May 15, 2025 • 46 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
House Republicans are close to reaching an agreement on the state and local tax deduction, aiming to pass the tax bill next week, Speaker Mike Johnson says.
Talks over SALT are on track to continue over the weekend, he tells reporters.
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, Kailey speaks with:
- Bloomberg Government Congress Reporter Jack Fitzpatrick.
- Republican Congressman Marlin Stutzman of Indiana.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Republican Congressman Ryan Mackenzie of Pennsylvania.
- Bloomberg Editor in Chief Emeritus Matthew A. Winkler.
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 (00:00):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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(00:20):
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Speaker 2 (00:25):
Welcome to Little Friday, Thursday edition of Balance of Power
Live on Bloomberg Radio, the satellite radio channel one twenty
one on Serious Exam, and of course on YouTube, where
you can find us now by searching Bloomberg Business News Live.
If you like me, you can also catch us on
the Bloomberg Business News App. Find us live on the app,
(00:45):
plug us in the car, play on your way to work.
So many ways to catch the program. And I wonder
what will Charlie Pellett tell us on the day they
cut a deal on salt? Could that be today? Do
we get a rally the minute that's announced? Think about
where all of these traders actually live in places like
(01:06):
New York, Connecticut, New Jersey. And I bring this up
because there's an important meeting happening today on Capitol Hill
as we try to align the stars for a vote
next week in the House. At least that's Mike Johnson's
job on reconciliation to pull all together this big mess
of bills and try to get something passed so it
can go to the Senate. He wants this done before
(01:27):
Memorial Day recess, but they can't get it done until
there's a deal yes on Bloomberg's favorite story, salt the
State and local tax deduction, and not everybody's getting along
on this. You've got the salty Republicans. We brought you
conversations with many of them from yes dates like New York,
as I mentioned, New Jersey and so on, California too.
You've got the Freedom Caucus. They don't like this idea
(01:48):
at all. They call it a blue state giveaway. Then
you've got other members of the House looking for even
steeper cutts, and Mike Johnson has to corral them all.
Speaking of salty Republicans, we spent some time with Congressman
Lolota on the late edition of Balance of Power, his
view from New York and specifically remembering it's a ten
thousand dollars cap right now, This idea of maybe forty
(02:11):
eighty forty for an individual, eighty for a couple, is
that going to grease the skids. Is that the final number.
Here's his reaction.
Speaker 3 (02:19):
Maybe forty eighty will be an ultimate proposal. So far, unfortunately,
the Ways and Means Committee has not offered us anything
anywhere close to that.
Speaker 4 (02:28):
Sadly, they've been stubborn and not gave us anything that
we could possibly say yes to. We got to go
back home and sell this and a low thirty k
cap when unlimited would come at the end of the
year if this bill expires, wouldn't be sufficient for my constituents.
Speaker 2 (02:44):
Nick Lolota, first District, New York, Long Island. Is that
your congressman, Producer James it Is. I thought so, and
so they're all going to argue this out here, but
nobody wants to show their cards.
Speaker 5 (02:57):
Right.
Speaker 2 (02:58):
Thirty thousand dollars is floated as a limit. It not
acceptable according to most of the delegation in New York
and related states. And so where do we fall here.
Jack Fitzpatrick is watching this very closely on Capitol Hill
and joins us right now from his perch at Bloomberg Government. Jack,
we just heard from the speaker here. We're very very
(03:18):
close to assault deal. We're still on path for the
bill to pass next week. Is he just being optimistic
or did something happen.
Speaker 6 (03:26):
He is being optimistic, It doesn't sound like there's a
concrete development that has happened today. That's not to say
they're not making progress. They're holding these meetings, they're continuing
to negotiate. But we've heard a pretty positive, optimistic series
of comments from the Speaker of the last few days,
and then when you check with the Salt Republicans, it's
(03:48):
a little bit more skeptical. There's an increasing amount of
frustration from the Conservatives.
Speaker 7 (03:54):
So there was a.
Speaker 6 (03:54):
Meeting this morning where the Speaker met with some Freedom
Caucus conservative as well as the Salt Republicans. We heard
from Young Kim from California, who wants a higher salt rate,
who just said they're still negotiating. We heard from Chip Roy,
who's an unhappy Conservative, unhappy with the bill as it
(04:14):
stands right now. He says he still has problems with
the fact that the Medicaid changes wouldn't occur until twenty
twenty nine. He doesn't really think it's a conservative enough bill.
So there's still some work left to do to get
this together. As far as the possibility of a vote
next week. Sure, next week is next week. They're still
working on it, but there is some work left to do.
Speaker 2 (04:35):
Is chip Roy ever happy? Just to digress for role,
I mean, it's his job to be unhappy, right, That's
the lemany pulls. As a member of the Freedom Caucus.
Speaker 6 (04:44):
That is usually true, but it's been unusual this year
or so. The Freedom Caucus members have been much happier,
much happier specifically with the leadership approach than usual. Mike
Johnson is not in the position of a John Bayner
chip Roy. They got a victory when they voted on
the framework before it was an actual bill to increase
(05:05):
the goal for spending cuts. Now they're not wholly following
through on that, but they have kind of played ball
with chip Roy, with Andy Harris, the leader of the
Freedom Caucus. It's just a question of how happy or
unhappy do these compromising figures feel. When we're actually at
the very end, at the finish line.
Speaker 2 (05:24):
We're hearing more from speaker Johnson is talking to reporters
Jack as we hold you up here in the rotunda.
If you do more on salt, he says, you have
to do more on savings. This doesn't sound like we're
anywhere near a deal, does it?
Speaker 6 (05:37):
Well, that's the fundamental issue is if you give more
to the handful of holdouts from high tax blue states,
it changes the math. If you create more tax expenditures,
the conservatives are going to be less happy and you're
going to have a harder push, possibly focused on Medicaid,
maybe bumping that twenty nine date up a year or two.
(06:00):
And then that raises questions about some of the moderates
who are not very comfortable with the amount of Medicaid cuts.
How does that do in the House, How does that
do in the Senate where Josh Holly has been pretty
outspoken against medicaid cuts. So it's hard to change the
pieces of this puzzle without just shaking it up entirely.
Speaker 2 (06:18):
Yeah, well, just to follow the bouncing ball here, and
I know that you're an expert on procedure when it
comes to appropriations, Jack, this needs to kind of get
done by tomorrow, right The House Budget Committee is waiting
to assemble all of these pieces on Monday, so this
can go to rules or tomorrow rather Friday, so it
can go to rules on Monday. Are these dates about
(06:38):
the change based on the salt standoff?
Speaker 6 (06:41):
They could change if this drags on, but they don't
need a deal before going to the Budget Committee. They
can really the Budget Committee just packages these disparate bills
together because that's its role in all of this, and
then they can do an amendment in the Rules Committee,
which is supposed to meet on Monday, so they still
can work through the weekend if necessary, and make changes
(07:02):
as of the Rules Committee meeting before they take it
to the floor for a vote.
Speaker 2 (07:08):
Can you qualify what happened with Medicaid, Jack, We've heard
so much about cuts to Medicaid. Republicans say they aren't cuts,
We're just making the program more efficient and more strict
when it comes to able bodied men. Is this a
cut to the program or a streamlining of Medicaid? Or
is this just about rhetoric? At this point, where are
(07:29):
the dollars?
Speaker 6 (07:31):
The word cut is kind of a fraught term in
Capitol Hill. It would reduce the trajectory of future spending.
It would not spend more, it would spend less compared
to the baseline. It is very significantly focused to able
bodied adults. Ultimately, that would lead to seven point seven
million people who currently have health insurance not having health
(07:53):
insurance according to the Congressional Budget Office. But yes, the
point that the conservatives have made that this is not
just taking insure, it's away from everybody who needs it.
It's focused on able bodied adults who are not working.
That is true. That's the focus of that measure on medicaid.
Speaker 2 (08:10):
Yep. All right, and then we get to food stamps.
Tell our listeners and viewers what happened in the Agriculture
Committee twenty nine to twenty five party lines here to
cut as much as three hundred billion dollars in food
aid spending. Is that accurate?
Speaker 6 (08:27):
Yes, as far as we know, and I think we're
going to continue to see holistic numbers come out from
the CBO and other think tanks. But the major change
to snap nutrition benefits is a shift from fully federally
funded to some burden being on states.
Speaker 5 (08:43):
Now.
Speaker 6 (08:44):
The baseline they laid out is five percent contributions from states,
but then there's a penalty for states that have a
history of not being totally accurate in terms of who's
eligible for it.
Speaker 7 (08:54):
That could raise it up.
Speaker 6 (08:55):
To twenty five percent matching from states, and that would
apply historically to about half the states in the country.
Speaker 5 (09:01):
So it's a.
Speaker 6 (09:01):
Significant shift towards the burden being on states for funding that.
Speaker 2 (09:06):
Right. Of course, I'm now supposed to ask you if
all of this is going to change when it goes
to the Senate, but I'm pretty sure that a lot
of it is. Jack will let you get back to
your coverage in the House of Representatives. Jack Fitzpatrick covering
this process for us at Bloomberg Government, our Congress reporter.
You can find him on the terminal of courses online
and as often as we can get him on this program.
Jack knows what he's talking about. That is the latest
(09:27):
that we have here, remembering budget tomorrow to assemble this
thing before it goes. If they get it done to
a floor vote next week, if we get a salt deal,
the earth will shake a bit around here. We'll let
you know as soon as it happens, and you know,
you'll have a red headline on the terminal.
Speaker 1 (09:45):
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us live weekdays at noon and five pm Eastern on
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Speaker 8 (10:04):
On Capitol Hill, the work continues on trying to find
a consensus around the Salt cap so that House Republicans
can move forward with a floor vote next week. At
least that's the goal, according to the Speaker on budget reconciliation. This,
of course, is one of the biggest outstanding issues is
some of those members of the Republican Conference who come
from blue states are willing to die, it seems, politically
(10:24):
on the Salt Hill, pushing for a number higher than
the thirty thousand which was included in the tax bill
that passed through the Ways and Means Committee yesterday. The
negotiations continued this morning. The Speaker says they're going to
continue through the weekend to try to find a solve here.
And of course we know that a number of numbers
have been thrown out there by members of the Salt Caucus,
(10:47):
including Congressman nik Loloda, the Republican from New York who
was with us on the late edition of Balance of
Power yesterday, on the idea of forty eighty being the
sweet spot.
Speaker 3 (10:57):
Maybe forty eighty will be an ultimate proposal. So far, unfortunately,
the Ways and means Committee has not offered us anything
anywhere close to that.
Speaker 4 (11:07):
Sadly, they've been stubborn and not gave us anything that
we could possibly say yes to. We got to go
back home and sell this, and a low thirty k
cap when unlimited would come at the end of the
year if this bill expires, wouldn't be sufficient for my constituents.
Speaker 2 (11:22):
So again, he's got to go home to New York
to sell this. And Congressman Lolota was not having too
much of this idea of a cap at thirty thousand
dollars for individuals, never mind the forty eighty that Kaylee
threw out there. It's where we start our conversation with
Congressman Marlin Stutsman, the Republican representing Indiana's third district. Is
(11:43):
where it's live from Capitol Hill. Congressman, it's great to
have you back on Bloomberg TV and Radio. A lot
of things need to happen pretty quickly. Here we put
the pieces together. If we follow the plan here on
the timeline laid out by the Speaker and the Budget
Committee tomorrow, Rules Committee picks it up on Monday, you
get a floor vote next week. Is salt the biggest
obstacle to getting this done right now.
Speaker 7 (12:03):
Well, it's one of them, and Joe, it's great to
be with you and Kayley again, it is. There's a
lot of conversations happening today and a lot of you know,
last minute meetings trying to find these compromises. And I
understand you know that you know the members from New York,
New Jersey, California, those salt districts, there's a handful of
them that represent Republican districts that this is an important
(12:26):
issue for them. You know, my message has been, look,
I'm willing to work with you all. I understand. I
don't like it because I feel like, you know, here
we have hoosiers from Indiana that are are are getting
a They're not getting the same benefit that these liberal
spending states are getting as far as the taxpayers there.
But these are Republican members fighting for their districts. I
(12:48):
understand that. But I think there should be an offset
or a compromise. Let's, you know, defund planned parenthood, Let's
make some sort of adjustments to to the Medicaid waivers.
We've got to reduce our healthcare costs. That's the bigger
item that really is blowing up the budget, and we've
got to address healthcare costs at some point. So I
understand where they're coming from, but let's work together and
(13:10):
I think that can happen.
Speaker 5 (13:12):
Well.
Speaker 8 (13:13):
And we did hear suggestion from the Speaker that if
they want to increase the salt cap, you're going to
have to find more spending offsets. Is it your assumption, Congressman,
that that only really substantially can come with even further
cuts to medicaid beyond what just went through the Energy
and Commerce commit.
Speaker 7 (13:29):
Well, we'll see, and now you know, we'll find out here.
We're going to have conference here in just a couple
of hours and all of the chairmen are going to
be reporting to all of the members in the House
Republican Conference their work, so we'll know more. But either way,
we know that we're on the wrong trajectory and we've
got to find savings sooner rather than later. I think
(13:51):
the bigger piece that frustrates me and some other budget
hawks is that we're pushing these savings out four years
six years. We need to do them right away. The
dog team is obviously going to help with that, but
we don't want to see gimmicks. We want to see
action now rather than pushing it down the road. We
know healthcare is something that has to be addressed. Now's
(14:13):
a good time to do it. Making sure able bodied
Americans aren't taking advantage of Medicaid and making sure that
that's really there for those folks who really need it
and are vulnerable.
Speaker 2 (14:24):
There is an important meeting, as we discuss here at
two thirty pm Washington time, the whole Republican House Conference
gets together behind closed doors to have this out. Congressman,
we keep reading about warring factions inside the conference, a
freedom caucus that's not getting along with the salty Republicans.
Who's going to be the loudest in this meeting? And
(14:45):
what will it generate?
Speaker 7 (14:47):
Yeah, well, you know, it's a lot like a family discussion.
You know, I have three siblings, and there was times
mom and dad called us all together and we had
it out, but we walked out as a family. And
I know that's what's going to happen here. You know,
Republicans are we know, you know what we have to do,
making sure the Trump tax cuts are in place, you know,
over the next five to ten years, making them permanent
(15:07):
if possible, We're going to also focus on the President's agenda,
you know, no tax on tips, no tax on Social Security,
and his other items that he has. This is just
the you know, the meeting that we have to make
sure that every voice is heard, and Speaker Mike Johnson
has done a good job at that, making sure that
every part of our conference is being heard, and I
(15:28):
know that's valuable to every person. At least we have
the opportunity to go back home and tell our constituents,
I made the case, I did everything I could. But
we're not always going to get what we want. But
I do think at the end, this is a bill
that's really important for the American people. It you know,
unleashes our energy production. It's going to focus on, of course,
our tax policy, but reducing regulation. It is that big,
(15:52):
beautiful bill, and that's why it's a little harder to
lift it across the finish line because there's so many
facets to it. But I truly believe we're going to get.
Speaker 8 (15:59):
It done well. Of course, it is the Budget Committee
on which you sit that is actually going to make
this one big beautiful bill. Take all of the disparate
pieces that have passed through the various committees and put
them back together scheduled to happen tomorrow. Have you been
given any reason to believe, Congressman, that the Budget Committee
itself reassembling this could be delayed because of these outstanding
issues or as tomorrow happening, No matter what.
Speaker 7 (16:20):
I think, tomorrow's going to happen, No matter what you know,
any changes could be agreed upon with Speaker Johnson's office
or the Leadership offices, along with the Budget Chair and
the Budget Committee. We would make instructions, send those to
the Rules Committee. They would have to make the changes
before it goes to the floor next Monday. But I
(16:41):
feel like there's, you know, some consensus coming together here
at the end. Everybody has made their case, you know,
whether it's the Salt Caucus or whether it's those of
us on the Budget Committee making sure we stick to
our numbers. And also, you know, we're hearing some good
things from the Senate side that they want to even
take up a couple of items that may increase savings
even more. At the end of the day, we want
(17:01):
to make sure the economy is strong, the tax rates
are in place. That way there's confidence in the markets.
And then also that the President has what he needs
to secure the border and do what he promised the
American people. And so I feel like we're all unified
those around those big principles and we're going to get there.
Speaker 2 (17:20):
Hungressman, I want to ask you as we follow President
Trump's travels across the Middle East. He's an Abu Dhabi
right now in a bilateral meeting with the president of
the UAE. We were struck by news earlier this week
that he in fact sat down with the new leader
of Syria. And it's important as we spend some time
with you because you were there just a couple of
weeks ago. You and Representative Corey Mills of Florida touchdown
(17:44):
in the Damascus suburb of Joe Bart and spend some
time touring the region meeting with officials. What did you
learn and what's going to happen next in Syria now
that President Trump has sat down with its leader and
removed sanctions.
Speaker 7 (17:57):
Yeah, I think it's a really good opportunity for the
Seria in people. To see the destruction that the Syrian
people had to endure under the Assad regime was just remarkable.
It's even hard to comprehend without seeing it, you know,
in person and seeing the magnitude of it, billions and
billions of dollars of homes destroyed, families torn apart. And
(18:19):
I went with a group called the Syrian American Alliance
for Peace and Prosperity, and Corey and I each met
with the new president separately, which was nice because we
could compare our notes. You're trying to you know, I'm
a business guy trying to figure out, you know, how,
you know, what is he telling us that we you know,
we really can trust this guy. He's got a checkered
(18:39):
past of his own, former Al Qaeda, former HTS. But
the Syrian people have been through so much and they're
asking for the sanctions to be lifted. And of course
the president, which I was impressed by the fact he
wasn't asking for military help, he wasn't asking for money
from the American people. He was simply asking for the
(19:00):
sanctions to be lifted. And the fact that he had
a deal or has a deal offered to him by
the Russians, but he didn't want to take it until
he actually talked to President Trump and to America to
see if you know, which direction they're going to go.
And we know they're going to go one direction or another,
but I really felt after meeting with them and being
in Syria for a couple of days, they really want
(19:21):
to be a part of the Western economy. And I
think they see what's happening in Saudi Arabia, Qatar and
UAE and the amount of prosperity and wealth that's being
built there that they want to be a part of that.
He talked about tradelines, tourism in their country, commerce, so
I really felt, you know, the line that Trump used
commerce over chaos was really applicable here.
Speaker 8 (19:44):
All right, Congressman, great to have you back on Balance
of Power. This Republican Congressman Marlin Stutsman of Indiana joining
us live from Capitol Hill, and we'll have more on
the president's trip to the Middle East in just a
moment when our political panel, Rick Davis and Jeanie Schanzano
join us. That's straight ahead here. It's a power on
Bloomberg TV and Radio.
Speaker 1 (20:05):
You're listening to the Bloomberg Balance of Power Podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Coarckley and Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (20:21):
We're digging into politics here in the nation's capital and
abroad as President Trump continues his journey through the Middle East,
touching down today in Abu Dhabi. He's inside the Presidential
Palace right now for a bilateral meeting with the President
of the UAE and a lavish dinner, not ruling out
at least as of three o'clock this morning, adding a
stop tomorrow Turkey, where Ukrainian peace talks are set to
(20:46):
be held. Here's what the President said before he left Cutter.
Speaker 9 (20:50):
I was thinking about going, but it's very tough because
of what we're doing today and tomorrow. But you know,
if something happened, I go on Friday if it was appropriate.
But we have people right now negotiating, and I think
that I just hope that Russia and Ukraine are able
to do something because it has to stop.
Speaker 8 (21:16):
The people right now negotiating. Mind you are not principles necessarily.
Vladimir Putin, of course, did not make tracks to Turkey
at all, instead sending some relatively lower level aids, and
while Vladimir Zelenski did head to Turkey and meet with
Turkish President Resip type Erdowon. He also, of course, is
not meeting face to face with these negotiators. So we
(21:38):
want to get into this now with our political panel.
Bloomberg Politics contributors Rick Davis and Genie Shanzino are joining us.
Rick stone Court, capital partner and Republican strategists, Genie democratic
analyst and senior Democracy fellow at the Center for the
Study of the Presidency and Congress. Rick, when we talked
about the prospect of this negotiation, if you will, happening
in Turkey earlier this week, you made it clear that
(21:59):
it was pretty obvious to you the principles were not
ready to all be sitting down together at this point
because so little tangible progress has actually been made to
get to that point in President Trump today said, look, obviously,
nothing's going to happen until I meet with Putin myself.
Is that really what needs to happen here first?
Speaker 2 (22:16):
You know, it's hard to tell.
Speaker 10 (22:18):
I can't imagine Donald Trump and Vladimir Putin cutting a
deal that's going to be acceptable to the Ukrainians, and
I can't imagine a situation where all three of those
principles get together to hash it out. And so typically
what you would see in this kind of a scenario is,
you know, in non principles meeting deputies people like that,
get together, try to find common ground, build off that
(22:40):
common ground into a deal, and then call the principles
in to take credit for the deal, you know, and
try to cement the deal. Usually there's one or two
issues that only a principle can make a decision on.
We're not anywhere near that, based on the reporting that
we're getting out of Istanbul about the status of these negotiations.
I do think it's interesting that the President went from
(23:02):
I'm going to settle this in the first day of
my presidency too, gee, I hope they can work it out.
That is a big difference in approach, and it maybe
indicates a lack of confidence by this administration that something's
going to get done here on the short term.
Speaker 2 (23:15):
Remarkable, Genie, Are we fooling ourselves to believe that Vladimir
Putin would give the US a win in mediating a
piece deal with Ukraine?
Speaker 5 (23:26):
I think so. First of all, I'm hoping for President
Trump's sake that they have a lot of good air
conditioning in that palace. It was one hundred degrees in
the UAE today, So God bless him. Yeah, it's hot.
You know, the reality is is that they're nowhere close
to a deal, Donald Trump said, to Rick's point, you know,
twenty four hours, forty eight hours, then he moved to
(23:47):
a thirty day cease fire, Zelenski agreed, put installed, then
he moved to meet in Turkey. Zolenski's there, Putin is not.
So this is right now, all about Zolensky and Vladimir
Putin trying to cozy up to Donald Trump and trying
to make sure, at least for Zelensky, incredibly important that
(24:08):
he shows Donald Trump that he is being played by
Vladimir Putin, because he believes strongly that if you look
at the recent history, that is what's going on. And
he is hoping that Donald Trump gets so frustrated with
Vladimir Putin he pulls the lever on those sanctions they've
been talking about, or if not, that he continues arming Ukraine,
which we've been doing, sharing important strategic information and other
(24:32):
ways of supporting Ukraine in the war.
Speaker 8 (24:36):
Well, and to your point, Genie, Ukrainian President Zelensky did
post on X today that Russia once again demonstrate that
it does not intend to end the war, having sent
a delegation of rather low level representatives. Moreover, such a
Russian approach, he says, is a sign of disrespect toward
the world and all partners. And I wonder if he's
intending for one partner in particular, the US and President
(24:57):
Trump to feel disrespected here, Genie, we have heard and
Rick was making this point earlier, a bit of a
shifting in language of President Trump, not just on the
realistic timeline for him being able to broker a deal here,
but also the way in which he talks about Vladimir
Putin and Russia. Are you starting to see signs of
the President feeling a bit disrespected?
Speaker 5 (25:19):
Absolutely? And we know just looking at this amazing trip
he's gone and in the Middle East. If you want
to get in good with President Trump, you need to
show a lot of respect, a lot of pomp and circumstance.
A good trillion dollar deal doesn't hurt. And we don't,
you know, we are getting signs that the administration and
Donald Trump are feeling frustrated with Vladimir Putin. And again
(25:42):
he has talked openly, the administration openly just in the
last few days about sanctions on Russia. I thought the
language he used today of saying, go only be a
deal if I meet with Vladimir Putin was important as well.
So he is, you know, hoping, at least from Vilelensky side,
that there is some frustration there and that at least
(26:04):
for Europe and Ukraine, that he does indeed start to
push Russia more than he has in the past.
Speaker 2 (26:13):
Interesting talk of peace deals. There's been a lot of
talk of deals on this trip, most of them involving money,
Rick Davis remarkable one point for trillion dollars in investments
the president announcing today in the UAE. He's actually with
Jensen Wong right now. If you're with us on Bloomberg
TV or on YouTube, look at this the President of
(26:33):
the United States and the CEO of Nvidia. Much of
this deal making has to do with high tech chips.
Nvidia and AMD specifically have been called out here. We've
seen companies including Amazon, Cisco, Qualcom also announcing new deals
and partnerships on this trip. Rick, I'm guessing this will
in fact be the lasting news from this journey. He's
(26:55):
got his Commerce secretary, Howard Lutnick with him, as well,
and a fascinating way to do business here with a
sharp contrast to what we saw from the previous administration.
Speaker 10 (27:04):
Yeah, certainly this sort of mercantile focused administration is going
to play up the fact that wherever Donald Trump goes,
investment into the US follows and and look, I mean,
I think it's a it's a great positive that these
countries are willing to invest in the greatest economy in
the world. So I think I think these are positives.
(27:24):
I would say, I'm still struck by the president's comments
in Saudi Arabia, where he really painted a geopolitical picture
of being also a deal maker on peace in places
like Syria, places like Iran, and and I've I felt
like that's a massive commitment by this administration on solving
age old problems that have existed for generations in that region.
(27:50):
And so if he can find solutions to some of
these vexing problems like relations between Israel and Syria being normalized,
and the idea that we could get a nuclear deal
out of Iran, that will overshadow over time the deal
making that he's doing today.
Speaker 8 (28:07):
Well, the President is actually speaking now after his quick
chat with Jensen Wong talking about AI development and the
purchases that these Middle Eastern countries are buying things from
US companies. He says it's a massive project will be
bought from through the US, talking about how this has
been a great visit and that he's leaving tomorrow destination unknown,
(28:27):
So maybe he is still leaving the door open to
a trip to Turkey. He says he's probably going back
to d c not definitively, I guess going back to
d C rick when it comes to the AI and
the kind of chip equipment that we're talking about here
that these countries are I guess going to be given
access to now by the United States. Bloomberg is reporting
today about how there are some China hawks, national security
(28:49):
hawks in particular, who actually are quite hesitant about this notion,
the idea that there may not be firm enough guardrails
in place to ensure that the end market actually ultimately
isn't China. Are those voice is able to win out
at all when he wants to be able to telp
these deals so badly.
Speaker 10 (29:03):
It's a very very difficult issue, especially within the Republican Party,
because you know, we have a group that say no
China technology going into the Middle East. We fought them
on allowing Huawei in there, you know, to get control
of five G. We've fought them on ports that they
wanted to have China come in to develop, and we
(29:25):
won those fights. But now it's up to us to
determine whether we're going to give them the highest technology,
not just technology, but the highest technology available to fuel
what is a revolution going on in the region with
building data centers, being able to power those and being
able to become more of a digital power themselves. And
the question is this cozy relationship that they've had with China,
(29:46):
is that can result in leakage of that technology into China.
And then on the other hand, is if we don't
give it to them, will China then have an open
door to get back into the region. This administration is
not going to shut the door on Middle East. If anything,
the last week has taught us that these are relationships
that they expect to span decades, and so that opens
(30:09):
the door. But there are a lot of Republicans, as
you say, hawks on China who are not happy with
the leakage of this technology in the areas where they have,
you know, strong relationships with Beijing.
Speaker 2 (30:18):
We GENI. Is this the new model here for presidential travel?
You show up with half of Wall Street and Silicon Valley.
You've got Donald Trump, Euro Jensen Wong and Abu Dhabi.
We saw Elon Musk, Larry Fink, Sam Maltman. I could
keep going when he was in Saudi Arabia? Is this
the new entourage?
Speaker 5 (30:37):
Seems to be. I'm not sure future presidents are going
to be able to do it in the way Donald
Trump seems to be able to do it. He pulls
this off. But I do think it is fascinating because
if you look at some of the pushback, you know
there is support obviously for investments in the United States
and what the president has been able to achieve in
(30:58):
that regard. The pushback is coming from some conservatives who
are likening the president's entry into the Middle East to
what Barack Obama did in his first and second term
when he went over there to widespread criticism and was
willing to entertain these kinds of approaches to the Middle East. Now,
(31:21):
the world has changed an awful lot since then, but
you are hearing comparisons in that regard, and of course
we can't leave out of this discussion. What do they
do about Iran and the nuclear aspect of that, That
is a huge question. I've been astounded by the fact
that President has talked about it openly over there and
(31:41):
seems to be saying there is a deal in the offing,
but we don't know what that might look like. And
Anne Marie was just talking to you about that. I
think that's one of the most important geopolitical issues that
he needs to address right now.
Speaker 2 (31:54):
Great conversation with our panel Jeanie Shanzano and Rick Davis,
Bloomberg Politics contributors. We thank you both. With breaking news,
Kayley on the terminal that brings us to coinbase. The
New York Times, supporting the SEC is probing whether coinbase
misstated its user numbers. The stock right now is down
over seven percent.
Speaker 1 (32:14):
You're listening to the Bloomberg Balance of Power podcasts. Catch
us live weekdays at noon and five pm. E's durn
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You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 8 (32:33):
As we come to you live from Washington. I'm Kaylee
lines alongside Joe Matthew. This is balance of power where
we've been spending a lot of time for the last
several weeks talking about an issue that yes is omnipresident
seems here in Washington, but does have ramifications for markets
like New York Er other places in which people play
high taxes in some blue states. That, of course, is
(32:54):
the issue of the salt cap. Just where exactly will
the state and local tax deduction ultimately end up As
Republicans try to find a compromise here so that they
can get through their budget reconciliation package ahead of the deadline.
The Speaker himself has set Memorial Day, it only leaves
them a handful of legislative days, although apparently they're going
beyond just the scheduled legislative days. They intend to work
(33:17):
on a deal on salt through the weekend. As Speaker
Johnson himself told us earlier today, I.
Speaker 11 (33:22):
Think everyone will say it was productive and that we
were moving the ball forward.
Speaker 7 (33:26):
Everyone has known that the salt issue is.
Speaker 8 (33:29):
One of the big ones that we have to resolve.
Speaker 6 (33:31):
It's one of the key pieces of this equation to
sort of meet the equal delivery point that everybody can
be satisfied with Not everybody's going to be the lie
to every provision and.
Speaker 8 (33:40):
To build this lord, but everyone can be satisfied.
Speaker 2 (33:44):
That's where we start our conversation with Congressman Ryan McKenzie,
the Republican from Pennsylvania seventh District, is with us back
on Bloomberg TV and Radio live from Capitol Hill. Congressman,
it's great to see you. We're using all of our
conversations like this just to get an update on what's happening,
and I'd love to know what you're hearing specific to
the argument over salt, which seems to have ground things
(34:05):
to a halt here before all the pieces are put
together tomorrow in the Budget committee. You're from Allentown. I
believe what are the people of Allentown or throughout the
seventh District of Pennsylvania think of subsidizing high taxes in
blue states?
Speaker 12 (34:22):
Well so, for individuals who do face high property taxes
in our local community, this is an issue that actually
could be helpful to them to bring down their overall
tax burden. At the same time, we want to find
a compromise and land on a spot where it is
not being abused by high income earners who don't need
that assistance. And so what you've been seeing in the
(34:43):
SALT negotiations is a raising of the cap from ten
thousand up beyond thirty thousand. That was the latest proposal,
but it's still not meeting the needs and demands of
folks from New York, New Jersey, California, and other places.
And so I think we're going to land somewhere slightly
north of that, but there will be in come caps
on that as well, again so that individuals who don't
(35:03):
really need that assistance aren't in that position to receive
those benefits. But you do have to recognize that state
and local taxes come in a variety of forms. Sometimes
it's income taxes, but sometimes it's property taxes. And so
in that instance, with property taxes, it might be somebody
who is a senior retiring in their home. Their value
of the home has gone up significantly over the years,
so they're faced with that tax burden, but they're actually
(35:26):
not in a position to pay that on an annual
basis to stay in their home because they don't have
the income to sustain it. So trying to strike that
appropriate balance.
Speaker 8 (35:35):
Well, and of course all of This ultimately does come
down to balance what kind of revenue can be lost
and what kind of spending cuts may be able to
offset that, or where else could you find revenue raisers
where you're having revenue reductions in Congress, when I ask
you this, knowing you have a seat on the Education
and Workforce Committee in the House, one of the ways
in which we are seeing a raising of revenue is
a dramatic increase in the endowment tax from the current
(35:58):
one point four percent to as high as twenty one percent.
What is that going to do to some of our
higher educational institutions that of course not only serve as
educational institutions, but research institutions as well.
Speaker 12 (36:12):
So that was a change that came out of the
Ways and Means Committee, that was a part of their
overall tax package. But in speaking with universities, obviously some
of them that would be faced with that twenty one
percent burden are very concerned about that. At the same time,
we do want to see these institutions deploying their capital,
not just sitting on these reserves and their endowment. We
(36:32):
want to make sure that college is affordable for everybody
across the country and that that research. If they want
to do that and it can't be helped or sustained
by the federal government, we want to see them deploying
that capital. And so too much is being put on
the sidelines for some of these universities just to simply
build up their endowments for the sake of building up
the endowments. And that's not what it should be about.
(36:54):
Higher education should be about the greater good, employing people
that can actually do this scientific research, making sure that
American students are getting a quality education at an affordable cost.
And the federal government does a lot to subsidize these institutions,
not only through student loan repayment programs, but also through
(37:15):
academic research and scientific research. Those are good things, but
again you have to have a balance that's struck in
in some instances these universities are sitting on too much
of an endowment, not deploying that capital to do the
things that we would expect higher education to actually be doing.
Speaker 2 (37:31):
All of this said, congressmen, will House Republicans help the
speaker meet his timeline? Budget Committee tomorrow, Rules Committee, Monday
floor vote before you leave for Memorial Day.
Speaker 7 (37:43):
That's a great question. I don't have an answer to it.
Speaker 12 (37:45):
We actually have a conference wide meeting at two thirty
today to go over reconciliation. There are still four or
five main components of this legislation that need to be
ironed out. We talked about salt Medicaid snap, the Federal
employee's retirement program, and then a number of other smaller
changes are all still on the dock. At those programs
(38:07):
and what came out of Committee are needing to have
some additional work, I think, and we've been advocating for
some changes as members. Leadership has been receptive, but now
we're going to need to see a manager's amendment in
very short order to start making some of these changes
so that we can get to a place where we
have broader agreement and ultimately get to two hundred and
eighteen votes to get a pass through the House.
Speaker 8 (38:30):
Well, but timing could be crucial here, Congressman, not just
considering this kind of Memorial Day deadline the Speaker has
set that isn't necessarily hard, but given the deadline that
the Treasury Secretary has warned about about an X state
that could come in August when you and your colleagues
are on your annual recess. He says for that reason,
the debt ceiling should be lifted by mid July. Do
(38:51):
you see risk here or need for a backup plan
to separate a debt ceiling hike out of this reconciliation
process in order to avert potentially what could be a
catastrophic scenario.
Speaker 7 (39:03):
I don't.
Speaker 12 (39:04):
The debt ceiling should be included in this package, and
that timeline that we were given by Treasury does match
I think even some of the less optimistic timelines for
reconciliation to get done. So I think we're still on
track to meet that. I don't think there should be
any uncertainty about that. But at the same time, the
very aggressive timeline that the Speaker set, I think that
(39:25):
was a good thing to do. We should be pushing
Congress to act. But at the same time, we always,
I think understand that that did give us some wiggle room,
some breathing room that in case things slip in negotiations
past that hard deadline up front, we still have time
to meet the ex deadline in July or August, and
so we're on track to do that. I'm optimistic that
(39:45):
we're ultimately going to get something done when We'll keep
pushing for the Memorial Day deadline and hopefully we'll get
there if those four or five big main issues that
I talked about get ironed out. If not, well, we
do have some extra time in the coming session weeks
to get it done.
Speaker 2 (40:01):
Only got a minute left. Congressman, I know you're obsessing
over the House version, because that's your job. At some
point there'll be a vote, it goes to the Senate.
Are you worried about what comes back?
Speaker 12 (40:11):
Well, actually, I think that should be a key part
of our consideration here in the House. We've already heard
some of the comments from the Senate and from the
White House, and it is important to have alignment between
all three of us, between the House, the Senate, and
the White House to ultimately get something done and signed
into a law to help the American people. So I
think we should be taking that into consideration now. At
(40:33):
the end of the day, it is a negotiation between
those three parties. They don't get the ultimate say, so
we do want to listen to what they're saying as
what their redlines may be or what additions they would
like to see. We should take that into consideration while
we're doing our work here in the House and again,
ultimately we'll come up with a product that will actually
get through this entire process.
Speaker 8 (40:54):
All right, Congressman, thanks for being here on balance of power.
Republican Congressman Ryan McKenzie of Pennsylvy seventh District here with
us on Bloomberg TV and Radio. Thank you so much.
Of course, discussing with us one aspect of President Trump's
economic policy, that would be tax cuts, but there are
others to consider as well, including his tariff regime that
has been very on and off, hot and cold, but
ultimately has led to increased concerns around the risk of
(41:17):
a recession in the United States. This is actually something
that Jamie Diamond, the CEO and chair of JP Morgan Chase,
spoke about from Paris today with our colleague Francin and
Loqua earlier.
Speaker 13 (41:27):
I'm going to defer to economists who've given about a
fifty percent chance. I think all these things are probably
inflationary a little bit more and slowing down the economy.
If there's a recession, I don't know how big it'll
be or how long it'll last. Hopefully we'll avoid it,
but I wouldn't take it off the table.
Speaker 8 (41:42):
At this point, wouldn't take it off the table. And
as we consider the fate of the US economy, that
is the subject of a new Bloomberg opinion piece out
by Bloomberg editor in chief emeritus Matthew Winkler. You can
find it on the terminal or online. It's entitled is
it too late to salvage the US economy?
Speaker 5 (42:01):
Matt?
Speaker 8 (42:01):
When we look at the US economy, the data we
got in hand today, from PPI to retail sales, When
you look at the incredible recovery we've seen in the
equity market in the aftermath of Liberation Day on April second,
it's almost like it never even happened. Where do you
see evidence that indeed might be too.
Speaker 11 (42:16):
Late, Well, you see it in an equity market, the
US equity market that is underperforming the world. The last
time the equity market stocks underperformed the world was two
thousand and nine, and if you recall, that wasn't such
a great year. It was the beginning of the end
of the financial crisis, and we had long recovery from
(42:41):
the Great Recession. So to go, from what the Economist
and the Wall Street Journal separately last year, before voters
went to the poll said the US economy is the
envy of the world. To what Jamie Diamond refers to
as a possibility of recession is quite a drum madic
change from where we've been.
Speaker 2 (43:04):
So is this stock market whistling past the graveyard?
Speaker 11 (43:07):
Well, far be it. Permit it to say that, and
hardly qualified to. But what you have seen is price
fluctuations that are unprecedented. For example, these wonderful magnificent seven stocks,
Apple in particular, in just a matter of months lost
a record amount of money in the stock market that
(43:28):
had never happened to Apple since it was founded in
nineteen seventy six. So this is the forty nine year
old maker of the iPhone, and suddenly it is experiencing
volatility in the market that it's never seen before. And
it wasn't the only one, of course, you saw that
with NTA Alphabet and all these other stocks. So the
volatility is a, if you like, symptom of the uncertainty
(43:51):
and the chaos that has been triggered by what you
referred to earlier as the on and off tariffs. The
forty five percent initially for China, now it's back to
thirty something percent. But this kind of instability that is
fostered by the tariffs has created uncertainty that we didn't
(44:14):
have the end of last year.
Speaker 8 (44:18):
Well, and of course it's one thing to look just
at stocks, but there's other asset classes to consider here
as well, looking at the bond market and what's happening
in foreign exchange, which is flashing the most glaring warning signal.
Speaker 11 (44:30):
Well, the bond market that you mentioned hasn't underperformed the
world since twenty seventeen, and if you recall, that was
the last time Trump was president, so it's been quite
a while since US bonds have been underperforming the rest
(44:52):
of the world, and that of course is happening as
we speak now. So even though there's been this, you
know is if it didn't happen, it really has happened
in the sense that people have gone through something that
is quite traumatic and that's got to have some kind
of lasting effect. The other thing is that the foreign
exchange market is also reflective of this chaos that was
(45:16):
caused by the tariffs, because you had this period of
the one hundred days where the US dollar fell depreciated
against every major currency in the world, and of course
we haven't seen that quite some time.
Speaker 2 (45:31):
He is Bloomberg's Editor in Chief emeritus. With a great
piece to read on the terminal and online, Matt Winkler,
We thank you so much for the insights. Matt Cayley.
He quotes the head of the Port of Los Angeles,
Jesus Soroka, who's been on the program many times with us,
reminding us we could have a major reality check when
it comes time for bactic school shopping. Thanks for listening
(45:53):
to the Balance of Power podcast. Make sure to subscribe
if you haven't already an Apple, Spotify, or wherever you
get your podcasts, and you can find us live every
weekday from Washington, d C. At noontime Eastern at Bloomberg
dot com.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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(00:20):
get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Welcome to Little Friday, Thursday edition of Balance of Power
Live on Bloomberg Radio, the satellite radio channel one twenty
one on Serious Exam, and of course on YouTube, where
you can find us now by searching Bloomberg Business News Live.
If you like me, you can also catch us on
the Bloomberg Business News App. Find us live on the app,
(00:45):
plug us in the car, play on your way to work.
So many ways to catch the program. And I wonder
what will Charlie Pellett tell us on the day they
cut a deal on salt? Could that be today? Do
we get a rally the minute that's announced? Think about
where all of these traders actually live in places like
(01:06):
New York, Connecticut, New Jersey. And I bring this up
because there's an important meeting happening today on Capitol Hill
as we try to align the stars for a vote
next week in the House. At least that's Mike Johnson's
job on reconciliation to pull all together this big mess
of bills and try to get something passed so it
can go to the Senate. He wants this done before
(01:27):
Memorial Day recess, but they can't get it done until
there's a deal yes on Bloomberg's favorite story, salt the
State and local tax deduction, and not everybody's getting along
on this. You've got the salty Republicans. We brought you
conversations with many of them from yes dates like New York,
as I mentioned, New Jersey and so on, California too.
You've got the Freedom Caucus. They don't like this idea
(01:48):
at all. They call it a blue state giveaway. Then
you've got other members of the House looking for even
steeper cutts, and Mike Johnson has to corral them all.
Speaking of salty Republicans, we spent some time with Congressman
Lolota on the late edition of Balance of Power, his
view from New York and specifically remembering it's a ten
thousand dollars cap right now, This idea of maybe forty
(02:11):
eighty forty for an individual, eighty for a couple, is
that going to grease the skids. Is that the final number.
Here's his reaction.
Speaker 3 (02:19):
Maybe forty eighty will be an ultimate proposal. So far, unfortunately,
the Ways and Means Committee has not offered us anything
anywhere close to that.
Speaker 4 (02:28):
Sadly, they've been stubborn and not gave us anything that
we could possibly say yes to. We got to go
back home and sell this and a low thirty k
cap when unlimited would come at the end of the
year if this bill expires, wouldn't be sufficient for my constituents.
Speaker 2 (02:44):
Nick Lolota, first District, New York, Long Island. Is that
your congressman, Producer James it Is. I thought so, and
so they're all going to argue this out here, but
nobody wants to show their cards.
Speaker 5 (02:57):
Right.
Speaker 2 (02:58):
Thirty thousand dollars is floated as a limit. It not
acceptable according to most of the delegation in New York
and related states. And so where do we fall here.
Jack Fitzpatrick is watching this very closely on Capitol Hill
and joins us right now from his perch at Bloomberg Government. Jack,
we just heard from the speaker here. We're very very
(03:18):
close to assault deal. We're still on path for the
bill to pass next week. Is he just being optimistic
or did something happen.
Speaker 6 (03:26):
He is being optimistic, It doesn't sound like there's a
concrete development that has happened today. That's not to say
they're not making progress. They're holding these meetings, they're continuing
to negotiate. But we've heard a pretty positive, optimistic series
of comments from the Speaker of the last few days,
and then when you check with the Salt Republicans, it's
(03:48):
a little bit more skeptical. There's an increasing amount of
frustration from the Conservatives.
Speaker 7 (03:54):
So there was a.
Speaker 6 (03:54):
Meeting this morning where the Speaker met with some Freedom
Caucus conservative as well as the Salt Republicans. We heard
from Young Kim from California, who wants a higher salt rate,
who just said they're still negotiating. We heard from Chip Roy,
who's an unhappy Conservative, unhappy with the bill as it
(04:14):
stands right now. He says he still has problems with
the fact that the Medicaid changes wouldn't occur until twenty
twenty nine. He doesn't really think it's a conservative enough bill.
So there's still some work left to do to get
this together. As far as the possibility of a vote
next week. Sure, next week is next week. They're still
working on it, but there is some work left to do.
Speaker 2 (04:35):
Is chip Roy ever happy? Just to digress for role,
I mean, it's his job to be unhappy, right, That's
the lemany pulls. As a member of the Freedom Caucus.
Speaker 6 (04:44):
That is usually true, but it's been unusual this year
or so. The Freedom Caucus members have been much happier,
much happier specifically with the leadership approach than usual. Mike
Johnson is not in the position of a John Bayner
chip Roy. They got a victory when they voted on
the framework before it was an actual bill to increase
(05:05):
the goal for spending cuts. Now they're not wholly following
through on that, but they have kind of played ball
with chip Roy, with Andy Harris, the leader of the
Freedom Caucus. It's just a question of how happy or
unhappy do these compromising figures feel. When we're actually at
the very end, at the finish line.
Speaker 2 (05:24):
We're hearing more from speaker Johnson is talking to reporters
Jack as we hold you up here in the rotunda.
If you do more on salt, he says, you have
to do more on savings. This doesn't sound like we're
anywhere near a deal, does it?
Speaker 6 (05:37):
Well, that's the fundamental issue is if you give more
to the handful of holdouts from high tax blue states,
it changes the math. If you create more tax expenditures,
the conservatives are going to be less happy and you're
going to have a harder push, possibly focused on Medicaid,
maybe bumping that twenty nine date up a year or two.
(06:00):
And then that raises questions about some of the moderates
who are not very comfortable with the amount of Medicaid cuts.
How does that do in the House, How does that
do in the Senate where Josh Holly has been pretty
outspoken against medicaid cuts. So it's hard to change the
pieces of this puzzle without just shaking it up entirely.
Speaker 2 (06:18):
Yeah, well, just to follow the bouncing ball here, and
I know that you're an expert on procedure when it
comes to appropriations, Jack, this needs to kind of get
done by tomorrow, right The House Budget Committee is waiting
to assemble all of these pieces on Monday, so this
can go to rules or tomorrow rather Friday, so it
can go to rules on Monday. Are these dates about
(06:38):
the change based on the salt standoff?
Speaker 6 (06:41):
They could change if this drags on, but they don't
need a deal before going to the Budget Committee. They
can really the Budget Committee just packages these disparate bills
together because that's its role in all of this, and
then they can do an amendment in the Rules Committee,
which is supposed to meet on Monday, so they still
can work through the weekend if necessary, and make changes
(07:02):
as of the Rules Committee meeting before they take it
to the floor for a vote.
Speaker 2 (07:08):
Can you qualify what happened with Medicaid, Jack, We've heard
so much about cuts to Medicaid. Republicans say they aren't cuts,
We're just making the program more efficient and more strict
when it comes to able bodied men. Is this a
cut to the program or a streamlining of Medicaid? Or
is this just about rhetoric? At this point, where are
(07:29):
the dollars?
Speaker 6 (07:31):
The word cut is kind of a fraught term in
Capitol Hill. It would reduce the trajectory of future spending.
It would not spend more, it would spend less compared
to the baseline. It is very significantly focused to able
bodied adults. Ultimately, that would lead to seven point seven
million people who currently have health insurance not having health
(07:53):
insurance according to the Congressional Budget Office. But yes, the
point that the conservatives have made that this is not
just taking insure, it's away from everybody who needs it.
It's focused on able bodied adults who are not working.
That is true. That's the focus of that measure on medicaid.
Speaker 2 (08:10):
Yep. All right, and then we get to food stamps.
Tell our listeners and viewers what happened in the Agriculture
Committee twenty nine to twenty five party lines here to
cut as much as three hundred billion dollars in food
aid spending. Is that accurate?
Speaker 6 (08:27):
Yes, as far as we know, and I think we're
going to continue to see holistic numbers come out from
the CBO and other think tanks. But the major change
to snap nutrition benefits is a shift from fully federally
funded to some burden being on states.
Speaker 5 (08:43):
Now.
Speaker 6 (08:44):
The baseline they laid out is five percent contributions from states,
but then there's a penalty for states that have a
history of not being totally accurate in terms of who's
eligible for it.
Speaker 7 (08:54):
That could raise it up.
Speaker 6 (08:55):
To twenty five percent matching from states, and that would
apply historically to about half the states in the country.
Speaker 5 (09:01):
So it's a.
Speaker 6 (09:01):
Significant shift towards the burden being on states for funding that.
Speaker 2 (09:06):
Right. Of course, I'm now supposed to ask you if
all of this is going to change when it goes
to the Senate, but I'm pretty sure that a lot
of it is. Jack will let you get back to
your coverage in the House of Representatives. Jack Fitzpatrick covering
this process for us at Bloomberg Government, our Congress reporter.
You can find him on the terminal of courses online
and as often as we can get him on this program.
Jack knows what he's talking about. That is the latest
(09:27):
that we have here, remembering budget tomorrow to assemble this
thing before it goes. If they get it done to
a floor vote next week, if we get a salt deal,
the earth will shake a bit around here. We'll let
you know as soon as it happens, and you know,
you'll have a red headline on the terminal.
Speaker 1 (09:45):
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.
You can also listen live on Amazon Alexa from our
flagship New York station Just say Alexa played Bloomberg eleven thirty.
Speaker 8 (10:04):
On Capitol Hill, the work continues on trying to find
a consensus around the Salt cap so that House Republicans
can move forward with a floor vote next week. At
least that's the goal, according to the Speaker on budget reconciliation. This,
of course, is one of the biggest outstanding issues is
some of those members of the Republican Conference who come
from blue states are willing to die, it seems, politically
(10:24):
on the Salt Hill, pushing for a number higher than
the thirty thousand which was included in the tax bill
that passed through the Ways and Means Committee yesterday. The
negotiations continued this morning. The Speaker says they're going to
continue through the weekend to try to find a solve here.
And of course we know that a number of numbers
have been thrown out there by members of the Salt Caucus,
(10:47):
including Congressman nik Loloda, the Republican from New York who
was with us on the late edition of Balance of
Power yesterday, on the idea of forty eighty being the
sweet spot.
Speaker 3 (10:57):
Maybe forty eighty will be an ultimate proposal. So far, unfortunately,
the Ways and means Committee has not offered us anything
anywhere close to that.
Speaker 4 (11:07):
Sadly, they've been stubborn and not gave us anything that
we could possibly say yes to. We got to go
back home and sell this, and a low thirty k
cap when unlimited would come at the end of the
year if this bill expires, wouldn't be sufficient for my constituents.
Speaker 2 (11:22):
So again, he's got to go home to New York
to sell this. And Congressman Lolota was not having too
much of this idea of a cap at thirty thousand
dollars for individuals, never mind the forty eighty that Kaylee
threw out there. It's where we start our conversation with
Congressman Marlin Stutsman, the Republican representing Indiana's third district. Is
(11:43):
where it's live from Capitol Hill. Congressman, it's great to
have you back on Bloomberg TV and Radio. A lot
of things need to happen pretty quickly. Here we put
the pieces together. If we follow the plan here on
the timeline laid out by the Speaker and the Budget
Committee tomorrow, Rules Committee picks it up on Monday, you
get a floor vote next week. Is salt the biggest
obstacle to getting this done right now.
Speaker 7 (12:03):
Well, it's one of them, and Joe, it's great to
be with you and Kayley again, it is. There's a
lot of conversations happening today and a lot of you know,
last minute meetings trying to find these compromises. And I
understand you know that you know the members from New York,
New Jersey, California, those salt districts, there's a handful of
them that represent Republican districts that this is an important
(12:26):
issue for them. You know, my message has been, look,
I'm willing to work with you all. I understand. I
don't like it because I feel like, you know, here
we have hoosiers from Indiana that are are are getting
a They're not getting the same benefit that these liberal
spending states are getting as far as the taxpayers there.
But these are Republican members fighting for their districts. I
(12:48):
understand that. But I think there should be an offset
or a compromise. Let's, you know, defund planned parenthood, Let's
make some sort of adjustments to to the Medicaid waivers.
We've got to reduce our healthcare costs. That's the bigger
item that really is blowing up the budget, and we've
got to address healthcare costs at some point. So I
understand where they're coming from, but let's work together and
(13:10):
I think that can happen.
Speaker 5 (13:12):
Well.
Speaker 8 (13:13):
And we did hear suggestion from the Speaker that if
they want to increase the salt cap, you're going to
have to find more spending offsets. Is it your assumption, Congressman,
that that only really substantially can come with even further
cuts to medicaid beyond what just went through the Energy
and Commerce commit.
Speaker 7 (13:29):
Well, we'll see, and now you know, we'll find out here.
We're going to have conference here in just a couple
of hours and all of the chairmen are going to
be reporting to all of the members in the House
Republican Conference their work, so we'll know more. But either way,
we know that we're on the wrong trajectory and we've
got to find savings sooner rather than later. I think
(13:51):
the bigger piece that frustrates me and some other budget
hawks is that we're pushing these savings out four years
six years. We need to do them right away. The
dog team is obviously going to help with that, but
we don't want to see gimmicks. We want to see
action now rather than pushing it down the road. We
know healthcare is something that has to be addressed. Now's
(14:13):
a good time to do it. Making sure able bodied
Americans aren't taking advantage of Medicaid and making sure that
that's really there for those folks who really need it
and are vulnerable.
Speaker 2 (14:24):
There is an important meeting, as we discuss here at
two thirty pm Washington time, the whole Republican House Conference
gets together behind closed doors to have this out. Congressman,
we keep reading about warring factions inside the conference, a
freedom caucus that's not getting along with the salty Republicans.
Who's going to be the loudest in this meeting? And
(14:45):
what will it generate?
Speaker 7 (14:47):
Yeah, well, you know, it's a lot like a family discussion.
You know, I have three siblings, and there was times
mom and dad called us all together and we had
it out, but we walked out as a family. And
I know that's what's going to happen here. You know,
Republicans are we know, you know what we have to do,
making sure the Trump tax cuts are in place, you know,
over the next five to ten years, making them permanent
(15:07):
if possible, We're going to also focus on the President's agenda,
you know, no tax on tips, no tax on Social Security,
and his other items that he has. This is just
the you know, the meeting that we have to make
sure that every voice is heard, and Speaker Mike Johnson
has done a good job at that, making sure that
every part of our conference is being heard, and I
(15:28):
know that's valuable to every person. At least we have
the opportunity to go back home and tell our constituents,
I made the case, I did everything I could. But
we're not always going to get what we want. But
I do think at the end, this is a bill
that's really important for the American people. It you know,
unleashes our energy production. It's going to focus on, of course,
our tax policy, but reducing regulation. It is that big,
(15:52):
beautiful bill, and that's why it's a little harder to
lift it across the finish line because there's so many
facets to it. But I truly believe we're going to get.
Speaker 8 (15:59):
It done well. Of course, it is the Budget Committee
on which you sit that is actually going to make
this one big beautiful bill. Take all of the disparate
pieces that have passed through the various committees and put
them back together scheduled to happen tomorrow. Have you been
given any reason to believe, Congressman, that the Budget Committee
itself reassembling this could be delayed because of these outstanding
issues or as tomorrow happening, No matter what.
Speaker 7 (16:20):
I think, tomorrow's going to happen, No matter what you know,
any changes could be agreed upon with Speaker Johnson's office
or the Leadership offices, along with the Budget Chair and
the Budget Committee. We would make instructions, send those to
the Rules Committee. They would have to make the changes
before it goes to the floor next Monday. But I
(16:41):
feel like there's, you know, some consensus coming together here
at the end. Everybody has made their case, you know,
whether it's the Salt Caucus or whether it's those of
us on the Budget Committee making sure we stick to
our numbers. And also, you know, we're hearing some good
things from the Senate side that they want to even
take up a couple of items that may increase savings
even more. At the end of the day, we want
(17:01):
to make sure the economy is strong, the tax rates
are in place. That way there's confidence in the markets.
And then also that the President has what he needs
to secure the border and do what he promised the
American people. And so I feel like we're all unified
those around those big principles and we're going to get there.
Speaker 2 (17:20):
Hungressman, I want to ask you as we follow President
Trump's travels across the Middle East. He's an Abu Dhabi
right now in a bilateral meeting with the president of
the UAE. We were struck by news earlier this week
that he in fact sat down with the new leader
of Syria. And it's important as we spend some time
with you because you were there just a couple of
weeks ago. You and Representative Corey Mills of Florida touchdown
(17:44):
in the Damascus suburb of Joe Bart and spend some
time touring the region meeting with officials. What did you
learn and what's going to happen next in Syria now
that President Trump has sat down with its leader and
removed sanctions.
Speaker 7 (17:57):
Yeah, I think it's a really good opportunity for the
Seria in people. To see the destruction that the Syrian
people had to endure under the Assad regime was just remarkable.
It's even hard to comprehend without seeing it, you know,
in person and seeing the magnitude of it, billions and
billions of dollars of homes destroyed, families torn apart. And
(18:19):
I went with a group called the Syrian American Alliance
for Peace and Prosperity, and Corey and I each met
with the new president separately, which was nice because we
could compare our notes. You're trying to you know, I'm
a business guy trying to figure out, you know, how,
you know, what is he telling us that we you know,
we really can trust this guy. He's got a checkered
(18:39):
past of his own, former Al Qaeda, former HTS. But
the Syrian people have been through so much and they're
asking for the sanctions to be lifted. And of course
the president, which I was impressed by the fact he
wasn't asking for military help, he wasn't asking for money
from the American people. He was simply asking for the
(19:00):
sanctions to be lifted. And the fact that he had
a deal or has a deal offered to him by
the Russians, but he didn't want to take it until
he actually talked to President Trump and to America to
see if you know, which direction they're going to go.
And we know they're going to go one direction or another,
but I really felt after meeting with them and being
in Syria for a couple of days, they really want
(19:21):
to be a part of the Western economy. And I
think they see what's happening in Saudi Arabia, Qatar and
UAE and the amount of prosperity and wealth that's being
built there that they want to be a part of that.
He talked about tradelines, tourism in their country, commerce, so
I really felt, you know, the line that Trump used
commerce over chaos was really applicable here.
Speaker 8 (19:44):
All right, Congressman, great to have you back on Balance
of Power. This Republican Congressman Marlin Stutsman of Indiana joining
us live from Capitol Hill, and we'll have more on
the president's trip to the Middle East in just a
moment when our political panel, Rick Davis and Jeanie Schanzano
join us. That's straight ahead here. It's a power on
Bloomberg TV and Radio.
Speaker 1 (20:05):
You're listening to the Bloomberg Balance of Power Podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Coarckley and Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (20:21):
We're digging into politics here in the nation's capital and
abroad as President Trump continues his journey through the Middle East,
touching down today in Abu Dhabi. He's inside the Presidential
Palace right now for a bilateral meeting with the President
of the UAE and a lavish dinner, not ruling out
at least as of three o'clock this morning, adding a
stop tomorrow Turkey, where Ukrainian peace talks are set to
(20:46):
be held. Here's what the President said before he left Cutter.
Speaker 9 (20:50):
I was thinking about going, but it's very tough because
of what we're doing today and tomorrow. But you know,
if something happened, I go on Friday if it was appropriate.
But we have people right now negotiating, and I think
that I just hope that Russia and Ukraine are able
to do something because it has to stop.
Speaker 8 (21:16):
The people right now negotiating. Mind you are not principles necessarily.
Vladimir Putin, of course, did not make tracks to Turkey
at all, instead sending some relatively lower level aids, and
while Vladimir Zelenski did head to Turkey and meet with
Turkish President Resip type Erdowon. He also, of course, is
not meeting face to face with these negotiators. So we
(21:38):
want to get into this now with our political panel.
Bloomberg Politics contributors Rick Davis and Genie Shanzino are joining us.
Rick stone Court, capital partner and Republican strategists, Genie democratic
analyst and senior Democracy fellow at the Center for the
Study of the Presidency and Congress. Rick, when we talked
about the prospect of this negotiation, if you will, happening
in Turkey earlier this week, you made it clear that
(21:59):
it was pretty obvious to you the principles were not
ready to all be sitting down together at this point
because so little tangible progress has actually been made to
get to that point in President Trump today said, look, obviously,
nothing's going to happen until I meet with Putin myself.
Is that really what needs to happen here first?
Speaker 2 (22:16):
You know, it's hard to tell.
Speaker 10 (22:18):
I can't imagine Donald Trump and Vladimir Putin cutting a
deal that's going to be acceptable to the Ukrainians, and
I can't imagine a situation where all three of those
principles get together to hash it out. And so typically
what you would see in this kind of a scenario is,
you know, in non principles meeting deputies people like that,
get together, try to find common ground, build off that
(22:40):
common ground into a deal, and then call the principles
in to take credit for the deal, you know, and
try to cement the deal. Usually there's one or two
issues that only a principle can make a decision on.
We're not anywhere near that, based on the reporting that
we're getting out of Istanbul about the status of these negotiations.
I do think it's interesting that the President went from
(23:02):
I'm going to settle this in the first day of
my presidency too, gee, I hope they can work it out.
That is a big difference in approach, and it maybe
indicates a lack of confidence by this administration that something's
going to get done here on the short term.
Speaker 2 (23:15):
Remarkable, Genie, Are we fooling ourselves to believe that Vladimir
Putin would give the US a win in mediating a
piece deal with Ukraine?
Speaker 5 (23:26):
I think so. First of all, I'm hoping for President
Trump's sake that they have a lot of good air
conditioning in that palace. It was one hundred degrees in
the UAE today, So God bless him. Yeah, it's hot.
You know, the reality is is that they're nowhere close
to a deal, Donald Trump said, to Rick's point, you know,
twenty four hours, forty eight hours, then he moved to
(23:47):
a thirty day cease fire, Zelenski agreed, put installed, then
he moved to meet in Turkey. Zolenski's there, Putin is not.
So this is right now, all about Zolensky and Vladimir
Putin trying to cozy up to Donald Trump and trying
to make sure, at least for Zelensky, incredibly important that
(24:08):
he shows Donald Trump that he is being played by
Vladimir Putin, because he believes strongly that if you look
at the recent history, that is what's going on. And
he is hoping that Donald Trump gets so frustrated with
Vladimir Putin he pulls the lever on those sanctions they've
been talking about, or if not, that he continues arming Ukraine,
which we've been doing, sharing important strategic information and other
(24:32):
ways of supporting Ukraine in the war.
Speaker 8 (24:36):
Well, and to your point, Genie, Ukrainian President Zelensky did
post on X today that Russia once again demonstrate that
it does not intend to end the war, having sent
a delegation of rather low level representatives. Moreover, such a
Russian approach, he says, is a sign of disrespect toward
the world and all partners. And I wonder if he's
intending for one partner in particular, the US and President
(24:57):
Trump to feel disrespected here, Genie, we have heard and
Rick was making this point earlier, a bit of a
shifting in language of President Trump, not just on the
realistic timeline for him being able to broker a deal here,
but also the way in which he talks about Vladimir
Putin and Russia. Are you starting to see signs of
the President feeling a bit disrespected?
Speaker 5 (25:19):
Absolutely? And we know just looking at this amazing trip
he's gone and in the Middle East. If you want
to get in good with President Trump, you need to
show a lot of respect, a lot of pomp and circumstance.
A good trillion dollar deal doesn't hurt. And we don't,
you know, we are getting signs that the administration and
Donald Trump are feeling frustrated with Vladimir Putin. And again
(25:42):
he has talked openly, the administration openly just in the
last few days about sanctions on Russia. I thought the
language he used today of saying, go only be a
deal if I meet with Vladimir Putin was important as well.
So he is, you know, hoping, at least from Vilelensky side,
that there is some frustration there and that at least
(26:04):
for Europe and Ukraine, that he does indeed start to
push Russia more than he has in the past.
Speaker 2 (26:13):
Interesting talk of peace deals. There's been a lot of
talk of deals on this trip, most of them involving money,
Rick Davis remarkable one point for trillion dollars in investments
the president announcing today in the UAE. He's actually with
Jensen Wong right now. If you're with us on Bloomberg
TV or on YouTube, look at this the President of
(26:33):
the United States and the CEO of Nvidia. Much of
this deal making has to do with high tech chips.
Nvidia and AMD specifically have been called out here. We've
seen companies including Amazon, Cisco, Qualcom also announcing new deals
and partnerships on this trip. Rick, I'm guessing this will
in fact be the lasting news from this journey. He's
(26:55):
got his Commerce secretary, Howard Lutnick with him, as well,
and a fascinating way to do business here with a
sharp contrast to what we saw from the previous administration.
Speaker 10 (27:04):
Yeah, certainly this sort of mercantile focused administration is going
to play up the fact that wherever Donald Trump goes,
investment into the US follows and and look, I mean,
I think it's a it's a great positive that these
countries are willing to invest in the greatest economy in
the world. So I think I think these are positives.
(27:24):
I would say, I'm still struck by the president's comments
in Saudi Arabia, where he really painted a geopolitical picture
of being also a deal maker on peace in places
like Syria, places like Iran, and and I've I felt
like that's a massive commitment by this administration on solving
age old problems that have existed for generations in that region.
(27:50):
And so if he can find solutions to some of
these vexing problems like relations between Israel and Syria being normalized,
and the idea that we could get a nuclear deal
out of Iran, that will overshadow over time the deal
making that he's doing today.
Speaker 8 (28:07):
Well, the President is actually speaking now after his quick
chat with Jensen Wong talking about AI development and the
purchases that these Middle Eastern countries are buying things from
US companies. He says it's a massive project will be
bought from through the US, talking about how this has
been a great visit and that he's leaving tomorrow destination unknown,
(28:27):
So maybe he is still leaving the door open to
a trip to Turkey. He says he's probably going back
to d c not definitively, I guess going back to
d C rick when it comes to the AI and
the kind of chip equipment that we're talking about here
that these countries are I guess going to be given
access to now by the United States. Bloomberg is reporting
today about how there are some China hawks, national security
(28:49):
hawks in particular, who actually are quite hesitant about this notion,
the idea that there may not be firm enough guardrails
in place to ensure that the end market actually ultimately
isn't China. Are those voice is able to win out
at all when he wants to be able to telp
these deals so badly.
Speaker 10 (29:03):
It's a very very difficult issue, especially within the Republican Party,
because you know, we have a group that say no
China technology going into the Middle East. We fought them
on allowing Huawei in there, you know, to get control
of five G. We've fought them on ports that they
wanted to have China come in to develop, and we
(29:25):
won those fights. But now it's up to us to
determine whether we're going to give them the highest technology,
not just technology, but the highest technology available to fuel
what is a revolution going on in the region with
building data centers, being able to power those and being
able to become more of a digital power themselves. And
the question is this cozy relationship that they've had with China,
(29:46):
is that can result in leakage of that technology into China.
And then on the other hand, is if we don't
give it to them, will China then have an open
door to get back into the region. This administration is
not going to shut the door on Middle East. If anything,
the last week has taught us that these are relationships
that they expect to span decades, and so that opens
(30:09):
the door. But there are a lot of Republicans, as
you say, hawks on China who are not happy with
the leakage of this technology in the areas where they have,
you know, strong relationships with Beijing.
Speaker 2 (30:18):
We GENI. Is this the new model here for presidential travel?
You show up with half of Wall Street and Silicon Valley.
You've got Donald Trump, Euro Jensen Wong and Abu Dhabi.
We saw Elon Musk, Larry Fink, Sam Maltman. I could
keep going when he was in Saudi Arabia? Is this
the new entourage?
Speaker 5 (30:37):
Seems to be. I'm not sure future presidents are going
to be able to do it in the way Donald
Trump seems to be able to do it. He pulls
this off. But I do think it is fascinating because
if you look at some of the pushback, you know
there is support obviously for investments in the United States
and what the president has been able to achieve in
(30:58):
that regard. The pushback is coming from some conservatives who
are likening the president's entry into the Middle East to
what Barack Obama did in his first and second term
when he went over there to widespread criticism and was
willing to entertain these kinds of approaches to the Middle East. Now,
(31:21):
the world has changed an awful lot since then, but
you are hearing comparisons in that regard, and of course
we can't leave out of this discussion. What do they
do about Iran and the nuclear aspect of that, That
is a huge question. I've been astounded by the fact
that President has talked about it openly over there and
(31:41):
seems to be saying there is a deal in the offing,
but we don't know what that might look like. And
Anne Marie was just talking to you about that. I
think that's one of the most important geopolitical issues that
he needs to address right now.
Speaker 2 (31:54):
Great conversation with our panel Jeanie Shanzano and Rick Davis,
Bloomberg Politics contributors. We thank you both. With breaking news,
Kayley on the terminal that brings us to coinbase. The
New York Times, supporting the SEC is probing whether coinbase
misstated its user numbers. The stock right now is down
over seven percent.
Speaker 1 (32:14):
You're listening to the Bloomberg Balance of Power podcasts. 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 play Bloomberg eleven thirty.
Speaker 8 (32:33):
As we come to you live from Washington. I'm Kaylee
lines alongside Joe Matthew. This is balance of power where
we've been spending a lot of time for the last
several weeks talking about an issue that yes is omnipresident
seems here in Washington, but does have ramifications for markets
like New York Er other places in which people play
high taxes in some blue states. That, of course, is
(32:54):
the issue of the salt cap. Just where exactly will
the state and local tax deduction ultimately end up As
Republicans try to find a compromise here so that they
can get through their budget reconciliation package ahead of the deadline.
The Speaker himself has set Memorial Day, it only leaves
them a handful of legislative days, although apparently they're going
beyond just the scheduled legislative days. They intend to work
(33:17):
on a deal on salt through the weekend. As Speaker
Johnson himself told us earlier today, I.
Speaker 11 (33:22):
Think everyone will say it was productive and that we
were moving the ball forward.
Speaker 7 (33:26):
Everyone has known that the salt issue is.
Speaker 8 (33:29):
One of the big ones that we have to resolve.
Speaker 6 (33:31):
It's one of the key pieces of this equation to
sort of meet the equal delivery point that everybody can
be satisfied with Not everybody's going to be the lie
to every provision and.
Speaker 8 (33:40):
To build this lord, but everyone can be satisfied.
Speaker 2 (33:44):
That's where we start our conversation with Congressman Ryan McKenzie,
the Republican from Pennsylvania seventh District, is with us back
on Bloomberg TV and Radio live from Capitol Hill. Congressman,
it's great to see you. We're using all of our
conversations like this just to get an update on what's happening,
and I'd love to know what you're hearing specific to
the argument over salt, which seems to have ground things
(34:05):
to a halt here before all the pieces are put
together tomorrow in the Budget committee. You're from Allentown. I
believe what are the people of Allentown or throughout the
seventh District of Pennsylvania think of subsidizing high taxes in
blue states?
Speaker 12 (34:22):
Well so, for individuals who do face high property taxes
in our local community, this is an issue that actually
could be helpful to them to bring down their overall
tax burden. At the same time, we want to find
a compromise and land on a spot where it is
not being abused by high income earners who don't need
that assistance. And so what you've been seeing in the
(34:43):
SALT negotiations is a raising of the cap from ten
thousand up beyond thirty thousand. That was the latest proposal,
but it's still not meeting the needs and demands of
folks from New York, New Jersey, California, and other places.
And so I think we're going to land somewhere slightly
north of that, but there will be in come caps
on that as well, again so that individuals who don't
(35:03):
really need that assistance aren't in that position to receive
those benefits. But you do have to recognize that state
and local taxes come in a variety of forms. Sometimes
it's income taxes, but sometimes it's property taxes. And so
in that instance, with property taxes, it might be somebody
who is a senior retiring in their home. Their value
of the home has gone up significantly over the years,
so they're faced with that tax burden, but they're actually
(35:26):
not in a position to pay that on an annual
basis to stay in their home because they don't have
the income to sustain it. So trying to strike that
appropriate balance.
Speaker 8 (35:35):
Well, and of course all of This ultimately does come
down to balance what kind of revenue can be lost
and what kind of spending cuts may be able to
offset that, or where else could you find revenue raisers
where you're having revenue reductions in Congress, when I ask
you this, knowing you have a seat on the Education
and Workforce Committee in the House, one of the ways
in which we are seeing a raising of revenue is
a dramatic increase in the endowment tax from the current
(35:58):
one point four percent to as high as twenty one percent.
What is that going to do to some of our
higher educational institutions that of course not only serve as
educational institutions, but research institutions as well.
Speaker 12 (36:12):
So that was a change that came out of the
Ways and Means Committee, that was a part of their
overall tax package. But in speaking with universities, obviously some
of them that would be faced with that twenty one
percent burden are very concerned about that. At the same time,
we do want to see these institutions deploying their capital,
not just sitting on these reserves and their endowment. We
(36:32):
want to make sure that college is affordable for everybody
across the country and that that research. If they want
to do that and it can't be helped or sustained
by the federal government, we want to see them deploying
that capital. And so too much is being put on
the sidelines for some of these universities just to simply
build up their endowments for the sake of building up
the endowments. And that's not what it should be about.
(36:54):
Higher education should be about the greater good, employing people
that can actually do this scientific research, making sure that
American students are getting a quality education at an affordable cost.
And the federal government does a lot to subsidize these institutions,
not only through student loan repayment programs, but also through
(37:15):
academic research and scientific research. Those are good things, but
again you have to have a balance that's struck in
in some instances these universities are sitting on too much
of an endowment, not deploying that capital to do the
things that we would expect higher education to actually be doing.
Speaker 2 (37:31):
All of this said, congressmen, will House Republicans help the
speaker meet his timeline? Budget Committee tomorrow, Rules Committee, Monday
floor vote before you leave for Memorial Day.
Speaker 7 (37:43):
That's a great question. I don't have an answer to it.
Speaker 12 (37:45):
We actually have a conference wide meeting at two thirty
today to go over reconciliation. There are still four or
five main components of this legislation that need to be
ironed out. We talked about salt Medicaid snap, the Federal
employee's retirement program, and then a number of other smaller
changes are all still on the dock. At those programs
(38:07):
and what came out of Committee are needing to have
some additional work, I think, and we've been advocating for
some changes as members. Leadership has been receptive, but now
we're going to need to see a manager's amendment in
very short order to start making some of these changes
so that we can get to a place where we
have broader agreement and ultimately get to two hundred and
eighteen votes to get a pass through the House.
Speaker 8 (38:30):
Well, but timing could be crucial here, Congressman, not just
considering this kind of Memorial Day deadline the Speaker has
set that isn't necessarily hard, but given the deadline that
the Treasury Secretary has warned about about an X state
that could come in August when you and your colleagues
are on your annual recess. He says for that reason,
the debt ceiling should be lifted by mid July. Do
(38:51):
you see risk here or need for a backup plan
to separate a debt ceiling hike out of this reconciliation
process in order to avert potentially what could be a
catastrophic scenario.
Speaker 7 (39:03):
I don't.
Speaker 12 (39:04):
The debt ceiling should be included in this package, and
that timeline that we were given by Treasury does match
I think even some of the less optimistic timelines for
reconciliation to get done. So I think we're still on
track to meet that. I don't think there should be
any uncertainty about that. But at the same time, the
very aggressive timeline that the Speaker set, I think that
(39:25):
was a good thing to do. We should be pushing
Congress to act. But at the same time, we always,
I think understand that that did give us some wiggle room,
some breathing room that in case things slip in negotiations
past that hard deadline up front, we still have time
to meet the ex deadline in July or August, and
so we're on track to do that. I'm optimistic that
(39:45):
we're ultimately going to get something done when We'll keep
pushing for the Memorial Day deadline and hopefully we'll get
there if those four or five big main issues that
I talked about get ironed out. If not, well, we
do have some extra time in the coming session weeks
to get it done.
Speaker 2 (40:01):
Only got a minute left. Congressman, I know you're obsessing
over the House version, because that's your job. At some
point there'll be a vote, it goes to the Senate.
Are you worried about what comes back?
Speaker 12 (40:11):
Well, actually, I think that should be a key part
of our consideration here in the House. We've already heard
some of the comments from the Senate and from the
White House, and it is important to have alignment between
all three of us, between the House, the Senate, and
the White House to ultimately get something done and signed
into a law to help the American people. So I
think we should be taking that into consideration now. At
(40:33):
the end of the day, it is a negotiation between
those three parties. They don't get the ultimate say, so
we do want to listen to what they're saying as
what their redlines may be or what additions they would
like to see. We should take that into consideration while
we're doing our work here in the House and again,
ultimately we'll come up with a product that will actually
get through this entire process.
Speaker 8 (40:54):
All right, Congressman, thanks for being here on balance of power.
Republican Congressman Ryan McKenzie of Pennsylvy seventh District here with
us on Bloomberg TV and Radio. Thank you so much.
Of course, discussing with us one aspect of President Trump's
economic policy, that would be tax cuts, but there are
others to consider as well, including his tariff regime that
has been very on and off, hot and cold, but
ultimately has led to increased concerns around the risk of
(41:17):
a recession in the United States. This is actually something
that Jamie Diamond, the CEO and chair of JP Morgan Chase,
spoke about from Paris today with our colleague Francin and
Loqua earlier.
Speaker 13 (41:27):
I'm going to defer to economists who've given about a
fifty percent chance. I think all these things are probably
inflationary a little bit more and slowing down the economy.
If there's a recession, I don't know how big it'll
be or how long it'll last. Hopefully we'll avoid it,
but I wouldn't take it off the table.
Speaker 8 (41:42):
At this point, wouldn't take it off the table. And
as we consider the fate of the US economy, that
is the subject of a new Bloomberg opinion piece out
by Bloomberg editor in chief emeritus Matthew Winkler. You can
find it on the terminal or online. It's entitled is
it too late to salvage the US economy?
Speaker 5 (42:01):
Matt?
Speaker 8 (42:01):
When we look at the US economy, the data we
got in hand today, from PPI to retail sales, When
you look at the incredible recovery we've seen in the
equity market in the aftermath of Liberation Day on April second,
it's almost like it never even happened. Where do you
see evidence that indeed might be too.
Speaker 11 (42:16):
Late, Well, you see it in an equity market, the
US equity market that is underperforming the world. The last
time the equity market stocks underperformed the world was two
thousand and nine, and if you recall, that wasn't such
a great year. It was the beginning of the end
of the financial crisis, and we had long recovery from
(42:41):
the Great Recession. So to go, from what the Economist
and the Wall Street Journal separately last year, before voters
went to the poll said the US economy is the
envy of the world. To what Jamie Diamond refers to
as a possibility of recession is quite a drum madic
change from where we've been.
Speaker 2 (43:04):
So is this stock market whistling past the graveyard?
Speaker 11 (43:07):
Well, far be it. Permit it to say that, and
hardly qualified to. But what you have seen is price
fluctuations that are unprecedented. For example, these wonderful magnificent seven stocks,
Apple in particular, in just a matter of months lost
a record amount of money in the stock market that
(43:28):
had never happened to Apple since it was founded in
nineteen seventy six. So this is the forty nine year
old maker of the iPhone, and suddenly it is experiencing
volatility in the market that it's never seen before. And
it wasn't the only one, of course, you saw that
with NTA Alphabet and all these other stocks. So the
volatility is a, if you like, symptom of the uncertainty
(43:51):
and the chaos that has been triggered by what you
referred to earlier as the on and off tariffs. The
forty five percent initially for China, now it's back to
thirty something percent. But this kind of instability that is
fostered by the tariffs has created uncertainty that we didn't
(44:14):
have the end of last year.
Speaker 8 (44:18):
Well, and of course it's one thing to look just
at stocks, but there's other asset classes to consider here
as well, looking at the bond market and what's happening
in foreign exchange, which is flashing the most glaring warning signal.
Speaker 11 (44:30):
Well, the bond market that you mentioned hasn't underperformed the
world since twenty seventeen, and if you recall, that was
the last time Trump was president, so it's been quite
a while since US bonds have been underperforming the rest
(44:52):
of the world, and that of course is happening as
we speak now. So even though there's been this, you
know is if it didn't happen, it really has happened
in the sense that people have gone through something that
is quite traumatic and that's got to have some kind
of lasting effect. The other thing is that the foreign
exchange market is also reflective of this chaos that was
(45:16):
caused by the tariffs, because you had this period of
the one hundred days where the US dollar fell depreciated
against every major currency in the world, and of course
we haven't seen that quite some time.
Speaker 2 (45:31):
He is Bloomberg's Editor in Chief emeritus. With a great
piece to read on the terminal and online, Matt Winkler,
We thank you so much for the insights. Matt Cayley.
He quotes the head of the Port of Los Angeles,
Jesus Soroka, who's been on the program many times with us,
reminding us we could have a major reality check when
it comes time for bactic school shopping. Thanks for listening
(45:53):
to the Balance of Power podcast. Make sure to subscribe
if you haven't already an Apple, Spotify, or wherever you
get your podcasts, and you can find us live every
weekday from Washington, d C. At noontime Eastern at Bloomberg
dot com.
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