June 17, 2025 • 35 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
Israel and the US are ratcheting up pressure on Iran, sparking fresh speculation that Washington could be preparing to join in the attack launched by its closest Middle East ally.
President Donald Trump said he wants a permanent end to Iran’s path to a nuclear weapon, after an early departure from the Group of Seven leaders meeting in Canada spurred questions about whether the US seeks to end the conflict or escalate it.
“We know exactly where the so-called “Supreme Leader” is hiding. He is an easy target, but is safe there - We are not going to take him out (kill!), at least not for now,” Trump said in a Truth Social post Tuesday. But he said that “our patience is wearing thin” and moments later sent another two-word post: “UNCONDITIONAL SURRENDER!”
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe speaks with:
- Bloomberg's Tyler Kendall and David Gura.
- Executive Director of the University of South Florida's Global and National Security Institute and Former United States Central Command Commander Ret. Gen. Frank McKenzie.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Bloomberg International Economics and Policy Correspondent Michael McKee.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
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Speaker 2 (00:25):
Wall Street again bumping into Washington and a looming decision
now for President Trump on what to do whether to
join Israel offensively against Iran. He's back at the White
House today, as we told you, having left the G
seven in Canada early to deal with these matters that
we've seen a flurry of posts on truth social demanding
unconditional surrender in one case, to Iran, and going even
(00:49):
further to write about Iran's supreme leader. We know exactly,
he writes, where the so called supreme leader is hiding.
He is an easy target, but is safe there. We're
not going to take him out, he writes, kill in parentheses,
at least not for now. But we don't want missiles
shot at civilians or American soldiers, our patients as wearing thin.
Speaker 3 (01:10):
Thank you for.
Speaker 2 (01:11):
Your attention to this matter. The question, of course, whether
the US should go further than providing logistical support to
the Israeli military, the Israeli Air Force, the IDF, whether,
in fact the US should put American air crews in
D two bombers to deliver bunker busting bombs that are
(01:32):
needed to get to the deep underground enrichment facilities like
Fourdeaux that we've talked about inside Iran. I discussed the
idea of US involvement and whether it was essential right
at this time. Yesterday in a conversation with Ron Dermer,
Israel's Minister for Strategic Affairs, Here's what he said.
Speaker 4 (01:50):
The US has been tremendous in the support that it's
given Israel from the beginning of this war on defense.
There's an understanding, frankly, Joe in America and not just Israel. Then,
when we are fighting Iran, we're not just fighting for ourselves.
We're fighting an enemy of the United States. So when
we're taking them on, we are fighting your fight, and
actually our victory will also be an American victory, and
(02:13):
I think it will help turn the region into a
different direction.
Speaker 2 (02:17):
Let's see what the thinking is at the White House
right now. Bloomberg's Tyler Kendall has been there all day
and joins US Live from the North Lawn Tyler.
Speaker 5 (02:25):
Yeah, hey, Joe, Well, it's our understanding that the US
has been in close contact with its Israeli counterparts. President
Trump has been in the situation room getting updates. And
then about an hour ago, as you mentioned, we saw
this flurry of posts on truth social that included him
posting about unconditional surrender and also threatening Iran Supreme leader.
And then another one worth reiterating. He said, quote, we
(02:46):
now have complete and total control of the skies over Iran.
Iran had good skytrackers and other defensive equipment, and plenty
of it, but it doesn't compare to American made, conceived,
and manufactured stuff in quotes. This definitely, of course, heightens
the US's support of these ongoing Israeli airstrikes, as the
question really does become what will US involvement look like
(03:08):
going forward? We could soon have an answer, as Axios
reports that President Trump is going to convene that National
Security Council at one pm Eastern, and we also heard
from the German Chancellor speaking to local broadcaster saying that
the US will make its decision based off of whether
or not it thinks Iran is willing to negotiate. We
should say that up to this point, the White House
has maintained that it has a defensive posture here, though
(03:31):
it did move military assets into the region, and analysts
do tell us, just for context, that if the US
does get involved, it likely want to be boots on
the ground, troops on the ground, but it would be
air or sea defense and support moving forward. There also
important to mention, though, that the speculation about this Joe
really did heighten after we saw a post from Vice
(03:51):
President to JD. Vance earlier today. He wrote in a
post on x that President Trump quote may decide he
needs to take further action to and Iranian enrichment. Of course,
the possibility of a diplomatic de escalation could still be
on the table. It's worth noting that President Trump did
suggest earlier that he may dispatch either Vance or his
special en voice Steed Witcoff or talks with Roan. We're
(04:13):
just waiting for some updates on how that involves.
Speaker 2 (04:16):
All right, Tyler, stay close with us. Bloomberg's Tyler Kendall
at the White House. As we turn our attention now
to what is left of the G seven summit in Canada.
Bloomberg's David Gura is in Banff, where world leaders are
continuing to move their conversations ahead even without President Trump. David,
how is all of this playing there?
Speaker 4 (04:38):
Well?
Speaker 6 (04:38):
To borrow a phrase from the President, this matter does
have the attention of the world leaders who are gathered here.
We heard from Chancellor Friedrich Mertz of Germany this morning
talking about that conflict, having some very strong rhetoric about Iran,
and suggesting that the US is going to make its
decision on military action today. So everyone here tracking very
closely what's happening in Washington, indeed what's happening in the
Middle East as well. But you just rightfully point out
(05:00):
the agenda proceeds as normal. President Vladimir Zelenski's here in Canada.
He had a meeting with Prime Minister Mark Karney just
a few minutes ago, at which Canada announced a big
investment in defense spending for Ukraine and new sanctions on Russia.
We're seeing those meetings continue over the course of the day,
and sitting in President Trump's seat at all of these
major meetings is now Scott Bessett, the Treasury Secretary who
(05:21):
traveled here with President Trump, with the expectation going into
this summit there'd be more conversations on the sidelines about
trade and tariffs, but he has now been given the
impromado to sit in that seat over the course of
these meetings to kind of play the role of the
US's representative here as conversations center on Ukraine this morning
and energy this afternoon. Again, the official agenda continues, but
(05:43):
everyone here very much watching what's unfolding and Washington in
the Middle East.
Speaker 2 (05:45):
Joe great reporting this week from David Girl live in Banff, Canada.
Speaker 3 (05:49):
Thank you so much, David.
Speaker 2 (05:51):
As we add the voice of experience in retired General
Frank McKenzie. We told you he would join us. Someone
with answers to many of the questions that we've been asking.
Is he was the former commander United States Central Command
SENTCOM from twenty nineteen to twenty twenty two. Now executive
director of the University of South Florida's Global and National
(06:11):
Security Institute. General mackenzie, it's good to have you back
on Balance of Power.
Speaker 3 (06:15):
Welcome back to Bloomberg TV and Radio. It's good to
have you with us.
Speaker 2 (06:19):
The President is facing a big choice today as it seems,
and he's been writing on truth Social about it. If
you were still in your old job, would you recommend
to the President that the US join Israel offensively in
eliminating Iran's nuclear program?
Speaker 7 (06:33):
Well, I think, first of all, it's going to be
with you, Joe. I think the important thing to remember
here is, as he approaches this decision, President Trump actually
has unique credibility with Iran because he gave the order
to strike Cassim Solmony back in early twenty twenty, So
he possesses enormous, enormous wata, if you will. As he
(06:53):
approaches this problem, it's going to be his decision to
choose how how is he going to use it? Are
we going to try to negotiate? Now? The problem with
nagociating with the Iranians is they're not great fighters, but
they're remarkable negotiators. They will try to bog you down,
they'll try to spend it out in time, and what
they will try to do is stay on their task
of destroying Israel and ejecting US from the region. So
(07:14):
it's a particularly it's a particularly difficult decision for the
President to make. If we go in and we strike
this target, as we're talking about doing. We're probably not
going to be able to completely eradicate the Iranian nuclear program,
but we will set the nuclear program back.
Speaker 2 (07:30):
Interesting you mentioned a custom Solomony. I believe you did
recommend to President Trump at the time that he'd be
taken out, and a lot of people are looking at
that as the beginning of a saga that brings us
here today. That, in fact, closing the deal at four
DOAU and eliminating by the use of American B two
bombers and the MOAB eliminating what is left of that
(07:52):
ENRICHMENTD facility would be the bookend on something that you
started that day.
Speaker 3 (07:56):
General, Is that correct.
Speaker 7 (07:59):
Well, that would be President Trump's decision to actually execute
that strike, And I believe you can make a point
that it began a narrative arc that has taken us
to where we are today. You know, twenty twenty four
was the worst year in Iranian history in terms of
foreign policy and defense policy, but it really did begin
with the loss of Solomani, who was their inspirational leader,
(08:21):
the guy that could bring it all together for him
across the region. After January twenty twenty, he was no
longer there and they have felt his loss significantly.
Speaker 2 (08:31):
It's really interesting as we try to understand the impact
that that had when it comes to communications with Iran's proxies,
when it comes even to a spreed to core if
I can use that term in keeping some cohesion among
proxies and even within the Revolutionary Guard. The elimination of
Cassem Solomani speaks directly to the chaos and the lack
(08:54):
of response, the chaotic response we're seeing now, does it not.
Speaker 7 (08:58):
It absolutely does. The fact of the matter is the
Iranian military and particularly the IRGC, the Republican Guard Corps,
they don't have good succession planning. People come into these
jobs and they stay for many, many, many years. You know,
you don't have someone you can turn to if a
person dies or is killed. And they felt that very keenly.
(09:19):
They felt it. And the loss of Solomony we see
it right now in the loss of their equivalent, of
their chairman and equivalent, and the loss of the IRGC commander.
It has been is having a profound effect on Iranian
decision making. It's crippling it. It's making it very hard
for them to come to coordinated positions on how to
respond and we see that every day in their ineptitude.
Speaker 3 (09:42):
Gentleal mackenzie.
Speaker 2 (09:43):
We're getting headlines from Iranian state media right now that
Iran will soon launch soon launch what they're calling a
putative operation against Israel. I'm reading these with you for
the first time, citing Iran's Chief of Staff of Armed
Forces on this operation, urging Israelis to evacuate tell Leviv
and Haifa. How should Israel respond to headlines like these?
(10:07):
And is the Iron Dome enough to keep them safe?
Speaker 7 (10:12):
The waves of Iranian attacks have had minimal success. I
know that's easy for me to say here in the
United States when buildings have been destroyed in Israel, but
the Israeli success rate with their various systems far beyond
Iron Dome has actually been pretty remarkable. The Iranians have
thrown about all they can throw at Israel. There's not
(10:33):
some secret deadly weapon out there waiting to be employed.
They just don't have it. You'll see more of the
same against Israel. I predict what will happen over time
is that Israeli defenses will grow increasingly effective as they
solve the way the Iranians are attacking, and the Iranians
don't have an endless supply of these weapons.
Speaker 2 (10:52):
As well, we've been surging equipment into the theater, as
I'm sure you know, more than two dozen tankers, air refuelers.
We're steering the USS Knimitz Strike Carrier Group into the region.
What does this collection of material illustrate.
Speaker 3 (11:08):
To you that we may be preparing for.
Speaker 7 (11:11):
First of all, that illustrates the excellence of the Joint Force,
and our capabilities are global. We can flex anywhere very quickly.
I think it's prudent planning by the Department of Defense.
It's all about giving the president options. The decision to
whether or not we're going to strike Iran is going
to be a political decision that is not a military decision.
(11:31):
But what you want to do is ensure that the
president has all the tools necessary to make that decision
or to defer that decision if that's what he wants
to do, and protect our forces in the region. And
so that's what's going on right now. It's pretty much
another day at the office for the US military. We're
very good at this. They're bringing them in so that
we can prepared for really any contingency.
Speaker 2 (11:54):
Some great reporting today in the New York Times about
what it would take to strike four Dough, the underground
and enrichment site that we've already referred to. It's essentially
underneath a mountain. General, and apparently the US was involved
here the Pentagon for several years trying to refine a
strike plan if in fact it was needed. They found
(12:15):
that it would require B two's, several of them releasing
one moab after another down the same hole before they
got there. Were you involved in those experiments? Is that
actually what it would take, regardless of whether it's decided
to be used today, is that what it would take
to blow up a mountain?
Speaker 7 (12:32):
So, really, Joe, all I can tell you is we
have very good plans, we have very good capabilities. We
study the problem, we believe we have a solution to
the problem. But that's really all I can tell you.
Speaker 2 (12:43):
Well, when the General can't answer a question like that,
I know we're getting warm on something here. Let me
ask you further. There's also reporting that if we didn't
in fact make that decision to use these bunker busting bombs,
that cutting the power might do it. A sabotage mission
to cut the power to these center feuge which spin
at supersonic speeds? Should that be in our playbook?
Speaker 7 (13:06):
Every possible approach to this problem is in our playbook,
and many of them obviously also in Israel's playbook. Everything
from different forms of cyber attack to power interruption to
proxy attack direct on the ground. All of those options
are on the table. All of those options have been
thoroughly studied, and all of those options would be available
should we choose to use them.
Speaker 2 (13:28):
As we spend time with retired General Frank Mackenzie trying
to figure out the way forward here, I wonder the
questions that you're asking as well about how far Israel
is planning to go here? General, is there a scenario
that we should be prepared for that would involve Israeli
boots on the ground in Iran and a very different
mission to support Joe.
Speaker 7 (13:50):
I can't see that under any circumstance it ran as
a large country or the population of over ninety million.
I can't see any possible way that involve an Israeli
ground invasion of Iran just not going to happen. I
see some scenarios perhaps where the Israelis believe they can
knock out the existing government. Now you're dealing with what
(14:13):
is essentially a failed state, a dysfunctional, a dysfunctional entity,
And in some ways that may be better than a
state that isn't failing, but that has malevolent intent not
only against Israel but against all of its neighbors. It
would it would not be a good scenario for the
people of Iran. Will be denied basic services, for food,
for medicine, for all the things that make a life
(14:33):
worth living. But to some degree, the only people to
blame for that is current Iranian leadership.
Speaker 2 (14:39):
Huh, General, you know what it's like to be in
the situation room with the National Security Council with the
President of the United States. It appears that's the kind
of day they're having today at the White House. We've
already discussed the decision that President Trump is facing here,
and I wonder if we could qualify this as the
most important foreign policy decision facing a president since the
withdrawal of afghanist in.
Speaker 7 (15:01):
It's certainly a big it's certainly a certainly a big decision.
And if you're in there as a military person, your
job is to ensure that the people who make those decisions,
the civilian leadership of our country, have all the options
they need in order to execute whatever decision they choose,
and then the Joint Force will faithfully execute those decisions.
Speaker 2 (15:21):
There seems to be an expectation this decision is made today. General,
how long is this window open for?
Speaker 7 (15:28):
I think we have some flexibility in how we choose
to approach it. I think the problem is for the Iranians,
time works against them. They're weaker every day, They're more
attried it every day, They're less capable every day. So
I think the pressure of the clock is working against them.
It's working for us and for Israel.
Speaker 2 (15:46):
Lastly, the President writing on truth Social Generally you might
have seen it. We know exactly where the so called
Supreme Leader is hiding. He writes an easy target. He's
safe there. We're not going to take him out, at
least for now. Is the Supreme Leader eventually a target?
Speaker 7 (16:01):
Don't know the answer to that. I do know that
President Trump has unique credibility when he writes those words,
and Iran is very much aware of that.
Speaker 3 (16:10):
It's great to have you with us. General.
Speaker 2 (16:12):
We hope that we can continue this conversation with you.
Retired General Frank Mackenzie, former Sencom commander now at the
University of South Flora's Global and National Security Institute, a
fascinating conversation. As we always seek to bring you voices
of experience practitioners here on Balance of Power.
Speaker 3 (16:28):
We'll assemble our panel next.
Speaker 2 (16:30):
Rick Davis and Jeanie Shanzino are with us live from
Washington with much more to follow.
Speaker 3 (16:34):
Here. I'm Joe, Matthew and Glad.
Speaker 2 (16:35):
You're Alon on the Tuesday edition of Balance of Power
on Bloomberg TV and Radio.
Speaker 1 (16:41):
You're listening to the Bloomberg Balance of Power Podcast. Catch
us live weekdays at noon and five pm Eastern on
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You can also listen live on Amazon Alexa from our
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Speaker 2 (16:59):
Thirty watching the Tuesday Trade Evolve with the news here
from Washington. Bloomberg News can now confirm the President of
the United States set to meet with the National Security
team here to talk about what next in the Middle East.
Speaker 3 (17:14):
We've had a.
Speaker 2 (17:14):
Flurry of truth social posts from President Trump and as
we were just discussing with retired General Frank McKenzie, a
big decision here in the offing and it could come
today based on everything that we are hearing about what
should be the US policy when it comes to offensive
military action against Iran, the President calling for unconditional surrender
(17:36):
in One Truth social post, going even further if you
were with us on Bloomberg to say, we know exactly
where the so called Supreme Leader is hiding, adding that
we're not going to take him out, at least not
for now. The pressure campaign is ratcheting up here as
we get closer to a decision that could lead to
either US military action or some sort of if we're
(18:01):
still allowing for that. We assembled our political panel now.
Bloomberg Politics contributors Genie Shanzano and Rick Davis are with us.
Rick is our Republican strategist partner at Stone Court Capital.
Genie is senior Democracy Fellow with the Center for the
Study of the Presidency in Congress, Rick, you spent enough
time at the White House and in skiffs across Washington
(18:22):
to have a sense of what this is like inside
the sit room, inside the West wing.
Speaker 3 (18:26):
Right.
Speaker 2 (18:26):
Now, give us a sense of the conversations that are
being had, the options the president is hearing and from whom.
Speaker 8 (18:33):
Yeah, well, the joint chiefs job is to advise the
president and give him military options, obviously orchestrated by his
Secretary of Defense Pete Hexath. So they are there along
with the National Security team both inside the White House
and other members in the cabinet, and that is exactly, Joe,
(18:56):
what you described they're doing. They're going through various scenarios,
you know, to tell the president what kind of options
he has, what kind of choices, ask answering any questions
that here the team has, and and game planning out
a little bit about what happens next. We know he's
not tweeting in there, because you're not allowed to have
a phone in a skiff. He's certainly not in the
(19:18):
sit room, and so he must have We can almost
time how much time he's in the sit room by
like when those tweets kick off again, he gets his
phone back. But the bottom line on it is is
that they'll have all the information they need there at hand,
a lot of electronic information available to make a decision,
(19:40):
and that maybe that decision is a non decision for now,
but at the end of the day, it's the president's choice.
It is not the decision of a military leader to
make what we do. They are giving him options. It's
up to the President to make that commander in chief decision.
Speaker 2 (19:57):
Genie, I don't know how often you're on the same
page as Tom mass but he is among a group
of Republicans on Capitol Hill who are demanding that Congress
be involved in this decision. The President obviously has great
authority when it comes to dealing with our own national
security when it comes to the immediacy of whether or
(20:17):
not to strike. But if we're talking about a longer
term commitment here, when does Congress get the call?
Speaker 9 (20:23):
Well, so far they have not been very active. You
mentioned Tom Massey, who is joined to buy strange bedfellows
like Ilhan Omar and Alexandro Casio Cortes who have indicated
they would sign on to this resolution. And then, of
course in the Senate you have Tim Kane, who is
promising to bring other Democrats along. It'll be curious to
(20:44):
see if any of the more right wing MAGA folks
go along with him. So we're going to see strange bedfellows.
And I think from the President's perspective, and you can
see this, I think in the truths from today, he
would think best case scenario is that he compels Iran
(21:05):
to give up, come to the negotiating table, and he
doesn't have to make this very tough decision because for
him politically, this is a very moment. He has told
people two things that simply do not reconcile together. One,
I am Israel's best ally. America will continues to support it.
(21:27):
Number Two, we are out of foreign wars. I am
heading for a Nobel Peace Prize. We are going to
be America first. Those two promises are irreconcilable, and he
is being called to the mat on those by those
on the MAGA right, which is why you're seeing the
Vice President, who speaks MAGA, speaking to them on Twitter
today and saying, give the president some space. He's earned
(21:50):
your trust. He's only going to do what's in the
best interest of the American public. But remember, the use
of troops for that reason is the same defense ever
free president of the United States gives. And Donald Trump
made a career of attacking George Bush, Barack Obama, Joe Biden.
I can go on and on Hillary Clinton for using
US troops on foreign soil for exactly the same reason.
(22:13):
So he's in a conundrum. Best case scenario, he doesn't
have to make a decision. But I think he's not
going to get that. He's probably going to have to
make it, and it's going to put him in a
politically charged position.
Speaker 3 (22:24):
Rick Wherrer, are you on Congress's role in all of this?
Speaker 2 (22:27):
How long does Donald Trump have to act independently before
lawmakers need to have a say?
Speaker 7 (22:33):
Oh?
Speaker 8 (22:33):
I think that historically presidents have been given a long
lead time. You know, throughout the ages, presidents have been
able to act in an offensive fashion. Bill Clinton intervened
in the Bosnia War without permission from Congress, and you
go back to presidents like Nixon and others. So there's
(22:55):
a lot of history to giving the President of the
United States flexibilit especially in urgent situations such as this. Right,
this does not correspond with a debate in Congress that
could last weeks. This is a moment in time US
needs to act and the president, I think will be
given plenty of leeway. Remember, too, there are a lot
(23:17):
of bipartisan support for heming in Iran.
Speaker 3 (23:21):
This is not just.
Speaker 8 (23:22):
A Republican idea. A lot of hawks in the Democratic
Party see this as an opportunity to finally rid the
Middle East of the biggest troublemaker that we've had in
our lifetimes, and so I think you'll find both bipartisan
opposition to this, but also bipartisan support for anything that
(23:43):
the President wants to do to end the scourge of
Iranian troublemaking in the region.
Speaker 3 (23:50):
Geni.
Speaker 2 (23:50):
When you hear the president's comments, particularly from last evening
on Air Force One, we are looking for better than
a cease fire, he said, better than a fire, a
real end, which is why people are wondering if he
is in fact thinking seriously about committing the US military
to this to take part in Israeli strikes against Iran.
Speaker 3 (24:14):
When you hear.
Speaker 2 (24:14):
Talk like that, does that tell you that Donald Trump
will make this decision today in the sit room with
his military advisors, or that actually Iran will make this
decision based on how it responds.
Speaker 9 (24:27):
You know, I think the President probably is committed to
where he wants to take this already. I think that's
why he came back. I think that's why we're seeing
the messages we are seeing from the President. The Vice
President Pete heg Seth on Fox News last night. Sure
his mind could be changed if he gets some new information,
(24:48):
but I think he knows where he wants to go,
and that is where he has been a long time.
Iran cannot have nuclear weapons. The challenge for him is
he blew up the deal in twenty eighteen that would
have left us in a much better position than we
are right now, and now he's got to make a
tough decision. Yes, he hopes that Iran completely capitulates, completely surrenders,
(25:11):
but you talk to Iran experts and they say, how
can Iran do that at this point in the future.
They might, but at this point, how can they? Number One,
they have lost faith in the President of the United
States Donald Trump because they don't feel like he was
being completely open and honest with them about the negotiations
(25:31):
that were occurring. And so that's something he's going to
have to overcome if he really wants a substantive negotiation
with them on this. And number two, is he really
going to backtrack on his no nuclear weapons for Iran?
I read that truth to say that he really does
want regime change, which many people do, but he doesn't
(25:53):
want to make the difficult decision as to how you
get there, and he may just have to in the
next couple hours.
Speaker 2 (25:59):
Well, that's pretty interesting, Rick, when you consider the options here.
Donald Trump could simply let Israel keep hammering away at
Iran and hope for the people to rise up, or
maybe an alternate approach to eliminating the centerfugees. But as
General McKenzie said, the Iranians are better negotiators than they
are fighters, and I think he said they're bad fighters
(26:21):
and great negotiators.
Speaker 3 (26:22):
Based on the.
Speaker 2 (26:23):
History of this conversation, why should the US even take
Iran seriously as a credible actor at a negotiating table.
Speaker 8 (26:31):
Yeah, I think that Donald Trump has always felt that
threats and coercions the way to go with the Iranians,
and he's probably more right than wrong. I mean, Frank
McKenzie has got an enormous amount of experience dealing with
the Iranians. But remember too, the Iranians have a Deak squad,
you know, trying to take out Donald Trump for the
(26:53):
assassination of Solomoni. I mean, these are not like normal
negotiations among interested parties. I mean, you know, this is
the the rangest group of people you're ever going to
meet with. Hey, we'd like to negotiate you with you
while we're trying to kill you. So if you have
conditions like that, you have to assume that Donald Trump's
going to use equal, if not more lethal ways of
(27:14):
dealing with the Iranians. And so I just want to
you know, this is not like negotiating a real estate deal.
You know, You've got a situation here where Iran does
not played by any rules of modern society, and therefore
they are now vulnerable to those who have the power
to prey upon them. And at the end of the day,
(27:36):
if you want a peaceful Middle East, you're going to
have to deal with the biggest troublemaker in the region,
and that's Iran. And Iran has been unwilling to contain
their ambitions.
Speaker 2 (27:47):
Ginnie, I've got less than a minute here. If the
President decides to attack and he loses MAGA, can he
win them back?
Speaker 9 (27:55):
He absolutely could, but there might be a fissure there.
But let's not forget we just got out of Afghanistan.
Who controls that country now, the Taliban? It is not
just we attack, regime change and we live in a
peaceful Middle East. The President, the United States, all of
our allies have to answer what is the day after?
(28:16):
What is next? What is this new regime you're hoping for.
We need to hear about that from the President of
the United States. If he decides to attack, what is
the end of.
Speaker 6 (28:25):
This entire thing?
Speaker 2 (28:28):
Great conversation with our great panel, Rick Davis and Jeanie Shanzano,
Bloomberg Politics contributors. Thank you both for the insights.
Speaker 1 (28:38):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on Alpa,
Cocklay and Android Auto with the Bloomberg Business App. Listen
on demand wherever you get your podcasts, or watch us
live on YouTube.
Speaker 2 (28:54):
A lot to look forward to you with regards to
our special FED coverage as well. That's tomorrow at the
meeting getting under and that's always our pleasure because Michael
McKee is in town. When the FED gets together, the
FOMC means Michael McKee is, whether it's at the desk
here Bloomberg International Economics and Policy correspond it's great to
see you. I don't know how bullish you're feeling, or
how bullish j Powell is feeling. We don't get a
(29:15):
cut tomorrow or a change in rates, but we might
start hearing some hints what do you think.
Speaker 10 (29:20):
Well, Wall Street should be looking for hints. The question
is how much of a hint does the Fed want
to give them? And I don't think it's going to
be a whole lot because they don't know anything either.
We are getting a new Summary of Economic Projections, their
forecast for GDP, unemployment, and inflation, and then we get
the new dot plot. Wall Street is kind of betting
that they're going to raise the unemployment forecast and raise
(29:44):
the inflation forecast, which would suggest slower growth, but not
do a whole lot about it in the dot plot,
maybe cut from two cuts this year to one cut,
and essentially admit they don't know what's going to happen
to the economy because we're all waiting on Donald Trump.
Speaker 3 (29:59):
Yeah, about everything.
Speaker 2 (30:01):
So yesterday I probably would have a couple of days
ago asked you about tariffs. We have a massive geopolitical
crisis that's unfolding now as well. Donald Trump's in the
White House as we're talking to you, trying to figure
out whether the US should join Israel offensively against Iran.
This is happening just as the FMC gets behind closed doors.
(30:21):
Does that factor into their decision making?
Speaker 10 (30:23):
It's not going to factor into their decision making because
there is no way to know what it will actually mean.
We can speculate about what the US might do, and
we can speculate about how the Iranians and others in
the Middle East might respond, but other than oil prices
going up, which is sort of a given in this situation,
there's no way to know how this would play out
for the US economy, which is what the FED cares about.
(30:46):
Oil prices can go up, they will maybe at some
point affect people's purchasing decision making, but for right now
they have to watch too. I mean, maybe they'll have
a TV set watching you FED meeting.
Speaker 3 (31:00):
We'll see about that. If anyone knows, it would be you.
Speaker 2 (31:02):
But in this case I mentioned tariffs. A weaker than
expected reading on retail sales today, this is something that
FED can get its arms around. Is that a result
of the front loading or the front running that we
saw ahead of tariffs taking.
Speaker 10 (31:14):
It largely was in the sense that most of the
damage was done by decline in car sales because everybody
bought cars earlier. Building materials maybe a little bit terrif related,
but probably a lot weather related, and it's rained, it
just keeps raining, and then you had gasoline prices go
(31:35):
down Ghasoly prices are going back up again now because of.
Speaker 3 (31:38):
What's going on in the Middle East.
Speaker 10 (31:40):
So it isn't clear exactly what the message is from
all of that, except that the FED has to keep
an eye on whether Americans want to keep spending. But
Americans are waiting for details as well. And the interesting
thing about getting all this information from the Fed tomorrow
is July ninth. Two weeks after that we hear about
(32:00):
the reciprocal tariffs, and that might change the whole game again.
Speaker 3 (32:03):
Less, of course, does an extend.
Speaker 10 (32:04):
But expiration data on their new forecast.
Speaker 2 (32:07):
Yeah, well, I guess in two weeks is a pretty
long time around here. So imagine yourself in the news
conference tomorrow as you will be, and I know you're
probably crafting some impossible to answer question as we speak.
Speaker 3 (32:18):
What's the tone?
Speaker 2 (32:18):
What's the posture for j Powell in the midst of
all this uncertainty? Is it just like the last news conference?
Speaker 10 (32:23):
I think so. I think he wants to avoid making
news as much as possible. He'll say that we are
focused on the economy and we will take in all
of the President's policies in terms of what they mean
for the economy and for our mandate, and we just
don't have enough information now to decide. And he'll kind
of leave it at that because there's no percentage in
(32:45):
him making the President mad. We already know the President
is bad at him, and there's no percentage in upsetting
Wall Street at this point because there's plenty of other
things that Wall Street has.
Speaker 2 (32:54):
To worry Yeah, well there's a lot of other things
that Donald Trump has to worry about as well. You
wonder if we don't get them sives on truth Social
tomorrow because we actually do have an international crisis underway.
Speaker 3 (33:04):
Yeah.
Speaker 10 (33:05):
I suspect that we might not, but it could be
overnight that he sends out some note that I don't
expect too late. Jay to Yes, too late? Pal is
Scott Besson the next FED chair? Uh my guess, I
guess would be no. I think where did this come from?
Speaker 8 (33:23):
This week?
Speaker 10 (33:23):
Well, it's the Wall Street game, you know, you you
float people's names and see what the reaction is. And
the reaction has not been overwhelmingly Yeah, we got to
have him. Uh And Besson is kind of busy with
a whole bunch of things for the president at this point,
and it is easier for the president to imagine another
FED chair, someone like Kevin Warsh, who he's already touted
(33:46):
as a potential FED Chair, then to come up with
another name for Treasury who would be able to fit
into the roles that Besson has played. Liai's under Wall
Street negotiator with Foreign Internation in terms of and things
like that. They've perfectly qualified people, but they also have
to satisfy the MAGA side of the party, so it'd
(34:07):
be harder for him maybe to get a new Treasury
Secretary than a FED chair.
Speaker 3 (34:11):
That's a lot of needles to thread. You've covered this
complex for some time.
Speaker 2 (34:15):
What do you make of all these roles that the
Treasury Secretary is suddenly balancing.
Speaker 3 (34:19):
Did he even know he was going to be doing this?
Speaker 10 (34:21):
Probably not. I mean, it seems to be an ad
hoc process over at the White House, but this is
not necessarily new. During the Clinton administration, Bob Rubin and
the folks a Treasury surpassed the State Department. They became
the prime policy implementers for the president because we had
an economic crisis in the world. We had the Asian
(34:42):
financial crisis, and then we saw Treasury under George W.
Bush with Hank Paulson also take the leading role on
we had the financial crisis. And this is a time
when the crises now Israel Iran may be different, but
the crises that we have been facing that Trump maybe
closing are on the financial side. So it puts Treasury
(35:03):
in the driver's seat in terms of implementing this stuff
and in terms of talking to everybody else.
Speaker 3 (35:07):
In the world.
Speaker 2 (35:08):
Fascinating. Great to have you with us here. We'll connect
tomorrow on the FED. Michael mckeed, Bloomberg International Economics and
Policy correspondent with us here on Balance of Power.
Speaker 3 (35:18):
Thanks for listening to the Balance of Power podcast.
Speaker 2 (35:21):
Make sure to subscribe if you haven't already, at Apple,
Spotify or wherever you get your podcasts, and you can
find us live every weekday from Washington, DC at noontime
Eastern at Bloomberg dot com.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Wall Street again bumping into Washington and a looming decision
now for President Trump on what to do whether to
join Israel offensively against Iran. He's back at the White
House today, as we told you, having left the G
seven in Canada early to deal with these matters that
we've seen a flurry of posts on truth social demanding
unconditional surrender in one case, to Iran, and going even
(00:49):
further to write about Iran's supreme leader. We know exactly,
he writes, where the so called supreme leader is hiding.
He is an easy target, but is safe there. We're
not going to take him out, he writes, kill in parentheses,
at least not for now. But we don't want missiles
shot at civilians or American soldiers, our patients as wearing thin.
Speaker 3 (01:10):
Thank you for.
Speaker 2 (01:11):
Your attention to this matter. The question, of course, whether
the US should go further than providing logistical support to
the Israeli military, the Israeli Air Force, the IDF, whether,
in fact the US should put American air crews in
D two bombers to deliver bunker busting bombs that are
(01:32):
needed to get to the deep underground enrichment facilities like
Fourdeaux that we've talked about inside Iran. I discussed the
idea of US involvement and whether it was essential right
at this time. Yesterday in a conversation with Ron Dermer,
Israel's Minister for Strategic Affairs, Here's what he said.
Speaker 4 (01:50):
The US has been tremendous in the support that it's
given Israel from the beginning of this war on defense.
There's an understanding, frankly, Joe in America and not just Israel. Then,
when we are fighting Iran, we're not just fighting for ourselves.
We're fighting an enemy of the United States. So when
we're taking them on, we are fighting your fight, and
actually our victory will also be an American victory, and
(02:13):
I think it will help turn the region into a
different direction.
Speaker 2 (02:17):
Let's see what the thinking is at the White House
right now. Bloomberg's Tyler Kendall has been there all day
and joins US Live from the North Lawn Tyler.
Speaker 5 (02:25):
Yeah, hey, Joe, Well, it's our understanding that the US
has been in close contact with its Israeli counterparts. President
Trump has been in the situation room getting updates. And
then about an hour ago, as you mentioned, we saw
this flurry of posts on truth social that included him
posting about unconditional surrender and also threatening Iran Supreme leader.
And then another one worth reiterating. He said, quote, we
(02:46):
now have complete and total control of the skies over Iran.
Iran had good skytrackers and other defensive equipment, and plenty
of it, but it doesn't compare to American made, conceived,
and manufactured stuff in quotes. This definitely, of course, heightens
the US's support of these ongoing Israeli airstrikes, as the
question really does become what will US involvement look like
(03:08):
going forward? We could soon have an answer, as Axios
reports that President Trump is going to convene that National
Security Council at one pm Eastern, and we also heard
from the German Chancellor speaking to local broadcaster saying that
the US will make its decision based off of whether
or not it thinks Iran is willing to negotiate. We
should say that up to this point, the White House
has maintained that it has a defensive posture here, though
(03:31):
it did move military assets into the region, and analysts
do tell us, just for context, that if the US
does get involved, it likely want to be boots on
the ground, troops on the ground, but it would be
air or sea defense and support moving forward. There also
important to mention, though, that the speculation about this Joe
really did heighten after we saw a post from Vice
(03:51):
President to JD. Vance earlier today. He wrote in a
post on x that President Trump quote may decide he
needs to take further action to and Iranian enrichment. Of course,
the possibility of a diplomatic de escalation could still be
on the table. It's worth noting that President Trump did
suggest earlier that he may dispatch either Vance or his
special en voice Steed Witcoff or talks with Roan. We're
(04:13):
just waiting for some updates on how that involves.
Speaker 2 (04:16):
All right, Tyler, stay close with us. Bloomberg's Tyler Kendall
at the White House. As we turn our attention now
to what is left of the G seven summit in Canada.
Bloomberg's David Gura is in Banff, where world leaders are
continuing to move their conversations ahead even without President Trump. David,
how is all of this playing there?
Speaker 4 (04:38):
Well?
Speaker 6 (04:38):
To borrow a phrase from the President, this matter does
have the attention of the world leaders who are gathered here.
We heard from Chancellor Friedrich Mertz of Germany this morning
talking about that conflict, having some very strong rhetoric about Iran,
and suggesting that the US is going to make its
decision on military action today. So everyone here tracking very
closely what's happening in Washington, indeed what's happening in the
Middle East as well. But you just rightfully point out
(05:00):
the agenda proceeds as normal. President Vladimir Zelenski's here in Canada.
He had a meeting with Prime Minister Mark Karney just
a few minutes ago, at which Canada announced a big
investment in defense spending for Ukraine and new sanctions on Russia.
We're seeing those meetings continue over the course of the day,
and sitting in President Trump's seat at all of these
major meetings is now Scott Bessett, the Treasury Secretary who
(05:21):
traveled here with President Trump, with the expectation going into
this summit there'd be more conversations on the sidelines about
trade and tariffs, but he has now been given the
impromado to sit in that seat over the course of
these meetings to kind of play the role of the
US's representative here as conversations center on Ukraine this morning
and energy this afternoon. Again, the official agenda continues, but
(05:43):
everyone here very much watching what's unfolding and Washington in
the Middle East.
Speaker 2 (05:45):
Joe great reporting this week from David Girl live in Banff, Canada.
Speaker 3 (05:49):
Thank you so much, David.
Speaker 2 (05:51):
As we add the voice of experience in retired General
Frank McKenzie. We told you he would join us. Someone
with answers to many of the questions that we've been asking.
Is he was the former commander United States Central Command
SENTCOM from twenty nineteen to twenty twenty two. Now executive
director of the University of South Florida's Global and National
(06:11):
Security Institute. General mackenzie, it's good to have you back
on Balance of Power.
Speaker 3 (06:15):
Welcome back to Bloomberg TV and Radio. It's good to
have you with us.
Speaker 2 (06:19):
The President is facing a big choice today as it seems,
and he's been writing on truth Social about it. If
you were still in your old job, would you recommend
to the President that the US join Israel offensively in
eliminating Iran's nuclear program?
Speaker 7 (06:33):
Well, I think, first of all, it's going to be
with you, Joe. I think the important thing to remember
here is, as he approaches this decision, President Trump actually
has unique credibility with Iran because he gave the order
to strike Cassim Solmony back in early twenty twenty, So
he possesses enormous, enormous wata, if you will. As he
(06:53):
approaches this problem, it's going to be his decision to
choose how how is he going to use it? Are
we going to try to negotiate? Now? The problem with
nagociating with the Iranians is they're not great fighters, but
they're remarkable negotiators. They will try to bog you down,
they'll try to spend it out in time, and what
they will try to do is stay on their task
of destroying Israel and ejecting US from the region. So
(07:14):
it's a particularly it's a particularly difficult decision for the
President to make. If we go in and we strike
this target, as we're talking about doing. We're probably not
going to be able to completely eradicate the Iranian nuclear program,
but we will set the nuclear program back.
Speaker 2 (07:30):
Interesting you mentioned a custom Solomony. I believe you did
recommend to President Trump at the time that he'd be
taken out, and a lot of people are looking at
that as the beginning of a saga that brings us
here today. That, in fact, closing the deal at four
DOAU and eliminating by the use of American B two
bombers and the MOAB eliminating what is left of that
(07:52):
ENRICHMENTD facility would be the bookend on something that you
started that day.
Speaker 3 (07:56):
General, Is that correct.
Speaker 7 (07:59):
Well, that would be President Trump's decision to actually execute
that strike, And I believe you can make a point
that it began a narrative arc that has taken us
to where we are today. You know, twenty twenty four
was the worst year in Iranian history in terms of
foreign policy and defense policy, but it really did begin
with the loss of Solomani, who was their inspirational leader,
(08:21):
the guy that could bring it all together for him
across the region. After January twenty twenty, he was no
longer there and they have felt his loss significantly.
Speaker 2 (08:31):
It's really interesting as we try to understand the impact
that that had when it comes to communications with Iran's proxies,
when it comes even to a spreed to core if
I can use that term in keeping some cohesion among
proxies and even within the Revolutionary Guard. The elimination of
Cassem Solomani speaks directly to the chaos and the lack
(08:54):
of response, the chaotic response we're seeing now, does it not.
Speaker 7 (08:58):
It absolutely does. The fact of the matter is the
Iranian military and particularly the IRGC, the Republican Guard Corps,
they don't have good succession planning. People come into these
jobs and they stay for many, many, many years. You know,
you don't have someone you can turn to if a
person dies or is killed. And they felt that very keenly.
(09:19):
They felt it. And the loss of Solomony we see
it right now in the loss of their equivalent, of
their chairman and equivalent, and the loss of the IRGC commander.
It has been is having a profound effect on Iranian
decision making. It's crippling it. It's making it very hard
for them to come to coordinated positions on how to
respond and we see that every day in their ineptitude.
Speaker 3 (09:42):
Gentleal mackenzie.
Speaker 2 (09:43):
We're getting headlines from Iranian state media right now that
Iran will soon launch soon launch what they're calling a
putative operation against Israel. I'm reading these with you for
the first time, citing Iran's Chief of Staff of Armed
Forces on this operation, urging Israelis to evacuate tell Leviv
and Haifa. How should Israel respond to headlines like these?
(10:07):
And is the Iron Dome enough to keep them safe?
Speaker 7 (10:12):
The waves of Iranian attacks have had minimal success. I
know that's easy for me to say here in the
United States when buildings have been destroyed in Israel, but
the Israeli success rate with their various systems far beyond
Iron Dome has actually been pretty remarkable. The Iranians have
thrown about all they can throw at Israel. There's not
(10:33):
some secret deadly weapon out there waiting to be employed.
They just don't have it. You'll see more of the
same against Israel. I predict what will happen over time
is that Israeli defenses will grow increasingly effective as they
solve the way the Iranians are attacking, and the Iranians
don't have an endless supply of these weapons.
Speaker 2 (10:52):
As well, we've been surging equipment into the theater, as
I'm sure you know, more than two dozen tankers, air refuelers.
We're steering the USS Knimitz Strike Carrier Group into the region.
What does this collection of material illustrate.
Speaker 3 (11:08):
To you that we may be preparing for.
Speaker 7 (11:11):
First of all, that illustrates the excellence of the Joint Force,
and our capabilities are global. We can flex anywhere very quickly.
I think it's prudent planning by the Department of Defense.
It's all about giving the president options. The decision to
whether or not we're going to strike Iran is going
to be a political decision that is not a military decision.
(11:31):
But what you want to do is ensure that the
president has all the tools necessary to make that decision
or to defer that decision if that's what he wants
to do, and protect our forces in the region. And
so that's what's going on right now. It's pretty much
another day at the office for the US military. We're
very good at this. They're bringing them in so that
we can prepared for really any contingency.
Speaker 2 (11:54):
Some great reporting today in the New York Times about
what it would take to strike four Dough, the underground
and enrichment site that we've already referred to. It's essentially
underneath a mountain. General, and apparently the US was involved
here the Pentagon for several years trying to refine a
strike plan if in fact it was needed. They found
(12:15):
that it would require B two's, several of them releasing
one moab after another down the same hole before they
got there. Were you involved in those experiments? Is that
actually what it would take, regardless of whether it's decided
to be used today, is that what it would take
to blow up a mountain?
Speaker 7 (12:32):
So, really, Joe, all I can tell you is we
have very good plans, we have very good capabilities. We
study the problem, we believe we have a solution to
the problem. But that's really all I can tell you.
Speaker 2 (12:43):
Well, when the General can't answer a question like that,
I know we're getting warm on something here. Let me
ask you further. There's also reporting that if we didn't
in fact make that decision to use these bunker busting bombs,
that cutting the power might do it. A sabotage mission
to cut the power to these center feuge which spin
at supersonic speeds? Should that be in our playbook?
Speaker 7 (13:06):
Every possible approach to this problem is in our playbook,
and many of them obviously also in Israel's playbook. Everything
from different forms of cyber attack to power interruption to
proxy attack direct on the ground. All of those options
are on the table. All of those options have been
thoroughly studied, and all of those options would be available
should we choose to use them.
Speaker 2 (13:28):
As we spend time with retired General Frank Mackenzie trying
to figure out the way forward here, I wonder the
questions that you're asking as well about how far Israel
is planning to go here? General, is there a scenario
that we should be prepared for that would involve Israeli
boots on the ground in Iran and a very different
mission to support Joe.
Speaker 7 (13:50):
I can't see that under any circumstance it ran as
a large country or the population of over ninety million.
I can't see any possible way that involve an Israeli
ground invasion of Iran just not going to happen. I
see some scenarios perhaps where the Israelis believe they can
knock out the existing government. Now you're dealing with what
(14:13):
is essentially a failed state, a dysfunctional, a dysfunctional entity,
And in some ways that may be better than a
state that isn't failing, but that has malevolent intent not
only against Israel but against all of its neighbors. It
would it would not be a good scenario for the
people of Iran. Will be denied basic services, for food,
for medicine, for all the things that make a life
(14:33):
worth living. But to some degree, the only people to
blame for that is current Iranian leadership.
Speaker 2 (14:39):
Huh, General, you know what it's like to be in
the situation room with the National Security Council with the
President of the United States. It appears that's the kind
of day they're having today at the White House. We've
already discussed the decision that President Trump is facing here,
and I wonder if we could qualify this as the
most important foreign policy decision facing a president since the
withdrawal of afghanist in.
Speaker 7 (15:01):
It's certainly a big it's certainly a certainly a big decision.
And if you're in there as a military person, your
job is to ensure that the people who make those decisions,
the civilian leadership of our country, have all the options
they need in order to execute whatever decision they choose,
and then the Joint Force will faithfully execute those decisions.
Speaker 2 (15:21):
There seems to be an expectation this decision is made today. General,
how long is this window open for?
Speaker 7 (15:28):
I think we have some flexibility in how we choose
to approach it. I think the problem is for the Iranians,
time works against them. They're weaker every day, They're more
attried it every day, They're less capable every day. So
I think the pressure of the clock is working against them.
It's working for us and for Israel.
Speaker 2 (15:46):
Lastly, the President writing on truth Social Generally you might
have seen it. We know exactly where the so called
Supreme Leader is hiding. He writes an easy target. He's
safe there. We're not going to take him out, at
least for now. Is the Supreme Leader eventually a target?
Speaker 7 (16:01):
Don't know the answer to that. I do know that
President Trump has unique credibility when he writes those words,
and Iran is very much aware of that.
Speaker 3 (16:10):
It's great to have you with us. General.
Speaker 2 (16:12):
We hope that we can continue this conversation with you.
Retired General Frank Mackenzie, former Sencom commander now at the
University of South Flora's Global and National Security Institute, a
fascinating conversation. As we always seek to bring you voices
of experience practitioners here on Balance of Power.
Speaker 3 (16:28):
We'll assemble our panel next.
Speaker 2 (16:30):
Rick Davis and Jeanie Shanzino are with us live from
Washington with much more to follow.
Speaker 3 (16:34):
Here. I'm Joe, Matthew and Glad.
Speaker 2 (16:35):
You're Alon on the Tuesday edition of Balance of Power
on Bloomberg TV and Radio.
Speaker 1 (16:41):
You're listening to the Bloomberg Balance of Power Podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Cockley and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa, play Bloomberg eleven.
Speaker 2 (16:59):
Thirty watching the Tuesday Trade Evolve with the news here
from Washington. Bloomberg News can now confirm the President of
the United States set to meet with the National Security
team here to talk about what next in the Middle East.
Speaker 3 (17:14):
We've had a.
Speaker 2 (17:14):
Flurry of truth social posts from President Trump and as
we were just discussing with retired General Frank McKenzie, a
big decision here in the offing and it could come
today based on everything that we are hearing about what
should be the US policy when it comes to offensive
military action against Iran, the President calling for unconditional surrender
(17:36):
in One Truth social post, going even further if you
were with us on Bloomberg to say, we know exactly
where the so called Supreme Leader is hiding, adding that
we're not going to take him out, at least not
for now. The pressure campaign is ratcheting up here as
we get closer to a decision that could lead to
either US military action or some sort of if we're
(18:01):
still allowing for that. We assembled our political panel now.
Bloomberg Politics contributors Genie Shanzano and Rick Davis are with us.
Rick is our Republican strategist partner at Stone Court Capital.
Genie is senior Democracy Fellow with the Center for the
Study of the Presidency in Congress, Rick, you spent enough
time at the White House and in skiffs across Washington
(18:22):
to have a sense of what this is like inside
the sit room, inside the West wing.
Speaker 3 (18:26):
Right.
Speaker 2 (18:26):
Now, give us a sense of the conversations that are
being had, the options the president is hearing and from whom.
Speaker 8 (18:33):
Yeah, well, the joint chiefs job is to advise the
president and give him military options, obviously orchestrated by his
Secretary of Defense Pete Hexath. So they are there along
with the National Security team both inside the White House
and other members in the cabinet, and that is exactly, Joe,
(18:56):
what you described they're doing. They're going through various scenarios,
you know, to tell the president what kind of options
he has, what kind of choices, ask answering any questions
that here the team has, and and game planning out
a little bit about what happens next. We know he's
not tweeting in there, because you're not allowed to have
a phone in a skiff. He's certainly not in the
(19:18):
sit room, and so he must have We can almost
time how much time he's in the sit room by
like when those tweets kick off again, he gets his
phone back. But the bottom line on it is is
that they'll have all the information they need there at hand,
a lot of electronic information available to make a decision,
(19:40):
and that maybe that decision is a non decision for now,
but at the end of the day, it's the president's choice.
It is not the decision of a military leader to
make what we do. They are giving him options. It's
up to the President to make that commander in chief decision.
Speaker 2 (19:57):
Genie, I don't know how often you're on the same
page as Tom mass but he is among a group
of Republicans on Capitol Hill who are demanding that Congress
be involved in this decision. The President obviously has great
authority when it comes to dealing with our own national
security when it comes to the immediacy of whether or
(20:17):
not to strike. But if we're talking about a longer
term commitment here, when does Congress get the call?
Speaker 9 (20:23):
Well, so far they have not been very active. You
mentioned Tom Massey, who is joined to buy strange bedfellows
like Ilhan Omar and Alexandro Casio Cortes who have indicated
they would sign on to this resolution. And then, of
course in the Senate you have Tim Kane, who is
promising to bring other Democrats along. It'll be curious to
(20:44):
see if any of the more right wing MAGA folks
go along with him. So we're going to see strange bedfellows.
And I think from the President's perspective, and you can
see this, I think in the truths from today, he
would think best case scenario is that he compels Iran
(21:05):
to give up, come to the negotiating table, and he
doesn't have to make this very tough decision because for
him politically, this is a very moment. He has told
people two things that simply do not reconcile together. One,
I am Israel's best ally. America will continues to support it.
(21:27):
Number Two, we are out of foreign wars. I am
heading for a Nobel Peace Prize. We are going to
be America first. Those two promises are irreconcilable, and he
is being called to the mat on those by those
on the MAGA right, which is why you're seeing the
Vice President, who speaks MAGA, speaking to them on Twitter
today and saying, give the president some space. He's earned
(21:50):
your trust. He's only going to do what's in the
best interest of the American public. But remember, the use
of troops for that reason is the same defense ever
free president of the United States gives. And Donald Trump
made a career of attacking George Bush, Barack Obama, Joe Biden.
I can go on and on Hillary Clinton for using
US troops on foreign soil for exactly the same reason.
(22:13):
So he's in a conundrum. Best case scenario, he doesn't
have to make a decision. But I think he's not
going to get that. He's probably going to have to
make it, and it's going to put him in a
politically charged position.
Speaker 3 (22:24):
Rick Wherrer, are you on Congress's role in all of this?
Speaker 2 (22:27):
How long does Donald Trump have to act independently before
lawmakers need to have a say?
Speaker 7 (22:33):
Oh?
Speaker 8 (22:33):
I think that historically presidents have been given a long
lead time. You know, throughout the ages, presidents have been
able to act in an offensive fashion. Bill Clinton intervened
in the Bosnia War without permission from Congress, and you
go back to presidents like Nixon and others. So there's
(22:55):
a lot of history to giving the President of the
United States flexibilit especially in urgent situations such as this. Right,
this does not correspond with a debate in Congress that
could last weeks. This is a moment in time US
needs to act and the president, I think will be
given plenty of leeway. Remember, too, there are a lot
(23:17):
of bipartisan support for heming in Iran.
Speaker 3 (23:21):
This is not just.
Speaker 8 (23:22):
A Republican idea. A lot of hawks in the Democratic
Party see this as an opportunity to finally rid the
Middle East of the biggest troublemaker that we've had in
our lifetimes, and so I think you'll find both bipartisan
opposition to this, but also bipartisan support for anything that
(23:43):
the President wants to do to end the scourge of
Iranian troublemaking in the region.
Speaker 3 (23:50):
Geni.
Speaker 2 (23:50):
When you hear the president's comments, particularly from last evening
on Air Force One, we are looking for better than
a cease fire, he said, better than a fire, a
real end, which is why people are wondering if he
is in fact thinking seriously about committing the US military
to this to take part in Israeli strikes against Iran.
Speaker 3 (24:14):
When you hear.
Speaker 2 (24:14):
Talk like that, does that tell you that Donald Trump
will make this decision today in the sit room with
his military advisors, or that actually Iran will make this
decision based on how it responds.
Speaker 9 (24:27):
You know, I think the President probably is committed to
where he wants to take this already. I think that's
why he came back. I think that's why we're seeing
the messages we are seeing from the President. The Vice
President Pete heg Seth on Fox News last night. Sure
his mind could be changed if he gets some new information,
(24:48):
but I think he knows where he wants to go,
and that is where he has been a long time.
Iran cannot have nuclear weapons. The challenge for him is
he blew up the deal in twenty eighteen that would
have left us in a much better position than we
are right now, and now he's got to make a
tough decision. Yes, he hopes that Iran completely capitulates, completely surrenders,
(25:11):
but you talk to Iran experts and they say, how
can Iran do that at this point in the future.
They might, but at this point, how can they? Number One,
they have lost faith in the President of the United
States Donald Trump because they don't feel like he was
being completely open and honest with them about the negotiations
(25:31):
that were occurring. And so that's something he's going to
have to overcome if he really wants a substantive negotiation
with them on this. And number two, is he really
going to backtrack on his no nuclear weapons for Iran?
I read that truth to say that he really does
want regime change, which many people do, but he doesn't
(25:53):
want to make the difficult decision as to how you
get there, and he may just have to in the
next couple hours.
Speaker 2 (25:59):
Well, that's pretty interesting, Rick, when you consider the options here.
Donald Trump could simply let Israel keep hammering away at
Iran and hope for the people to rise up, or
maybe an alternate approach to eliminating the centerfugees. But as
General McKenzie said, the Iranians are better negotiators than they
are fighters, and I think he said they're bad fighters
(26:21):
and great negotiators.
Speaker 3 (26:22):
Based on the.
Speaker 2 (26:23):
History of this conversation, why should the US even take
Iran seriously as a credible actor at a negotiating table.
Speaker 8 (26:31):
Yeah, I think that Donald Trump has always felt that
threats and coercions the way to go with the Iranians,
and he's probably more right than wrong. I mean, Frank
McKenzie has got an enormous amount of experience dealing with
the Iranians. But remember too, the Iranians have a Deak squad,
you know, trying to take out Donald Trump for the
(26:53):
assassination of Solomoni. I mean, these are not like normal
negotiations among interested parties. I mean, you know, this is
the the rangest group of people you're ever going to
meet with. Hey, we'd like to negotiate you with you
while we're trying to kill you. So if you have
conditions like that, you have to assume that Donald Trump's
going to use equal, if not more lethal ways of
(27:14):
dealing with the Iranians. And so I just want to
you know, this is not like negotiating a real estate deal.
You know, You've got a situation here where Iran does
not played by any rules of modern society, and therefore
they are now vulnerable to those who have the power
to prey upon them. And at the end of the day,
(27:36):
if you want a peaceful Middle East, you're going to
have to deal with the biggest troublemaker in the region,
and that's Iran. And Iran has been unwilling to contain
their ambitions.
Speaker 2 (27:47):
Ginnie, I've got less than a minute here. If the
President decides to attack and he loses MAGA, can he
win them back?
Speaker 9 (27:55):
He absolutely could, but there might be a fissure there.
But let's not forget we just got out of Afghanistan.
Who controls that country now, the Taliban? It is not
just we attack, regime change and we live in a
peaceful Middle East. The President, the United States, all of
our allies have to answer what is the day after?
(28:16):
What is next? What is this new regime you're hoping for.
We need to hear about that from the President of
the United States. If he decides to attack, what is
the end of.
Speaker 6 (28:25):
This entire thing?
Speaker 2 (28:28):
Great conversation with our great panel, Rick Davis and Jeanie Shanzano,
Bloomberg Politics contributors. Thank you both for the insights.
Speaker 1 (28:38):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on Alpa,
Cocklay and Android Auto with the Bloomberg Business App. Listen
on demand wherever you get your podcasts, or watch us
live on YouTube.
Speaker 2 (28:54):
A lot to look forward to you with regards to
our special FED coverage as well. That's tomorrow at the
meeting getting under and that's always our pleasure because Michael
McKee is in town. When the FED gets together, the
FOMC means Michael McKee is, whether it's at the desk
here Bloomberg International Economics and Policy correspond it's great to
see you. I don't know how bullish you're feeling, or
how bullish j Powell is feeling. We don't get a
(29:15):
cut tomorrow or a change in rates, but we might
start hearing some hints what do you think.
Speaker 10 (29:20):
Well, Wall Street should be looking for hints. The question
is how much of a hint does the Fed want
to give them? And I don't think it's going to
be a whole lot because they don't know anything either.
We are getting a new Summary of Economic Projections, their
forecast for GDP, unemployment, and inflation, and then we get
the new dot plot. Wall Street is kind of betting
that they're going to raise the unemployment forecast and raise
(29:44):
the inflation forecast, which would suggest slower growth, but not
do a whole lot about it in the dot plot,
maybe cut from two cuts this year to one cut,
and essentially admit they don't know what's going to happen
to the economy because we're all waiting on Donald Trump.
Speaker 3 (29:59):
Yeah, about everything.
Speaker 2 (30:01):
So yesterday I probably would have a couple of days
ago asked you about tariffs. We have a massive geopolitical
crisis that's unfolding now as well. Donald Trump's in the
White House as we're talking to you, trying to figure
out whether the US should join Israel offensively against Iran.
This is happening just as the FMC gets behind closed doors.
(30:21):
Does that factor into their decision making?
Speaker 10 (30:23):
It's not going to factor into their decision making because
there is no way to know what it will actually mean.
We can speculate about what the US might do, and
we can speculate about how the Iranians and others in
the Middle East might respond, but other than oil prices
going up, which is sort of a given in this situation,
there's no way to know how this would play out
for the US economy, which is what the FED cares about.
(30:46):
Oil prices can go up, they will maybe at some
point affect people's purchasing decision making, but for right now
they have to watch too. I mean, maybe they'll have
a TV set watching you FED meeting.
Speaker 3 (31:00):
We'll see about that. If anyone knows, it would be you.
Speaker 2 (31:02):
But in this case I mentioned tariffs. A weaker than
expected reading on retail sales today, this is something that
FED can get its arms around. Is that a result
of the front loading or the front running that we
saw ahead of tariffs taking.
Speaker 10 (31:14):
It largely was in the sense that most of the
damage was done by decline in car sales because everybody
bought cars earlier. Building materials maybe a little bit terrif related,
but probably a lot weather related, and it's rained, it
just keeps raining, and then you had gasoline prices go
(31:35):
down Ghasoly prices are going back up again now because of.
Speaker 3 (31:38):
What's going on in the Middle East.
Speaker 10 (31:40):
So it isn't clear exactly what the message is from
all of that, except that the FED has to keep
an eye on whether Americans want to keep spending. But
Americans are waiting for details as well. And the interesting
thing about getting all this information from the Fed tomorrow
is July ninth. Two weeks after that we hear about
(32:00):
the reciprocal tariffs, and that might change the whole game again.
Speaker 3 (32:03):
Less, of course, does an extend.
Speaker 10 (32:04):
But expiration data on their new forecast.
Speaker 2 (32:07):
Yeah, well, I guess in two weeks is a pretty
long time around here. So imagine yourself in the news
conference tomorrow as you will be, and I know you're
probably crafting some impossible to answer question as we speak.
Speaker 3 (32:18):
What's the tone?
Speaker 2 (32:18):
What's the posture for j Powell in the midst of
all this uncertainty? Is it just like the last news conference?
Speaker 10 (32:23):
I think so. I think he wants to avoid making
news as much as possible. He'll say that we are
focused on the economy and we will take in all
of the President's policies in terms of what they mean
for the economy and for our mandate, and we just
don't have enough information now to decide. And he'll kind
of leave it at that because there's no percentage in
(32:45):
him making the President mad. We already know the President
is bad at him, and there's no percentage in upsetting
Wall Street at this point because there's plenty of other
things that Wall Street has.
Speaker 2 (32:54):
To worry Yeah, well there's a lot of other things
that Donald Trump has to worry about as well. You
wonder if we don't get them sives on truth Social
tomorrow because we actually do have an international crisis underway.
Speaker 3 (33:04):
Yeah.
Speaker 10 (33:05):
I suspect that we might not, but it could be
overnight that he sends out some note that I don't
expect too late. Jay to Yes, too late? Pal is
Scott Besson the next FED chair? Uh my guess, I
guess would be no. I think where did this come from?
Speaker 8 (33:23):
This week?
Speaker 10 (33:23):
Well, it's the Wall Street game, you know, you you
float people's names and see what the reaction is. And
the reaction has not been overwhelmingly Yeah, we got to
have him. Uh And Besson is kind of busy with
a whole bunch of things for the president at this point,
and it is easier for the president to imagine another
FED chair, someone like Kevin Warsh, who he's already touted
(33:46):
as a potential FED Chair, then to come up with
another name for Treasury who would be able to fit
into the roles that Besson has played. Liai's under Wall
Street negotiator with Foreign Internation in terms of and things
like that. They've perfectly qualified people, but they also have
to satisfy the MAGA side of the party, so it'd
(34:07):
be harder for him maybe to get a new Treasury
Secretary than a FED chair.
Speaker 3 (34:11):
That's a lot of needles to thread. You've covered this
complex for some time.
Speaker 2 (34:15):
What do you make of all these roles that the
Treasury Secretary is suddenly balancing.
Speaker 3 (34:19):
Did he even know he was going to be doing this?
Speaker 10 (34:21):
Probably not. I mean, it seems to be an ad
hoc process over at the White House, but this is
not necessarily new. During the Clinton administration, Bob Rubin and
the folks a Treasury surpassed the State Department. They became
the prime policy implementers for the president because we had
an economic crisis in the world. We had the Asian
(34:42):
financial crisis, and then we saw Treasury under George W.
Bush with Hank Paulson also take the leading role on
we had the financial crisis. And this is a time
when the crises now Israel Iran may be different, but
the crises that we have been facing that Trump maybe
closing are on the financial side. So it puts Treasury
(35:03):
in the driver's seat in terms of implementing this stuff
and in terms of talking to everybody else.
Speaker 3 (35:07):
In the world.
Speaker 2 (35:08):
Fascinating. Great to have you with us here. We'll connect
tomorrow on the FED. Michael mckeed, Bloomberg International Economics and
Policy correspondent with us here on Balance of Power.
Speaker 3 (35:18):
Thanks for listening to the Balance of Power podcast.
Speaker 2 (35:21):
Make sure to subscribe if you haven't already, at Apple,
Spotify or wherever you get your podcasts, and you can
find us live every weekday from Washington, DC at noontime
Eastern at Bloomberg dot com.
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