27:04):
You know, we've talked about permanence a lot lately, Kaylee
and I and whether that's going to tip the cart
over if you make these cuts permanent, you got to
find the money somewhere. If it comes out of salt,
that we're dead in the water. Is the conventional wisdom
right here? Or would you be very hard pressed.
Speaker 3 (27:18):
To find a Republican who votes for a tax hike.
Speaker 11 (27:21):
You're hard pressed to find a Republican for a tax hike.
But we've got narrow majorities here. You see the tension
between the White House and Senator Ran Paul highlighted that
he would otherwise be for a tax cut, but because
the debt ceilings included, he won't play ball. That makes
it more precarious for the Senate to produce a reasonable
tax package. Probably means less tax cuts in fact, because
(27:45):
he's not participating, more spending overall. Because he's not participating.
That's quite frustrating when you're trying to make policy and
actually have a more physically sound outcome. But I do
think you're look looking at permanence as a baseline conversation
for the Senate. I think that is a net plus
the fact that we have a tax cod that's expiring
(28:09):
for individuals, and individuals are facing in small businesses facing
a massive tax increase. Secretary Bessett said it very well
before the before the Congress this week. This could be
the largest tax increase in American history. So action is
really is quite necessary for economic growth and economic activity.
The debate has gotten become an abstraction from that fact point,
(28:33):
which they're trying to draw it back to those really
basic principles.
Speaker 6 (28:37):
Yeah, and yet the debate has migrated onto very specific,
narrow issues like the state and local tax deduction, which
affects just a handful of lawmakers in the House who
happen to have read state or red districts in a
blue state. Mike Johnson was asked when he was leaving
the White House about salt changes, and he says he
hopes the Senate changes it in a very small way.
(28:57):
How do we translate? He'll speak very small way into
an actual number. Reducing that amount by ten thousand dollars,
for example, be considered very small.
Speaker 11 (29:04):
They're going to risk it, Okay, the Senate, it's going
to test it. This is a massive So when you
see the scoring. There are two pieces of the debate
right now. Is that there is those on the lower
end of the scale are going to see their net
benefits from government be reduced, and at the top end
of the scale, you're going to see a greater tax cut.
(29:27):
That is driven around salts, and a debate about medicaid.
If you are working poor and you're not on medicaid,
this is a tax cut for you. If you're receiving
medicaid and you're gaming the system, yes, that's a huge loss.
Speaker 7 (29:40):
So work requirements are.
Speaker 11 (29:42):
Always going to skew. Is this is this you're cutting people.
What you're saying is if you're able bodied, you should
not be on governmental services. So that becomes a point
of debate. The second piece of that is the salt deduction.
A salt deduction has the greatest impact on the higher
end of the distribution for high income individuals in blue states.
(30:05):
The reason why we have the AsSalt deduction at ten
thousand dollars capped at ten thousand dollars for the first
time in American history. Is because in twenty seventeen, Republicans
had sufficient votes to go beyond blue state Republicans in
the House. This time around, that is not the case.
The Republican majority in the House is driven out of
(30:25):
Republicans from New Jersey and New York without them. Hakeem
Jeffries a Speaker of the House, not Mike Johnson, so
they do they do have a serious role here. The
Senate cares not one whit this debate. So the tension
here is going to be a lot of performative acts
(30:46):
around what is actually going to happen. I think we
can fast forward here. This is going to be basically
the House trying to be the sheep dog to steer
the Senate, steer the Senate to a package that the
South that the House will consume and pass and put
to the presence desk. That is actually what we're hearing
here between congressional leaders.
Speaker 2 (31:08):
The House as sheep dog, not the Senate jamming the House.
Speaker 11 (31:11):
Well, this is assuming the jam yeah, and trying.
Speaker 7 (31:16):
To assume the gym, trying to limit.
Speaker 11 (31:18):
The jym, try to massage the productage the gym such.
Speaker 7 (31:21):
That you can consume the jam.
Speaker 11 (31:23):
Okay, wow, this is matahan is a lot No, all right,
but this is much more of a Friday afternoon conversation.
Speaker 3 (31:30):
Let's make sorry, I'll take it that way.
Speaker 2 (31:31):
Bring us inside the minds of the Salt Caucus. You
remember from New York. You're a tough guy. Hell no,
is what we're hearing. Not a dollar less than forty
thousand dollars. You dealt with this all the time, though,
how much of this is bluster when you're alone in
a room?
Speaker 3 (31:48):
Are we really voting for the taxi?
Speaker 2 (31:49):
Like, if you bring this down to thirty thousand dollars,
maybe you're gonna tell me yes, because you can't primary
them with a maga candidate.
Speaker 11 (31:56):
Okay, So the difficulty here is, if you're a Republican
and you're in the New York media market, you are
one of the most sound active politicians you can possibly be.
You've been put through a meat grinder. You know what
it's like to have the media blaring at you and
to be like a unicorn in this space. So they're
(32:19):
professional and how they're taking this. They're going to fight
for as high a deduction as they possibly can because
it benefits their constituents, that's really, and therefore benefits their
politics and re electability. And they are really proficient in
how they act. They're sticking together and they know how
to negotiate. So is it going to be thirty thousand
(32:40):
dollars or is it going to be some number between
thirty and forty?
Speaker 7 (32:43):
We're going to see.
Speaker 11 (32:44):
But there's going to be a lot of performance between
now and then, and a lot of heartache before the
vote as well.
Speaker 8 (32:50):
Well.
Speaker 6 (32:50):
In between now and then, there's other legislative efforts underway
on the Hill and in the House specifically where we
saw a markup this week of the Clarity Act. This
is the long awaited market structure and iteration, shall we say,
of the Fit twenty one Act that passed while you
were still in the Chamber trying to delineate authority between
the SEC and CFTC.
Speaker 10 (33:08):
Here.
Speaker 6 (33:09):
Some concerns are being raised about this though, and I
wonder how you view the prospects, specifically the prospects of
ultimately reconciling it with whatever the Senate would like to do.
Speaker 11 (33:17):
So a French Hill constructed with this Market Structure Bill
in the House took what we did last Congress, built
on it, refined it. I think it's a better product,
and much more balanced product than it was last Congress,
and durable. I mean, this is a set of policy
that can make its way unchanged, signed in law. What
we saw with a markup yesterday is that the actions
(33:40):
of the Trump family engaged in crypto has made it
very difficult for pro crypto Democratic members to participate in
the policy making here. So you saw complete performative acts
around the president's family and their actions in crypto. That
was what the whole market was about, not about the
the policy or some concern about the substance of the policy,
(34:03):
but it was all about the politics of the Democratic
politicians visa vis the president and the president's family. That
tells me it's not actually the legislation that's the problem.
It's going to be giving Democratic members enough cover that
they can actually participate and cast the votes they want
to participate. And there are a lot of Democratic members
at the House and the Senate that want to do that. Still,
(34:27):
we saw sixty nine Democratic votes in the Senate, very
high vote total for the for the Stable Quinn bill.
I think the pairing of those two is inevitable post
tax bill, and I think those two getting pushed together
as a single vote to go to a single bill
to the President's desk is the most reasonable outcome of
(34:48):
this summer.
Speaker 6 (34:49):
So post tax bill, meaning it happens this fall.
Speaker 11 (34:52):
No, I basically or really, I'm a I think what
we're going to see is a major push to take
the Senate tax bill through the House before fourth of July,
and then July becomes crypto month. You can the president
have a bill at the end of the month.
Speaker 3 (35:09):
Wow, we just named July crypto month. Fantastic. Patrick McHenry,
thank you so much.
Speaker 2 (35:13):
I didn't get a chance to ask you what would
happen at the Congressional dinner tonight at the White House.
Speaker 3 (35:18):
We'll do that next time you're with us.
Speaker 2 (35:20):
The great Patrick McHenry, Bloomberg Politics contributor see on the
late edition of Ballance of Power. 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
your podcasts, and you can find us live every weekday
from Washington, DC at noontime Eastern at Bloomberg dot com.
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