Key Global Decisions Loom for Trump

Summary

Balance of Power – "Key Global Decisions Loom for Trump"

Podcast: Bloomberg Balance of Power
Hosts: Joe Mathieu, Kailey Leinz
Air Date: January 16, 2026

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Episode Overview

This episode of Balance of Power addresses the mounting global and domestic decisions facing President Trump in 2026. The hosts, supported by expert guests and a political panel, explore escalating international tensions—including US relations with Denmark (Greenland), Iran, and Venezuela—as well as pressing domestic topics such as immigration policy, economic "affordability," and controversial proposals for financial reform. The show examines how the Trump administration’s actions and rhetoric are affecting both global diplomacy and US internal politics as a critical election approaches.

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Key Discussion Segments & Insights

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1. US–Denmark/Greenland Tensions and NATO Reassurances

Segment: 01:02–05:48
Guests: Richard Haass (Council on Foreign Relations), Senators Chris Coons and Thom Tillis (clips)

• Background: President Trump expresses interest in acquiring Greenland, prompting bipartisan Congressional action to reassure Denmark the US does not intend to challenge Danish sovereignty or undermine NATO.
• Greenland’s strategic value is highlighted—resource-rich and critical for military positioning.
• Congressional Feedback: Both Republican and Democrat Senators travel to Copenhagen to reinforce Congressional commitment to NATO and to contradict any executive moves toward annexation.

Notable Quote:

“An illegal taking of another territory from a sovereign nation and a member of NATO is just not good advice.”
— Richard Haass (03:00)

• Haass’s Analysis: He calls the Trump policy “unnecessary and misguided,” stresses that diplomatic channels exist for US–Greenland arrangements, and warns heavy-handedness would cast the US as a rogue actor (03:23–04:24).
• Considers the move more “foreign policy theater” than sound strategy.

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2. US Policy and Rhetoric Toward Iran and Venezuela

Segment: 05:48–10:10
Guests: Richard Haass, Press Secretary Caroline Levitt (clip), Kailey Leinz

• Explores administration’s “softer rhetoric” toward Iran following halt in executions, while noting over 3,400 protesters were already killed.
• Richard Haass doubts real US influence:

  “I don’t see any change in the behavior of the Iranian regime... the administration can’t quite figure out what its policy is. It got very forward on its skis with its rhetoric. It didn’t deliver.” (06:54)

• Discussion on regime change:

  “We’re not going to bring about regime change in an afternoon... Iran simply has too many people in place who want to sustain this system.” (07:43)

• On Venezuela and Trump’s Nobel Peace Prize:

  “Nobody looks at it that way... the opposition still has no clear role in the future of Venezuela.” (09:55)

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3. Immigration: Policy, Politics, and Repercussions

Segment: 11:56–24:13
Guests: Sarah Chamberlain (Main Street Partnership), Jeannie Shanz Zaino (Harvard), Bill Dudley (comments), Congresswoman Nicole Malliotakis (clip)

• Polling Data: Recent surveys show waning support for Trump’s immigration enforcement tactics among independents; voters support border security but find ICE raids concerning, particularly post-Minneapolis shooting (12:30–14:31).
• Panel Insights:
  • Chamberlain stresses the need for better communication:

    “We are capturing criminals, but we’re not talking about it. We need to start saying... we’re actually going for the real criminals and getting them out of our country.” (14:48)

  • She supports reforms like ICE officer bodycams and better de-escalation training to fix public perception and accountability (18:54).
  • Zaino (Democrat perspective):

    “These polls show that in both of those areas [immigration and economy], he is underwater… American public is seeing chaos coming out of this White House.” (17:08)

• Legislative Ideas: Bipartisan discussion around ICE transparency, funding, and cooperation with local law enforcement.
• Key Political Forecast: Panelists expect affordability and economic concerns to be the chief issue in upcoming midterms, with immigration receding if policies are moderated (21:04–22:24).

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4. Economic Policies and Populist Proposals

Segment: 24:13–39:29
Guests: Kitty Richards (Groundwork Collaborative), Bill Dudley (Fed, via Wall Street Week clip)

• Populist Economic Measures: President Trump proposes capping credit card interest rates, banning institutional buyers from housing, allowing 401k withdrawals for home down-payments, and curbing defense contractor dividends.
• Republican Unease: Main Street Partnership is wary:

  “We’re actually agreeing with Elizabeth Warren here... 10% [interest cap] is not realistic.” (22:05)

• Critique of Housing/401k Proposal:
  • Kitty Richards notes this aid will not reach those most in need since only half of Americans have meaningful 401k assets—helps upper-middle class, not those struggling most (37:40–39:08).
• Affordability Messaging Problems: The panel notes confusion coming from the administration—Trump touts economic health while proposing aggressive interventions, undermining public trust (23:14).

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5. Federal Reserve Independence and Political Pressure

Segment: 25:55–35:13
Guests: Bill Dudley (Ex-NY Fed), Jamie Dimon (JP Morgan, clip), Katie Richards (Groundwork Collaborative)

• Jay Powell Investigation: DOJ criminal probe into Fed Chair Powell; strong bipartisan defense of Fed independence as vital for both economic stability and global trust.
• Fed Insider Perspective: Dudley details FOMC operations—collegial, insulated from politics, but acknowledges outside pressure is felt (27:03–29:19).
  • “If the administration is putting tremendous pressure... it creates the idea of, are they doing it because they think this is appropriate... or are they caving to the administration’s pressure?” — Dudley (27:23)
• Risks to US Dollar Status: Katie Richards warns attacks on Fed could erode global confidence and trigger long-term economic harm:

  “Losing our status as a reserve currency… could impact our ability to fund really important things through the government... it’s going to cost the government and the American people real money.” (31:07–33:18)

• Jamie Dimon:

  “Most people I know... say we need an independent Fed. But... you don’t want to chip away too much. Because... it will drive rates higher, not lower.” (33:29)

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6. The K-Shaped Economy & Political Messaging

Segment: 40:57–49:31
Guest: Peter Atwater (Financial Insights)

• K-Shaped Economy: Atwater’s concept describes a widening divide—prosperity at the top, hardship at the bottom.
• Assessment of Affordability Proposals:
  • Measures like 401k withdrawals for homebuying “sound” like solutions but ignore the reality that most people at the bottom have no 401ks or little disposable income (46:39).
  • “Policymakers are not moving to become socialist; they're becoming survivalist. They need the bottom of the K to support them in November.” (45:08)
  • On housing: “Efforts are focused on demand... that's not the way to solve an inflation problem. If the issue is affordability, we need to boost supply.” (47:24)
• Critique of Populist Rhetoric:
  • Atwater says bottom-of-K voters need policies that are “immediate, tangible, and fit me.” Abstract frameworks and “depression meal” messaging reinforce resentment and insecurity (48:23).

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Notable Quotes & Memorable Moments (with Timestamps)

• “I think that an illegal taking of another territory from a sovereign nation and a member of NATO is just not good advice.”
  — Richard Haass (03:00)
• “We can't use military force to bring about a change of regime in Iran... I really think the administration needs to... come up with a sustainable policy.”
  — Richard Haass (07:20)
• “When the president is losing Joe Rogan, that is a problem.”
  — Jeannie Shanz Zaino, discussing loss of independent voters on immigration (16:28)
• “We're actually agreeing with Elizabeth Warren here... 10% is not realistic.”
  — Sarah Chamberlain, on credit card rate caps (22:05)
• “These are really the kinds of things that we don't expect to happen in a place like the United States... if we lose [global economic confidence], it's going to cost the government and the American people real money.”
  — Katie Richards, on threats to Fed independence (31:07–33:18)
• “If the issue is affordability, we need to boost supply... if we increase demand, all we're going to end up doing is boosting inflation.”
  — Peter Atwater, on housing policies (47:24)
• "Policymakers are not moving to become socialist; they're becoming survivalist... those at the bottom, they want 'me, here, now.'"
  — Peter Atwater (45:08)

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Structured Timeline of Segments

| Timestamp | Topic | Primary Contributors | Summary | |-----------|-------|---------------------|---------| | 01:02–05:48 | Greenland & NATO | Joe Mathieu, Richard Haass | Congressional efforts to reassure Denmark; skepticism toward Trump’s approach | | 05:48–10:10 | Iran & Venezuela | Joe Mathieu, Richard Haass, Katie Richards | Iran executions, regime change limits, Venezuela opposition | | 11:56–24:13 | Immigration | Joe Mathieu, Sarah Chamberlain, Jeannie Shanz Zaino | Immigration enforcement backlash, ICE reforms, midterms focus | | 24:13–39:29 | Economy & Populism | Joe Mathieu, Sarah Chamberlain, Jeannie Shanz Zaino, Kitty Richards | Trump’s affordability proposals, skepticism, 401k housing, policy confusion | | 25:55–35:13 | Fed Independence | Joe Mathieu, Bill Dudley, Katie Richards, Jamie Dimon | DOJ probe into Powell, defense of Fed independence, risks to US credibility | | 40:57–49:31 | K-Shaped Economy | Joe Mathieu, Peter Atwater | Systemic divides, why proposed solutions miss the mark, voter psychology |

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Tone and Style

Throughout the episode, the hosts and guests use a direct, analytical, and at times wryly skeptical tone, questioning both the intentions and efficacy of administration policies. The conversation remains fact-driven but reflects concern about both practical outcomes and broader democratic principles.

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Summary Takeaways

• Foreign Policy: Congress is actively working to check executive overreach on controversial foreign policy issues, notably attempts regarding Greenland.
• Iran and Venezuela: US influence is doubted; rhetoric outweighs results; military force seen as unrealistic.
• Domestic Policy & Economy: There’s deep unease, even among Republicans, about the administration’s populist economic proposals, which are criticized as vague and misaligned with voters’ actual needs.
• Immigration: Voters support secure borders but are turned off by harsh enforcement tactics; midterm elections will hinge more on economic issues than immigration if current trends continue.
• Fed & Institutions: Bipartisan consensus exists around defending the independence of institutions like the Federal Reserve; fears grow about lasting damage to global confidence in the US.
• Voter Sentiment: The “K-shaped economy” remains sharply divisive; lower-income Americans are unconvinced by policies that aren’t immediate or directly relevant to their needs.

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For listeners seeking clear, critical analysis of the Trump administration’s current global and domestic challenges—and the deepening divides shaping 2026 US politics—this episode provides nuanced, inside-the-room perspectives from policy experts and political insiders.

Transcript

[Joe Matthew]

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[Joe Matthew]

All right, there you have President Trump on his way to Marine One now and to a much warmer place for the weekend. I'm Joe Matthew in Washington. Thank you for joining us. If you're just joining on Bloomberg TV and radio, Balance of Power, the Friday edition with a lot of questions as we just heard, about Venezuela, about Iran and yes, as well about Greenland. With an important congressional, bipartisan and bicameral codel in Denmark today to try to reassure copenhagen that the U.S. congress does not have designs on Greenland. President Trump referring to the deal between Canada and China and Mr. Carney okay for him to get a deal with China. He says it's a good thing for Carney. It's what he should be doing on his meeting with Corina Machado yesterday. Very interesting as we saw the two only in a photograph as Machado presented the President of the United States with her Peace Prize medal. He says we'll be talking again. No reason to use the Insurrection Act. Meantime, in Minnesota right now we're going to be spending some time, as I mentioned to you, with Richard Haass from the Council on Foreign Relations. And I want to get back to where we began our conversation with Greenland, having spent time this week with a Democrat and a Republican in the United States Senate. They're both over there right now, Chris Coons, the Democrat from Delaware, Thom Tillis, the Republican from North Carolina, with their reactions to President Trump's designs on Greenland.

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[Peter Atwater]

Loyal allies in NATO saying that the future of this alliance that has kept.

[Podcast Sponsor/Announcer]

Us safe and secure and prosperous for 80 years, that is a staggering prospect. So this bipartisan and bicameral delegation is going to present ourselves in Denmark, in Copenhagen, to say, we appreciate you, we.

[Joe Matthew]

Value the NATO alliance.

[Richard Haass]

I think that an illegal taking of.

[Joe Matthew]

Another territory from a sovereign nation and.

[Richard Haass]

A member of NATO is just not good advice.

[Joe Matthew]

And I'm going there to tell them.

[Richard Haass]

There'S at least one branch of government.

[Joe Matthew]

That stands with the NATO alliance. Joined live now by Richard Haass, the President Emeritus Council on Foreign Relations Senior counselor, centerview partner. It's great to have you back, Richard, on Bloomberg TV and Radio. Do you take the President at his word? Is a CODEL like this necessary?

[Richard Haass]

Well, the code is simply a reaction, excuse me, to a policy that I would describe as unnecessary and misguided. We can get whatever economic and military arrangements we want with Greenland without pressuring them or bullying them, much less with doing something that would essentially transform the United States in the eyes of many, into a rogue actor and undermine NATO. So this seems to me unnecessary. You know, God invented diplomats for a region. And the reason is to negotiate special arrangements. Greenland and Denmark are more than willing to do that if we would only meet them halfway.

[Joe Matthew]

Well, you mentioned the President's policy on this, and I'm not sure I'm entirely clear on what it is. We've heard that he's interested in potentially buying Greenland, that there might be kind of a half measure in which there's an expanded relationship as opposed to a military invasion. We're not, we're not really talking about a NATO member invading another Naito member's territory, are we?

[Richard Haass]

I don't think so. The real question is what if Greenland refuses to be bought? What if Denmark refuses to sell? And then the question is, what is the United States reaction? What kind of pressure do we, do we apply? And again, I understand the importance of Greenland strategically, economically, we can debate it, but this is, this is unnecessary. There's, there's lots of ways to get to where we want to get without turning this into a heavy handed, what piece of foreign policy theater. It's just, it's just ill advised and it really is unnecessary.

[Joe Matthew]

Before I bring you to Iran, I'm curious your thoughts just on the domestic politics here. To see Republican lawmakers crossing the ocean to reassure Denmark that Congress will not support the President. How significant is this moment?

[Richard Haass]

Look, it's always nice to see Republicans rediscovering Article one of the Constitution and that Congress has a role to play. That said, Presidents, not just this president, but every president, enjoys enormous latitude and leeway and discretion when it comes to the making of foreign policy. So it's again, I appreciate the trip. I think it sends a useful signal that of support for NATO and for a proper relationship. But again, the president is basically the one who has the lion's share of the, of the influence on this issue.

[Joe Matthew]

More happy talk strangely about Iran in the driveway just now, Richard Haass, President Trump saying that he greatly respects Iran's decision to not execute anti government protesters, knowing that more than 3,400 have been killed already. We heard from Press Secretary Caroline Levitt on the president's decision to slow roll any potential strikes. Here's what she said.

[Katie Richards]

The president and his team have communicated to the Iranian regime that if the killing continues, there will be grave consequences. And the president received a message, as he revealed to all of you in.

[Bloomberg Host]

The whole world yesterday, that the killing.

[Katie Richards]

And the executions will stop. And the president understands today that 800 executions that were scheduled and supposed to take place yesterday were halted. And so the president and his team are closely monitoring this situation.

[Joe Matthew]

Are we to believe, Richard, that the president of the United States is actually affecting outcomes right now in Iran? And do you buy this softer rhetoric while military options remain on the table?

[Richard Haass]

Well, a couple of things. It's possible that the Iranians have backed off doing the public executions, but as you've pointed out, they've killed thousands of people since this president first threatened them with consequences if they went ahead and did it. Second of all, for all we know, these people are incarcerated. For all we know, they're going to be killed. I don't see any change in the behavior of the Iranian regime. I think the administration can't quite figure out what its policy is. It got very forward on its skis with its rhetoric. It didn't deliver. It didn't back up its words. And arguably it shouldn't. It never should have said those things. In the first place, we can't use military force to bring about a change of regime in Iran. We can't use military force to protect individual Iranians protesting the regime. So I really think the administration needs to take a step back and come up with a sustainable policy to try to bring about change in Iran on its nuclear program, its support for proxy groups, on how it treats its own people. And it ought to be a more patient, disciplined program. But we're not going to bring about regime change in an afternoon. Even if you, even if we were to attack them, Iran simply has too many people in place who want to sustain this system.

[Joe Matthew]

You write in an op ed in the Financial Times two things can be true at the same time. The Iranian regime is closer to collapse now than at any time since the 1979 revolution, which is quite a statement to hear from you. Yet it is still not on the brink of collapsing. And this was suggested as one of the reasons why President Trump decided not to move, that the military options on the table were not convincing enough that it would in fact topple the regime. We've got an aircraft carrier on the way right now. It's probably two weeks out. If reports are right, this is the USS Lincoln that's on its way to the Mediterranean. Is that when something happens.

[Richard Haass]

But again, we could shoot off, you know, cruise missiles, we could send in some planes, but that's not going to bring about regime change. Regime change take sustained effort. It's got to be a situation that is incredibly brittle and then you've got to follow it up. As bad as the situation is in Iran, why does anyone assume that a successor situation would be so much better? Maybe the bad guys would have even more power at that point. And you know, and I know, Joe, that this administration, which wasn't prepared to get involved in Venezuela in a serious way, is not going to get involved in a country of more than 90 million people. Yeah. That would make Iraq or Afghanistan look like a cakewalk by comparison. So I don't think we're really in a position to promote regime change directly with military force. The real question is using economic tools and the like, whether we can move Iran in a direction that we want to see.

[Joe Matthew]

Well, even with all the things we're talking about here, President Trump's got a Nobel Peace Prize, I guess, hanging on the wall in the Oval Office. Do we look at this as Donald Trump's peace prize now?

[Richard Haass]

Nobody looks at it that way. More important, I think the leader of the Venezuelan opposition, I think she was hoping to play Donald Trump by offering him the peace prize. She would get a reaction. Instead, she got played. The opposition still has no clear role in the future of Venezuela.

[Joe Matthew]

It's great to have you with us again, Richard. Thank you. Richard Haass, counsel on foreign relations with a voice of experience and insight that we can only bring it here on Bloomberg. We'll assemble our political panel next. Stay with us on balance of power. We'll have much more coming up after this.

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[Joe Matthew]

Been spending some time talking about some of the populist ideas coming out of the White House with regard to the economy. Affordability. Even though the president doesn't like to use that word, pick the one you want. Inflation, costs, prices, they clearly need to come down, and that could be through health care legislation. It could be through any number of things, including what the president's up to today, trying to lower your electricity bills. Because the polling data shows people are very concerned about this, just like they were in the election that brought Donald Trump back to the White House. There's some interesting private polling data as well today that Axios is reporting on, that we're going to talk about for a little bit with our political panel here, as President Trump's team has recently reviewed private Republican polling that shows support for his immigration policies falling. And when we say immigration, we should probably be more specific. People have enormous support for security at the border, for closing the border. It's the ICE raids that we've been seeing, and these numbers were taken before the fatal shooting in Minneapolis that have caused great consternation here to the degree that they support a more constrained approach is what we're talking about here, and the erosion specifically among independents is something that the White House is concerned about. Should there be a new approach? We talked about this with Republican Congresswoman Nicole Maliatakis of New York yesterday, remembering she turns to the border every time we speak with her and certainly did during the campaign as her number one issue. Here's what she said yesterday. We also see that there are areas where they've gone too far.

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And we've had a real discussion about this with the speaker and with the White House because we want to see.

[Joe Matthew]

Some type of balance here.

[Richard Haass]

Right.

[Joe Matthew]

And I think that's what the American people want. So you secured the border, you're deporting the criminals. But when it comes to these raids, I think, I think they are problematic. But I think the other issue is that the municipalities are not cooperating to deport those criminals. This is where we start with our political panel, and we've got a great one for you today. Bloomberg Politics contributor Jeannie Shann Zaino is with us. Democracy visiting fellow at Harvard Kennedy School's Ash center alongside Republican strategist Sarah Chamberlain, of course, Republican Main Street Partnership president. And it's great to have you both with us on a Friday. Sarah, I'm going to start with you as our Republican here. What was found in the polling and the research was a rupturing of the coalition of independent, moderate and minority voters who really came together in a way almost to redefine the map for President Trump. What do you think of the comments from the congresswoman and how do they align with the priorities at the Main Street Partnership?

[Sarah Chamberlain]

So the congresswoman, when she talked about she's had these meetings, the group have had these meetings with the speaker. Well, I've been in those meetings. So it's been very interesting. They are going on. There's a lot of nervousness, concern. We are what happened in Minnesota was a great tragedy. There's no doubt about that. Nobody questions that. But we are capturing criminals, but we're not talking about it. We need to start saying, you know, 19,000 rapists have been removed, you know, 10,000 killers like whatever that is, gang members. But you're not seeing any of those statistics out there. So we're pushing the White House to please try to get the statistics out there so people understand we're just not tackling, you know, women and daycare centers.

[Joe Matthew]

Yes.

[Sarah Chamberlain]

You know, we're actually going for the real criminals and getting them out of our country.

[Joe Matthew]

So is this a communications or messaging issue only, or is it also the way ICE is comporting itself? I mean, we're, we're seeing this daily barrage of videos of breaking windows, pulling people outside of their cars or their homes or whatever, as you describe. In many cases, they're, they're not criminals. Do we Need a different method on the ground.

[Sarah Chamberlain]

We need a, we need a little change. Yes, we need to talk about the numbers. If you're breaking the window of a criminal, I don't think America would care. So we need to emphasize, okay, this person, we broke this window because he's a gang member, not just somebody that needs to be deported.

[Joe Matthew]

Sweeping up massive.

[Sarah Chamberlain]

Yes, we need to tone that down and concentrate on the criminals because that is what this group voted for. They voted for the border shut, which we've done, and they voted for the criminals to be removed from our country. That we're doing, but we're not talking about it enough. And we need to going after people that, yes, they've broken the law, but there are other priorities.

[Bill Dudley]

Yeah.

[Joe Matthew]

Well, this has become its own issue on Capitol Hill. And Jeannie, we've talked about this when it comes to the funding debate and exactly what Democrats will be able to do to affect funding for dhs, for the Department of Homeland Security. And there are some different ideas, including, I guess there's a compromise bill now that's getting some attention. We'll ask Sarah about this as well. To have ICE agents wear body cams. How far should Democrats push this when it comes to a funding issue?

[Bloomberg Host]

You know, I think Democrats will push it quite far as these pictures continue to pour out of the Midwest. But I think this, you know, immigration is one critically important issue that Donald Trump ran and won on. So is the economy. These polls show that in both of those areas, he is underwater. And it's not concerning when he's underwater with Democrats. But the independents and moderates matter an awful lot. And he is suffering there. And what the American public is seeing is chaos coming out of this White House. And I think this comes down to something that we see with a lot of administrations, which is an overreading of a mandate. To your point and Sarah's point, when the president ran and won on immigration, it was about border security that he has done very well. He gets very high marks for that. Where this starts to fall off the rafters for most people is you see a militarized Minneapolis, you see ICE agents and masks, all of these things. When the president is losing Joe Rogan, that is a problem. People in the United States don't feel like they want to be carrying around their papers and showing them to federal agents. But it's not just immigration. It is chaos from Doge. It is chaos from Liberation Day. The list goes on and on. And the American public, as they look at Venezuela, look at Iran and elsewhere are scratching their heads and saying, what does all this chaos have to do with me being able to afford groceries, pay my energy bills? And that is what Democrats need to focus on. So to me, it is all about affordability. And the immigration stuff plays into that because of the chaos that has erupted and kept the president from focusing on what he should be doing, which is making our lives more affordable.

[Joe Matthew]

I'm curious to hear from you, Sarah, on this potential legislative solution here. This is the House Republican offer to the Senate. You were in the room, I'm guessing, when this happened. The DHS bill, as I mentioned, would order the department to fund body cameras for immigration enforcement agents, but there would also be training, training on de escalation.

[Sarah Chamberlain]

Right.

[Joe Matthew]

This is something the partnership supports, most of the members.

[Sarah Chamberlain]

Do they want a little more details? But yes, I mean, if you saw the latest, some of the ice, they were not properly trained. They have. They're going back now and catching them and training them. So that helps. I think the body cams are great, especially after the tragedy. And the other thing the Main street members looking at is like, maybe you don't have to wear masks. Like maybe walk up and identify yourself and talk with the people without having a mask on and scaring them. So these are, these are changes that we're hoping we'll work through. We think the American people will be happier with that.

[Joe Matthew]

Are they meetings or are they cooperative?

[Sarah Chamberlain]

Very cooperative, yeah. Yeah, absolutely.

[Joe Matthew]

Jeannie, what do you think of this idea that the masking issue alone is a huge one? Wouldn't that make a big difference?

[Bloomberg Host]

It absolutely would. That has been a huge issue. It has been brought up over and over again. When police approach us on the streets, people can ask for badge numbers. They can see their faces. That would certainly go a long way. And I think this gets back to something, actually that Donald Trump has talked about, which is execution of policy matters, training matters. You know, Donald Trump, too, wanted to withdraw troops from Afghanistan, but criticized Joe Biden for the way in which he executed that. The same thing goes here. The American public want to have immigration addressed, but they want it done in a way that makes sense, that is constitutional, that is keeping in line with our principles and done by responsible, well trained public officials. So that's what the President needs to focus on when it comes to this. And I said to you before, Joe, and I'll say it again, I think Kristi Noem presents him with a real problem. And I know she has an intent to run in 28, but I would suggest that she may be One who takes a fall on this and not Stephen Miller as much.

[Joe Matthew]

Wow, interesting. The tip sheets can't seem to get enough of that story here. You know, it's interesting, Sarah, this was such a big issue on the campaign trail. This was constantly in competition with the economy, immigration, economy that led voters to make their decisions. Will that be the case on the midterm campaign cycle as well?

[Sarah Chamberlain]

I think now that the border is closed, as long as we can fix the isa, you know, tweak it a little bit, it's all going to come down to the economy.

[Joe Matthew]

This is affordability.

[Sarah Chamberlain]

Yeah, it's affordability. People vote their pocketbooks, they vote their budgets because the groceries are so expensive when you go to the grocery store.

[Joe Matthew]

Right.

[Sarah Chamberlain]

I mean aca, now that's expired, it costs more money for your insurance premiums.

[Joe Matthew]

Yeah.

[Sarah Chamberlain]

So there's a lot of issues around, around affordability that I think was going to be decide the election.

[Joe Matthew]

We're going to talk a lot more about the, the ACA matter in our second hour and I'm very curious to hear from you on where you think we are. A lot of folks seem to think this thing has blown up for now. Check back next year. But with regard to the economy and the, some of the ideas the President's putting forth have given some Republicans some heartburn. Capping interest rates on credit cards, telling companies what to do when it comes to dividends and buybacks. There are more where these came from. Banning institutional buyers from the housing market. Does the Main Street Partnership feel aligned with what many see as populist, progressive ideas?

[Sarah Chamberlain]

They want to know more information that came up in the discussions. Like we're actually agreeing with Elizabeth Warren here. That's a little, makes them a little nervous. I'm not going to lie. It's like really in capping at 10%, is it going to, to take people, they can't, they can't get loans. You know, I mean it could really crush, especially the lower income people or the people trying to start businesses. They won't get access to capital. So that's a problem. So we were, the members really want to know more information like what are we talking about and moving forward. But I think 10% is not realistic. I think it could be 50, 15, maybe 20%. They're comfortable with a cap, but maybe a little larger one. Ten is a little, sounds like there's.

[Joe Matthew]

Room for a negotiation.

[Sarah Chamberlain]

There is, there's discussion happening as opposed to maybe very good discussion. No one's yelling at each other. Just say, okay, these are good Ideas. Let's, let's keep talking them through and see if we can come up with a compromise.

[Joe Matthew]

You know, the President's got a new one today, Jeannie, because we're going to get much more into the funding debate. As I mentioned in our, in our next hour, allowing people to tap their 401k savings to generate a down payment on a home. I don't know how Fidelity is going to feel about this, but would it work?

[Bloomberg Host]

Yeah, I can guess how they're going to feel about it. You know, I think it is part and parcel of like a whole bevy of populist ideas that he's thrown out there. I think one of the problems about all of this is the messaging coming from the President himself. On the one hand, he said this week that there's no inflation. He gives himself a triple A plus for the economy. He says affordability is a hoax. Then why is he throwing out one after the other of these populist proposals? Why is he telling people not to pay for more, not to get as much dolls? Why does he have, you know, this agriculture secretary talking about depression era meals for $3. So you had these messages coming out of the White House on the economy that make no sense. The American public know how they feel about the economy. It is not working for them. He is underwater on that and he needs to take people where they're at as opposed to trying to tell them it is great. And oh by the way, don't buy as many dolls and get your $3 affordability meal.

[Joe Matthew]

The three dollar meal is a riot. Just 30 seconds left. Sounds like it's time for a State of the Union address.

[Sarah Chamberlain]

Be very interesting one this second.

[Joe Matthew]

I can't even imagine. Stay with us on balance of power. We'll have much more coming up after this.

[Podcast Sponsor/Announcer]

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[Joe Matthew]

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[Joe Matthew]

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[Bloomberg Host]

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.

[Joe Matthew]

As we always say on Fridays, Charlie, it has been a week. Can you imagine? It was this week we heard about the Jay Powell investigation. That was on Monday. Washington woke up to the news, then Wall street woke up to the news and everybody said, what's going on here? The DOJ criminal investigation. The president said he knew nothing about that. Wall street has so far had an enormous amount of patience with, not so much in Congress, where Democrats and Republicans have stood up to defend the Fed chair in the face of a possible criminal indictment. David Westin talks about this and more on this week's edition of Bloomberg Wall Street Week, sitting down with Bill Dudley, as a matter of fact, to get his take on it, the former New York Fed President, Bloomberg contributor, not only about the investigation into Powell, but actually what goes on inside the FOMC meeting. Let's listen. As I understood the chair, he was saying, you're accusing us in order to have influence over our monetary policy.

[Bill Dudley]

Exactly. He said pretext. I think the key word in his statement was this is a pretext because this is a way of putting pressure on me to lower interest rates and I'm not having it.

[Joe Matthew]

Which takes us into the room, as it were, for the FOMC when they're voting, how it really works. I mean, you've been in the room and whenever we ask somebody who's on the Fed, they say, oh no, no, we pay no attention to politics at all. Absolutely not. It doesn't affect us. But you are human beings. I mean, it must play in the back of your mind somewhere, even if it's not discussed in the meeting.

[Bill Dudley]

Well, you know, you can look at the Federal Reserve transcripts of all the FOMC meetings released with a lag of five years, and you won't see any discussion about political consideration. So I think that's actually true. But you know, you're certainly right in the sense that if the administration is putting tremendous pressure on the Fed to do something that makes It a little bit more difficult for the Fed to deliver what the administration actually wants because it creates the idea of, are they doing it because they think this is appropriate for the economy, or are they caving to the administration's pressure?

[Joe Matthew]

Take us inside the room when the FOMC meet, because historically it's sort of been like, secret. We don't know what's going on.

[Bill Dudley]

Well, you have the transcripts, and I think the transcripts are pretty accurate about what the meetings are like. You know, basically what happens at a meeting is typically you have a briefing from the system open account manager about what's going on in markets. Then you have a briefing on the economy from the staff, and then a briefing on international staff, and then you have a go around and everyone talks about their views on the economic outlook. And then at every meeting, you also have the same thing happen on monetary policy. Staff presents, here's the options, and then people talk about their views on monetary policy. Then sometimes there's a special topic. So there's a third thing that they take up and discuss, like maybe, you know, the balance sheet, for example, or financial stability risks, for example. But it's a pretty collegial place. I mean, you know, if you, you know, people want to understand the views of others. People aren't yelling and screaming and arguing, you know, vociferously. It's very respectful. And, you know, people spend, you know, quite a bit of time, you know, when the meeting's not in place, actually, you know, you know, talking in the halls, you know, having a cup of coffee on the break or at the breakfast or lunch. So I would say, you know, I find it to be quite collegial, you know, and I think that's, and I think that makes the institution function better.

[Joe Matthew]

A collegiate place where one in Lisa Cook and now two in the chair Jay Powell, are under very public attack, personal attack.

[Bill Dudley]

And I think people are feeling they're, you know, that could be me. So I think, you know, there's quite a bit of sympathy for what those two people are going through. So I think, yeah, I think the Federal Reserve leadership, you know, including, you know, all the FOMC participants are prettyyou know, are very sympathetic to where Paul is coming from, and I think they feel really good about what he did and said and had to say in his video message this past weekend.

[Joe Matthew]

A lot more where that came from. And you can watch or listen to the full conversation with former New York Fed President Bill Dudley on the new edition of Bloomberg Wall Street Week with our colleague David Westin. That's at 6pm Wall street time here on Bloomberg TV and radio. Really interesting to hear what goes on in that room. So they don't burn incense. There's no closing prayer. It's where we start our conversation with Katie Richards. As we mentioned with us in studio today, senior strategic advisor at the Groundwork Collaborative, former official director of the state local Fiscal recovery funds at the U.S. department of the treasury and the Biden administration. Katie, I hope your year is going well. Great to see you.

[Katie Richards]

Great to see you. Thanks for having me.

[Joe Matthew]

Did you ever want to be in for one of these meetings to see what actually goes on?

[Katie Richards]

I mean, it'd be fascinating to be a fly on the wall.

[Joe Matthew]

Right.

[Katie Richards]

Especially now they're full of really competent staff, as he was saying.

[Joe Matthew]

Yeah.

[Katie Richards]

So, you know, I think it's a really interesting place to learn a lot about what's going on in the economy.

[Joe Matthew]

Should say so. And criminal investigations was really amazing to sit here and think just now. That was only on Monday when we learned about this investigation into Jay Powell. He's been getting pretty high remarks in the way he's handling this politically. Are you surprised that the market from a financial standpoint is so calm?

[Katie Richards]

I am unfortunately not surprised anymore because this is a pattern that we've seen, we've been trained, the Trump administration, but I think it's a really big problem. When you think about Fed independence, it can sound very dry and esoteric. And then we look at the market and see, oh, there isn't really much of a reaction. But unfortunately this is the kind of thing that can have really far reaching implications and sometimes it can be kind of nothing, nothing, nothing, and then all at once. And you know, I see the investigation into the Fed chair as part of a piece of the firing of Lisa Cook, which we're going to be getting more information from the Supreme Court on soon. And also with some of the other kind of more shocking moves that the president is making, like announcing that tariff policy might be set in order to encourage our European allies to allow us to annex sovereign territory from another country. These are really the kinds of things that we don't expect to happen in a place like the United States. And, and it's not that it's going to drive mortgage rates up tomorrow, but the tail risk on this kind of behavior and people really losing confidence in the robustness of the American economy and our status as a safe place to invest are very, very large. And I really think that it's important to think about how something like losing our status as reserve currency for many countries and losing our status as the place where money runs to when there's any uncertainty could impact our ability to fund really important things through the government, our ability for people to get those mortgages at reasonable prices. You know, the United States has had very low bargaining costs or very low borrowing costs for decades now, partly because of our status in the world. And if we lose that, it's going to cost the government and the American people real money.

[Joe Matthew]

You know who weighed in on the argument over Fed independence was Jamie DiMon, of course. JP Morgan spoke to David Rubenstein on Bloomberg yesterday in New York. Listen to what he said.

[Bill Dudley]

Everyone I know, including the President, United States says we need an independent Fed board. Most people I know, including the President of the United States, speak up about their opinion, which they're free to do. Some say it more aggressively than others. That's their right. The question is only about when certain things take place and think of lawsuits and stuff like that, does it chip away at that independence to some spectrum? So you can say a little bit, you can say a lot, but you don't want to chip away too much. Because if you chip away too much, in my view, this is my opinion, it will drive rates higher, not lower. That's all.

[Joe Matthew]

Julie seen that to some extent already, haven't we?

[Katie Richards]

That's right. And it's a combination of, as Mr. Dimon was saying, the sort of, like, you get a little bit here, a little bit there, drip, drip, drip rates go up a bit. Some of that is about just the question of the Fed's ability to control what's going on with interest rates. Right. Because one of the things the Fed does is provide confidence to investors that they're going to, for example, get inflation under control. And that makes investors think, oh, we can demand a little bit lower interest rate. The Fed's got it under control. That kind of confidence can have those small but meaningful effects. And over time, as that erodes, you have problems. And then there's a bigger question of what if we really squander the goodwill of, you know, nations all across the world and start to look like a place that is not safe for investment? And that's something that I never would have thought that you and I would be talking about. But some of these moves are really scary.

[Joe Matthew]

So I want to ask you about some of the proposals that the President has put out in the name of affordability. Because if interest rates aren't dropping, the President says prices are and have already begun falling. We see, of course, different things at the grocery store and in different elements of the economy here. But some of the more recent proposals he's put out, and we're going to hear about this, I guess, next week at Davos, for instance, tapping 401ks to make a down payment on a home, banning institutional buyers from the housing market, both of those to loosen housing or I guess lower prices, although it could also raise prices if you increase demand, but not supply. But other things like capping interest rates on credit cards that we've heard the President put forth, stopping defense contractors from using taxpayer dollars to pay out dividends. None of these are associated with conservative politics. But would they work?

[Katie Richards]

So I think I'd like to put some of these in a few different buckets.

[Joe Matthew]

Sure.

[Katie Richards]

But, you know, to talk about capping credit card interest rates and getting private equity out of the housing market, those are things that you're right, they don't come out of conservative politics. They actually come out of progressive think tanks and places like the place that I work.

[Joe Matthew]

Yeah, you work for them.

[Katie Richards]

You know, when I hear those things coming from Donald Trump, what I want to do is look at the actual record of his administration, because right now we're talking about truth social posts, not policy moving through Congress. And, you know, on things like credit card interest rates, what is actually going on with the regulation of banks? What is his administration actually doing about private equity? And the answer is they're sort of opening up the store and saying, you know, we're going to allow mergers to go through that are going to raise costs for people. We're deregulating every market that we can get our hands on. So, you know, I would be fascinated to see the President actually push a legislative proposal.

[Joe Matthew]

He's got legislation to do this very interest rate capping idea when it comes to credit cards. He was on the phone with Elizabeth Warren talking about this the other day. That doesn't mean they're going to pass.

[Katie Richards]

Right.

[Joe Matthew]

But it also reminds us of the struggle that this administration, like the last one, is having. Lowering prices.

[Katie Richards]

That's right. And, you know, I did want to talk a little bit about tapping into 401ks for housing.

[Joe Matthew]

Well, what happened?

[Katie Richards]

I think it's a really great example of something that's going to be really appealing to the small number of people in this country who have enough in a 401k for a down payment on a house and otherwise can't afford to purchase a house. That is an extraordinarily small set of people because only about half of working Americans even participate in an employer sponsored retirement plan. Among those the balances, you know, for people who are in the kind of first time homebuyer stage of life tend to be very low. And the people who really really benefit from 401ks are people who are high income where the tax benefit is a really big benefit to them and who have a lot of extra money lying around that they're not using to make bills that they can then put into a 401k and get that tax benefit. And so for those people who are already wealthy, it's going to be fantastic to be able to withdraw some money tax free from a tax preferred account and invest it in a housing asset that then when you sell it it's your primary residence so you get 500,000 cap gains tax free. But for a person who is struggling to make rent every week and working in a, you know, middle wage job like a working class person, yeah, this isn't going to help them afford to.

[Joe Matthew]

Buy their first really interesting. Boy, we've learned a lot as always from Kitty Richards. None of these ideas do anything to increase the supply of housing as well, which we can note from the Groundwork Collaborative. Many thanks Kitty for comparing notes with us here. Stay with us on Balance of Power. We'll have much more coming up after this.

[Podcast Sponsor/Announcer]

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[Joe Matthew]

Investing Brokerage Services by Open to the Public Investing Inc.

[Podcast Sponsor/Announcer]

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[Joe Matthew]

Complete disclosures [e-mail] disclosures.

[Bloomberg Host]

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[Joe Matthew]

It's all about affordability around here. The President talking about your electricity bill as we just discussed with Shep. You know, they're busy writing a State of the Union address right now, but they're also writing a big speech for next week. Davos. Yeah, they'll be up there with Bloomberg surveillance, hanging out with Donald Trump, talking, I guess about domestic issues. And I'm not sure exactly how that resonates with the crowd in Davos, but the President is out with more plans. You heard about the great health care plan yesterday. That's not me opining, that's actually the name of it. Remember, we had the big beautiful bill, now we got the great health care plan. A set of cost cutting ideas is how it's being described. A video by the President says he's calling on Congress to pass this framework into law without delay. The problem is, well, there's no paper, there's no legislative text, there's no timeline for congressional action. There's really not much more than a concept of a plan. Asked how this would move through Congress, administration officials said it's a broad architecture. That's another one. Right. Framework, broad architecture. And we've got this roundtable this morning, the President talking about the great health care plan. We're just not sure exactly what it is going to be. So hold that thought. We're going to talk a little bit later on with Catherine Clark about the effort to revive Obamacare subsidies. That's another part of the affordability discussion that at least Democrats are having in most cases. Then there's the idea to help the housing market by unlocking your 401k. Have you heard about this yet? It's one of the big stories today. This is what the President's going to announce in Davos. I'm pretty sure most of the people in Davos are not going to have to raid their 401ks, but maybe you will. And the President thinks you ought to be able to do it without penalty. Listen to him before the economic club of Detroit.

[Bill Dudley]

In the coming weeks, I will be laying out even more plans to help bring back affordability. As part of those efforts at Davos next week, I'm going to provide much more detail about our housing policies so that every American who wants to own a home will be able to afford one. This will include a ban on large institutional investors buying up single family homes all over the country and making it impossible for People to buy home.

[Joe Matthew]

Yeah, that was the first salvo ban. Institutional buyers perked up Elizabeth Warren's ears. She already proposed that a lot of these populist ideas are coming from the left, which is why they are not getting support in many cases from Republican lawmakers. Kind of like capping interest rates on credit cards. But here you go with the 401k story. You better believe that Bloomberg News has the details. We'll unveil a plan next week letting savers in 401k retirement plans to use at least some of their money for down payments on a home purchase. Kevin Hassett on Fox Business President will put the final plan out next week. But yeah, we're going to let people deploy assets from the 401k. He says suppose you put 10% down in a home, you take 10% of the equity of the home, you put it in as an asset in the 401k, then your 401k will grow over time. I don't understand that. We'll see how this all comes together now. Fidelity feels about that. I also wonder how Peter Atwater feels about all of this. The last time Peter was with us, we were talking about the K shaped economy. It was really something in the daily conversation and that hasn't changed since. But it has only grown louder with the president now on the affordability track. He's president of Financial Insights, author of the Confidence Map, Charting a path from Chaos to Clarity, and the man who made this concept of the K shaped economy mainstream. Peter, it's great to have you. Welcome back to Bloomberg. I hope your year is off. Well, I'm going to stop talking for a while because I want to hear from you on this. President Trump has not been sounding a lot like a conservative when it comes to the issue of affordability. And I know he doesn't like to use that word, but have any of the plans that I've described here helped to close the K?

[Peter Atwater]

Joe, thanks for having me back. You know, when I last talked to you, I was lamenting that neither side of the political aisle was paying attention to the K shaped economy. Now we have a, an, an arms race on affordability ahead of the midterms. So I look at all of these proposals left and right with a couple of thoughts. One is politicians are not moving to become socialist. They're becoming survivalist. They know they need the bottom of the key to support them in November. What they still don't yet appreciate is the mindset of those at the bottom. They're in me here now Mode, which means that everything that they hear from the left and right need to flow through three filters. Does it fit me? Is it immediate? Is it tangible? And there I see struggles on both sides. There are a lot of great intentions, plans, frameworks, as you just said. You just said. But those at the bottom, they want me here now.

[Joe Matthew]

Me here now. What do they think when the President calls affordability a Democrat hoax? Or is that just the noise? Peter, does something like what I'm describing to try to unlock savings, to buy a home, to try to cap interest rates on credit cards, does that resonate with people at the bottom of the K?

[Peter Atwater]

It resonates so long as it's real and as long as it fits. So let's talk about the 401k piece. The Bureau of Labor Statistics last year said that 56 of them, 60, 56% of Americans, have 401 plans through their employer, which would suggest that about half of Americans don't have the plan and would not qualify to begin with. I don't think it's a hard stretch to think that Most of that 44% sits at the bottom. So, again, may be well intended, but it's not targeting the group that needs this relief the most.

[Joe Matthew]

Don't we need to build more homes? How does this help us increase supply?

[Peter Atwater]

Well, that was going to be my second point. A lot of the efforts that I see are focused on demand. That's not the way to solve an inflation problem. If the issue is affordability, we need to boost supply. Sadly, if we increase demand, all we're going to end up doing is boosting inflation in the product that's for sale.

[Joe Matthew]

Mm. Yeah. So I don't know if you heard about what the independent was calling the Depression meal this week. The Agriculture Secretary, Secretary Rollins, was at this idea. She said they ran a thousand simulations at the White House, Peter. A thousand simulations, and found that you could pay $3 for a meal of a piece of chicken, a piece of broccoli, a single corn tortilla, and one other thing. We're not sure what the other thing is. We're pretty sure it's not a prime rib. But that kind of talk resonates how? At the bottom of the cake?

[Peter Atwater]

I don't think it resonates at all. I think all that does is to reinforce the scarcity that those at the bottom feel. Moreover, it does so at a time where they are all too aware of the overabundance above them. I look at the K shaped dynamic today boarding an airplane, and those at the back of the plane are walking past row after row after row of business class seats before they arrive at their destination. And I think that policymakers especially need to be careful about reminding those who don't have enough today how little they have relative to those around them.

[Joe Matthew]

You know, there's a literal interpretation of what you're talking about here, Peter. I think it was Delta Airlines just last week in its earnings report said bookings in the main cabin are down, bookings in first class are through the roof. They can't keep up with it to the point where they're going to start expanding first class sections in airplanes. This is the manifestation of the king.

[Podcast Sponsor/Announcer]

Absolutely.

[Peter Atwater]

And they expect 60% of their revenues to come from the front of the plane.

[Joe Matthew]

Imagine.

[Peter Atwater]

Yeah. And I think for those at the bottom, they're seeing lots of things being handed out to those above them. They see the benefits of the one beautiful bill and other things. They're challenging both sides of the aisle to respond. And I think left and right need to take note of the messages from the new mayor of New York. As I said, it's not a socialist message, it's a survivalist message. And how do they help those at the bottom? And I think the challenge given the breadth of the K today is it's creating a slave of two masters environment where to help those at the bottom, they're ultimately going to need to take something from the top. And we saw that with the credit card proposal. We've seen that with some of the housing proposals. And that's, that's a tough thing to a tough march to walk if you are, you know, a administration that uses the stock market is a barometer of success.

[Joe Matthew]

Yeah. I've asked this before, Peter. If the Supreme Court strikes down the tariff regiment, does that spare the bottom of the K and therefore, politically speaking, the administration now I think the bottom.

[Peter Atwater]

Of the key, it only spares them to the extent that they see the benefit. And it's unclear now that prices have adjusted for the tariffs whether we will see, you know, the full array of, of retailers now reduce prices as a result or do those who are making things are in the middle seize the opportunity?

[Joe Matthew]

Really something. Peter, it's great to have you back and I appreciate it. Don't be a stranger. Peter Atwater, the president of Financial Insights with us live on Bloomberg. Check out his book the Confidence Map. Really interesting to hear the insights of Peter Atwater as the K shaped economy becomes part of the daily conversation here in Washington and on Wall street foreign. 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 [e-mail] these days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI well, the holidays have come and gone once again. But if you've forgotten to get that special someone in your life a gift, well, Mint Mobile is extending their holiday off offer of half off unlimited wireless. So here's the idea. You get it now. You call it an early present for next year. What do you have to lose? Give it a [e-mail] Switch limited time.

[Katie Richards]

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[Joe Matthew]

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[Katie Richards]

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[Bloomberg Host]

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[Katie Richards]

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