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- [00:00]
Michelle Hussain
Hello and welcome. This is the Michelle Hussain Show. I'm Michelle Hussain. I speak with people like Elon Musk.
- [00:08]
Joe Matthew
I think I've done enough.
- [00:09]
Michelle Hussain
And Shonda Rhimes.
- [00:10]
Liz Pancati
That's so cute.
- [00:11]
Michelle Hussain
This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to the Michael Hussain show from Bloomberg Weekend. Wherever you get your podcasts, you certainly ask interesting questions. Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:56]
Joe Matthew
I'm Joe Matthew in Washington. Thanks for being with us on Balance of Power alongside Tyler Kendall here in the Nation's on what is expected to be the last day of the longest government shutdown in American history. The votes are teed up for a few hours from now and we're going to have a special edition of Balance of Power for you starting at 5pm Eastern as all of this is set to get going. But Tyler, as we kind of unpack everything that we just heard from Kevin Hassett, really interesting, beginning with the shutdown itself, he says it will have an impact on GDP, which could come in quarterly between one and a half, 2% for the year. He's targeting about 2%, said inflation is not all the way down to where you want it to be, was quote. But he agrees with the presidents that rates can be a lot lower.
- [01:37]
Tyler Kendall
Right. I was actually pretty struck by the laughter in the room when he was asked why he would want to be the next Fed chair. Of course he's on the short list for that. He also said if he's reading the tea leaves, he's looking at a likely 25 basis point cut when the FOMC meets in December. But of course, the backdrop here, the fact that we haven't gotten as much economic data as there should be as we try to weed through the forecast.
- [02:00]
Joe Matthew
We'Re learning a little more about that, by the way, I guess within 48 hours of the government reopening, we'll get a new calendar from bls and then, you know, it's off to the races at that point. Liz Pancati is with us, I'm glad to say, managing director of Policy Advocacy at the Groundwork Collaborative, having listened to that conversation and sort of noting broadly what's happening here against the backdrop of a government shutdown. Liz, welcome back. It's great to see you. This is going to have an impact on data. The question is, when do we start seeing data? BLS is going to take some time and we're never going to fill these gaps that we have for the month of October, are we?
- [02:33]
Liz Pancati
No, I mean, there is some data collection that was already in process prior to the government shutdown for what was to be released in October. The government shut down on September 30th.
- [02:41]
Joe Matthew
At a stale September jobs report.
- [02:43]
Liz Pancati
We'll get a stale September jobs report. We may get some CPI indications, kind of a mini release and then we will hopefully start to get back to collecting data. Some of the data that goes into, especially the jobs report is reported on a pretty continual basis. It is not a survey that, you know, phone calls or online surveys have to go out to households. It's kind of incoming data. So it's sifting through that, analyzing it and then getting the surveys back on track. That will probably take a couple of weeks to get those stale reports and then hopefully by the beginning of the year we'll have an accurate picture. But of course, the Fed will have to meet once again before that without that full picture.
- [03:18]
Tyler Kendall
So let's talk about where we currently stand from, what we do know. What are the indicators that you've been watching for as we tried to piece together a picture particularly related to the labor market? Because of course we're talking about two missed monthly jobs reports.
- [03:30]
Liz Pancati
Yeah. Unfortunately, the private sector data, as you both know, is not always the most high quality or the most sensitive. You know, we've seen ADP kind of all over the place, but what we have seen is record numbers of layoffs. When we look at, you know, the Challenger report, that to me is a little bit concerning. We had started to see layoffs tick up, but they were still within a normal range. And we got information from Challenger last week that they were really at historic highs. The other thing I have been watching is among small businesses, how hiring has been faring. And we've seen both in Gusto, another private payroll processor and adp. Those small business numbers not look great. Small businesses obviously employ about half of workers in the United States. They are, they have been hit the hardest by tariffs, just unable to kind of increase inventories and keep cash on the books as interest rates are very high. So those are the couple of things I am looking out for. And then we've gotten some indications that seasonal temporary hiring will be down through the holiday season, which is typically a big kind of push in many areas. We Saw Spirit Halloween really slow their openings and we are seeing for the retail spending ahead of the holiday season that not to look so great given where consumers are. And so a lot of retailers are holding back on hiring.
- [04:49]
Joe Matthew
Caroline Levitt was just asked about the lack of data she's holding forth in the White House briefing room. Now the press secretary at the White House. Check this out, Liz. October CPI and jobs data likely never to be released for October. I guess you can't go back in time and get that snapshot. Will it be more difficult for the Federal Reserve to understand the impact of this government shutdown if we start putting numbers on data like this? Between 1 1/2 to 2% growth this quarter, according to Kevin Hassett. What happens though when you cut off 42 million Americans from snap benefits for a month? When do you know what the impact of that is?
- [05:25]
Liz Pancati
The snap benefits, you know, even knowing what when they'll be turned back on is something we don't know right now. A lot of states able to send out at least partial benefits either because governor stepped in or we had a couple of late breaking court rulings forcing some of that money to go out. The administration has not committed to a specific schedule for when those benefits will resume going out. I think, you know, there's a tension in wanting to know what the effects of the shutdown were after the shutdown is over. And for the Fed especially and other policymakers to know what the current state of the economy is. I would put those in the opposite order of we need to know exactly what our economy looks like right now so we can make decisions about interest rates, about fiscal policy. It would be nice to have that historical look back. But missing one month is not catastrophic. I think the bigger issue is that we are unlikely to have that data by the Fed meeting in a couple of weeks here for the current snapshot, which is the more concerning thing to me than missing those data points. But you know, we saw the president a couple times in the last week say inaccurate things about how prices are down. We saw that Walmart report about a Thanksgiving meal costing less when in fact they were just moving around all of the items that go into that. I think the more and more that the administration tries to rely on fuzzy private market data as they, you know, withhold that information about the typical reliable government reports. That to me is more concerning.
- [06:47]
Tyler Kendall
I did want to ask you also about the broader backdrop of the economy here when it comes to tariffs. You brought up tariffs. It was also part of this conversation that we just heard with Kevin Hassett, and he said that the administration is considering some of these other tariff authorities as the Supreme Court looks at the the big one ia those broad based tariffs based on emergency powers. We heard President Trump earlier this week suggest that there could be $2,000 refund checks. How do these headlines jive when you have the administration looking at dispersing money from tariff revenue but also preparing a backstop if those tariffs get struck down?
- [07:24]
Liz Pancati
You know, in the Supreme Court arguments last week, we really saw these solicitors struggle with how to respond to questions from the justices about these revenue effects of the tariff. They say they're minor. The president tweets out that they're going to be $4 trillion. The President tweets again that they're going to be $3 trillion and they're going to fund stimulus checks. I mean, it's really all over the place and quite incoherent, I'd say on the checks, I am not running out to put $2,000 on my credit card because I think the government will be sending me a check in the next 30 days and I would not suggest that anyone else do so. And then, you know, I think we're likely even if the Supreme Court does weigh in on those emergency IPA tariffs, the Trump administration has signaled and they have even started over a dozen investig those other authorities on specific inputs. So that could be, you know, copper, aluminum, semiconductors, but we could see those spread to other industries using other authorities, some of which, you know, could allow him to enact time limited across the board tariffs of 10 to 15%. Others would require six month typically investigations before they could put higher rates on them.
- [08:28]
Joe Matthew
So there would be an interruption then waiting for the next round of tariffs to come in that world with the money need to be paid back during that period of time. I guess the court needs to decide that, Liz, and I won't make you decide that now. I guess the question I have is what would happen? President says it will ruin the country to destroy the country to pay back what he says is $3 trillion. It seems to be in the billions, not the trillions. But what would be the impact of writing checks like that?
- [08:53]
Liz Pancati
There's kind of two separate things happening right here. So one is if the IPA tariffs that have been somewhat collected over the last six months by customs, there are lots of delays and lots of kind of mixed implementation of if the Supreme Court strikes down those tariffs. There are already companies lining up as part of class action lawsuits trying to get those refunds from the Treasury Department for the Tariffs that they've paid. I think it's very unlikely those would then be passed on to consumers, though some consumers did directly pay those tariffs on shipments to their doorsteps.
- [09:24]
Joe Matthew
So then you get the class action lawsuit going.
- [09:25]
Liz Pancati
Correct. Which is a whole other disaster in and of itself. And I think you have both seen how long it takes for lawsuits to work through our court system. So that's one aspect. The President is separately suggesting that these magical dividend checks will be sent out to consumers that are completely separate. So those would be funded by the revenue from the tariffs coming in, the tariffs, which could of course be interrupted by the Supreme Court's ruling. But as you said, there are not 3 to 4 trillion dollars worth of revenue. We have at most seen, you know, two to $300 billion taken in, in revenue. And the administration has drawn on that pot of money to pay for this, that and the other over the course of the last six months, trying to pay troops or trying to pay snap, you know, paying for the ballroom. I mean, there he, he seems to view this as kind of an unlimited slush fund. Whether he spends it or tweets it out, this is really not a thing I think the American people can rely on.
- [10:19]
Tyler Kendall
We actually have a great story on the Bloomberg Terminal about how there is already a case forming for a class action so that we could see those tariff refunds paid out more broadly. Because we know that the issue of universal injunctions has come up before with this, this administration on it, sticking on tariffs. We heard from the Treasury Secretary, Scott Bessen earlier today who said that we could see some potential planned reductions. When it comes to things like coffee, bananas, other food that we don't grow here in the US how would targeted reductions work and does that make a dent when we're talking about potential pass throughs and prices for consumers?
- [10:56]
Liz Pancati
The targeted carve outs are very complicated to implement, as are the broad sweeping tariffs that the President has put into place. They also seem to the administration has historically not stuck with the thing that they announced. So do I think that it will be smooth sailing for exempted coffee, bananas, et cetera? No, because none of these tariffs have been smooth sailing. I think this is a really fascinating press tour that, you know, both Bessant and Hassett are doing right now where they realize that American people are very frustrated with higher prices. The President campaigned on lowering prices on day one. Last week he walked us back saying that's a 2026 priority for them. So I guess this is kicking off that tour. But you know, a couple ago The President said groceries. What a fascinating word. No one I wonder where that word came from. And I guess now he has figured out that in fact, the American people do care about their grocery prices. We, of course, do not grow coffee or bananas here in the United States. It's not so much about on shoring supply chains. It's just genuinely impossible. And so now they are exploring these, you know, limited carve outs. We have seen the President look at other limited carve outs. There was a deal struck with Apple where they would be able to get out of semiconductor tariffs. These have been, you know, implemented in different ways. And in many cases, tariffs are not being collected anyway because there's so much confusion at the border. So do I expect, you know, bananas to magically become cheaper at the grocery store in the next couple of weeks? No. I mean, coffee's up 20, 30% over the past year. And there are a number of other grocery costs that are not so impacted by the tariffs. Ground beef is up double digits over the past year. Given other issues in the economy that tariffs will not really affect, though, I guess the President is looking at increasing imports from Argentina to fix that problem.
- [12:35]
Joe Matthew
Well, he does cite beef pretty frequently. That is the whole grocery store is cheaper, but beef is the cost that we need to deal with. And of course, he's running afoul our ranchers here in the United States, the cattlemen who have been not terribly happy about that idea. What is his obsession with grocery? You brought this up. He says it's an old word, a beautiful word, a strange word, grocery. And then he started using BLT as a descriptor of what grocery is. Bacon, lettuce, tomato. Has he ever been in a grocery store?
- [13:01]
Liz Pancati
That's a great question.
- [13:01]
Joe Matthew
Being serious about.
- [13:02]
Liz Pancati
I would love to have, you know, a Bloomberg reporter ask that the next time that they get a press briefing question. It's a good one.
- [13:09]
Joe Matthew
You remember the gallon of milk with George Bush? This used to be like treacherous ground for a politician. It's not anymore, is it?
- [13:13]
Liz Pancati
Yes. I mean, I remember President Joe Biden opening up a bag of chips and saying, there's not too many Doritos in here. Right. I think, you know, maybe we'll see. As part of this press tour, Donald Trump go into Kroger and take a couple of things off the shelf.
- [13:26]
Joe Matthew
I would be curious when this stuff.
- [13:27]
Liz Pancati
Happens, how long it's been since he went into a Kroger and pulled a couple of things off the shelf. But, you know, we saw an elections last week in Virginia, New York City, and New Jersey and even in Georgia where, you know, power bills were on the ballot, that Americans are really frustrated by the prices they're paying, whether it's at the grocery store, at the gas pump, for rent. And I think the president hates to be an unpopular guy. His approval ratings on the economy and inflation are in the tank. And he realizes that he's going to have to get acquainted with the beautiful word groceries if he wants to turn it around.
- [13:56]
Joe Matthew
It's an old fashioned word, Tyler.
- [13:58]
Liz Pancati
Yes. Okay.
- [13:59]
Tyler Kendall
Well, this has been great insight after that conversation between Kevin Hassan and.
- [14:03]
Joe Matthew
Yeah, glad we could spend some time. This is a great dive. We should keep this going actually, as long as the press tour is on the road.
- [14:09]
Tyler Kendall
All right. Liz Pancati, managing director of policy and advocacy at the Groundwork Collaborative. Thanks so much.
- [14:14]
Joe Matthew
Stay with us. On Balance of Power. We'll have much more coming up after this.
- [14:22]
Carol Massar
I'm Carol Massar.
- [14:23]
Joe Matthew
And I'm Tim Stanweck inviting you to join us for the Bloomberg businessweek daily podcast.
- [14:27]
Carol Massar
Now every day we are bringing you reporting from the magazine that helps global leaders stay ahead.
- [14:32]
Joe Matthew
We've got insight on the people, the companies and trends that are shifting shaping today's complex economy.
- [14:37]
Carol Massar
That's right, Tim. We're all over global business, finance, tech news, all as it is happening in real time. And we've got complete coverage of the US Market.
- [14:44]
Joe Matthew
Close.
- [14:44]
Carol Massar
Got to say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it.
- [14:51]
Joe Matthew
We also have a lot of fun doing it. Bloomberg businessweek also brings you the analysis behind the headlines through conversations with our expert guests.
- [14:59]
Carol Massar
And we are doing this all live each weekday. And then we bring you the best analysis in our daily podcast search for.
- [15:05]
Joe Matthew
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- [15:09]
Carol Massar
Check it out on your way home from work to catch up on the conversations that you miss during the business.
- [15:13]
Joe Matthew
Day and on the weekend. Check it out for a complete wrap up of your business week.
- [15:17]
Carol Massar
That's the Bloomberg Business Week Daily Podcast. I'm Carol Massar.
- [15:20]
Joe Matthew
And I'm Tim Stanovec. Subscribe today wherever you get your podcasts.
- [15:28]
Michelle Hussain
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business Apple app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [15:44]
Joe Matthew
Counting down to some important votes in the House of Representatives on what is expected to be the last day of the Longest government shutdown in American history. And it's a pleasure to bring in a voice from the House of Representatives now that the chamber is back in session. Democratic Congressman Ro Khanna of California is with us live from Capitol Hill. And Congressman, it's good to see you back in the Capitol here. Welcome back to Bloomberg TV and Radio. We've missed our conversations. I know that a lot of Democrats are pretty unhappy about the way this has gone in the Senate. And you're not terribly happy with the way Senator Chuck Schumer has handled things. Now that the bill is coming into your chamber, are you a no vote?
- [16:23]
Ro Khanna
I'm a no vote because I don't believe we can sit idly BY like while 20 million Americans face astronomical spikes in their health care. We have a moral responsibility to make sure people have food assistance, to make sure they have health care. And we're not meeting that moment.
- [16:41]
Tyler Kendall
But Congressman, President Trump has said that he's willing to negotiate on health care. Isn't it better to negotiate with the government reopened, alleviate the stress on our air travel system, get food benefits to Americans and pay our federal workers?
- [16:54]
Ro Khanna
Well, we could have done all of that. I mean, the president held this country hostage. He refused to release aid, food aid for Americans, which would have cost $9 billion while he's giving $40 billion to a corrupt libertarian in Argentina. My question for the president is why aren't you putting Americans first? Why are you withholding aid from American kids and giving money to Argentina instead? We should have been funding the food. We should have been funding our federal workers and paying our troops. And then we could be negotiating on health care to make sure that 20 million people under Donald Trump's watch are not going to have the largest increase in health care since Barack Obama.
- [17:32]
Joe Matthew
We understand that you will have a new colleague in the House as of a couple of hours from now. Congressman, as Adelina Grijalva is at last sworn in, having been elected on September 23rd. This means only a two vote margin, if you will, for Speaker Johnson in passing this CR minibus package. It also means you have the vote that you need to bring the Jeffrey Epstein discharge petition opposition to the floor of the House. How quickly do you expect that will happen and does it need to pass the Senate?
- [18:04]
Ro Khanna
I expect that Adelaide Grijalova will sign today. That gives us 218 and early December. We will have a vote. But look, the Epstein class in American politics needs to go. These are rich and powerful people who either covered up for Jeffrey Epstein or who themselves abused young girls and The American people are tired of benefit. They're tired of one set of rules for rich people who have friends who are politicians and another set of rules for ordinary Americans. So I believe the House will pass this and it's going to send a message for the full release of the Epstein files and for the Senate to pass it.
- [18:42]
Joe Matthew
I know that you want to bring obviously all members to account on this and have them take a vote which will take place in the House. But to be clear, it does need to pass the upper chamber. Chamber to force the release of these files, Congressman?
- [18:56]
Ro Khanna
It does. And I believe that the vote margin in the House will matter. If it just eats through the Senate may kill it. But if we get 40, 50 Republicans, as I am hearing we may, then it's going to put a lot of pressure on the Senate to act.
- [19:11]
Tyler Kendall
We're seeing the Democrats on the House Oversight Committee release their own tranche of I believe 20,000 emails today. Could you give us any insight into the timing here? Is this too close coincide with your new colleague coming in and momentum behind the discharge petition?
- [19:27]
Ro Khanna
Well, we had subpoenaed the Epstein estate. I had written a letter to the Epstein Estate with Mr. Colmer and we had gotten these files and one of the things we got today were emails where Jeffrey Epstein is talking to Ghislaine Maxwell saying that Donald Trump is aware that there are underage girls at the Epstein estate. And so it implicates Trump in the Epstein files. And there's much more to be released. But we just need it all out there. We need transparency.
- [19:57]
Joe Matthew
You made clear on Twitter the only reason these emails are out is that at Lawrence has the survivors lawyers on who gave me the tip to subpoena the estate. You asked why did justice or the FBI not get and release these? Do you have an answer?
- [20:15]
Ro Khanna
I don't. I mean here they were claiming they're doing a thorough investigation, they're going to do everything. And then you have a congressman who's more focused on economic issues than anything on Lawrence o'. Donnell. And a lawyer for the survivors basically says, hey, tell the congressman he should write a letter to the estate. They have the documents. And so I write a letter to the estate and get the documents and you're telling me that the FBI and the Justice Department couldn't do that? Of course they could. They haven't taken this investigation seriously. That's why Congress has gotten involved. We need a full release of the Epstein files.
- [20:48]
Tyler Kendall
In the final minute that we have. You, Congressman, I know that you have been working on a ban crypto corruption legislation. Now that the House is back in session, can you give an update to us on this? And I'm also curious about the link here to your perch as the ranking member on the Armed Services Committee. What's the national security angle to this legislation? Inflation.
- [21:09]
Ro Khanna
Well, members of Congress and the president and their families should not be trading cryptocurrencies and they should not be trading stock. But look, the president family has made millions of dollars on cryptocurrency. They sold World Liberty as a stablecoin, and they have this guy who's gotten now a pardon, a foreign billionaire who's basically accepting payments of World Liberty. This should not be going on. It makes us vulnerable to foreign countries, to foreign interests. And so my bill is simple. No trading of cryptocurrency by any elected official, whether it's in Congress, whether it's the presidency, whether it's the Supreme Court as an appointed person.
- [21:56]
Tyler Kendall
All right, Congressman Ro Khanna, Democrat representing California state, 17th district, thanks so much for joining us here on Bloomberg Television and Radio.
- [22:06]
Joe Matthew
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime eastern@bloomberg.com in our new podcast, Everybody's Business, we talk about the business news that concerns everybody.
- [22:26]
Liz Pancati
From Bloomberg businessweek, I'm Stacey Vanek Smith.
- [22:29]
Joe Matthew
And I'm Max Chavkin.
- [22:30]
Liz Pancati
Each week we unpack what is happening on Main street and Wall street, all the streets. WrestleMania has taken over the US economy.
- [22:38]
Joe Matthew
Poetry that executives write on LinkedIn.
- [22:41]
Liz Pancati
A little actual magic in our underrated.
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Joe Matthew
Story of the week, the single greatest marketing campaign the music business has ever seen.
- [22:47]
Liz Pancati
I decided to ask people how they felt about the penny going away. Listen to everybody's business wherever you get your podcasts.