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- [00:03]
Joe Matthew
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.
- [00:25]
Kailey Leinz
For most people, a Thursday would mean we are one day away from the end of the work week. Friday would be upon us. But of course, here in Washing Washington, at least if you are an elected representative on Capitol Hill, usually your workweek ends on a Thursday. Everybody flies out of here. And it does look, Joe, like that is what is going to happen this evening. Even if there is no deal to keep the Department of Homeland Security funded beyond the deadline of tomorrow, it doesn't look like that deal is anywhere close to getting done. Therefore, they're taking recess as they plan to.
- [00:54]
Joe Matthew
Yeah, both chambers. So this could be what's undetermined. If this shutdown takes place in Homeland Security, exactly how long it will last because there does not appear to be a continuing resolution that anybody can agree on here. And before we talk about this and a lot more with Senator Shelley Moore, Capitol the Republican from West Virginia is going to join us live from Capitol Hill. Bloomberg Washington correspondent Tyler Kendall is also roaming the halls of the Capitol and finding a lot of news today. There's a lot going on with regard to this debate, but also, Tyler, the Federal Reserve and the next chair. I want to start here with you because you had a conversation with Thom Tillis earlier today that's making a lot of news. No, knowing that there was this idea of maybe a swap in investigations, if you will, to unlock a confirmation hearing in the Banking Committee. If the DOJ were to drop its Senate Banking Committee would pick it up. Tyler, is Thom Tillis in favor of this move?
- [01:48]
Tyler Kendall
No, Joe, he told us reporters here on Capitol Hill that he is batting down this idea and he's really central to what is going to happen to Kevin Warsh's nomination going forward because he is that key member on the Senate Banking Committee where Republicans only hold that 13 to 11 majority. So in terms of this proposal being floated, one Republican official does tell Bloomberg News that an option being put on the table could be for the Senate Banking Committee, as you outlined, to take over the investigation or lead an investigation, presumably to have the Department of Justice let up on its investigation. But Tom Tillis says that is not going to be a viable option.
- [02:30]
Rick Davis
I really do think Warsh is a great nominee.
- [02:34]
Mike Flood
In fact, the short list was great.
- [02:35]
Joe Matthew
I told the president that.
- [02:37]
Rick Davis
But I'm not going to have an.
- [02:39]
Mike Flood
Investigation out there.
- [02:43]
Rick Davis
Because I still think.
- [02:44]
Joe Matthew
It speaks to the very thing that I moved quickly to make a point.
- [02:48]
Mike Flood
On the Sunday night when the investigation revelation was there.
- [02:52]
Rick Davis
We have to have an independent Fed.
- [02:55]
Mike Flood
And we can't finesse this.
- [02:56]
Rick Davis
They either need to move forward with.
- [02:58]
Joe Matthew
A compelling investigation that convinces me I.
- [03:00]
Rick Davis
Was wrong or resolve the current investigation and move on.
- [03:11]
Tyler Kendall
Joe and Kaylee. I then pressed to Senator Tillis to see if he could confirm that these negotiations are happening behind the scenes with the White House. He said that he would not detail his private conversations with the administration, though it was interesting to hear him also add that he felt that the administration was actually caught off guard by this investigation that was launched by the Department of Justice into Jerome Powell. So it's one of those threads that we're going to have to keep following closely here because as you well know, Powell's term as chair is up in May. And this is a process that actually does take some time. Warsh has been broadly applauded. This historic typically would have been considered a pretty easy confirmation hearing. It's going to take some weeks at least to get going because he has to meet privately with all the members here in the Senate before we can even talk about setting that potential hearing date.
- [04:02]
Kailey Leinz
So this is a thread we will continue to follow, as you say, Tyler, another thread we're following, of course, today, knowing that the deadline looms tomorrow to keep the Department of Homeland Security funded or risk shutting it down. Has there been any progress today that you sense on Capitol Hill to avoid that outcome, or are we just expecting everyone to get on their planes and deal with this on the other side of recess?
- [04:23]
Tyler Kendall
Well, Kelly, it depends on who you ask. I did have a conversation with the lead Republican negotiator for DHS funding that Senator Katie Britt, a Republican from Alabama. She told me that they have made, quote, significant strides when it comes to negotiation. She's talking about the side sending text back and forth to each other. But when you ask Democrats, they're saying that the proposals being put on the table by the White House is not enough to actually amount to getting their votes, not for the full fiscal year. Funding for dhs, that appears to be an option that is long gone at this point, but for potentially supporting another continuing resolution for potentially two weeks, as we just saw, for dhs. And of course, as you well know, there was that breaking news this morning. President Trump's borders are confirming that they are going to end that surge in Minnesota. While that was broadly applauded by both sides of the aisle. It is action like that that Democrats say isn't enough to get them to the table. They need to see some of their demands really codified into law instead of just falling to executive action.
- [05:27]
Kailey Leinz
All right, Bloomberg's Tyler Kendall live on Capitol Hill for us. Thank you so much. And sticking on Capitol Hill here on Bloomberg TV and radio, I'm pleased to say. Also joining us live now is Republic Senator Shelley Moore Capito of West Virginia, the chair of the Committee on Environment and Public Works. Senator Capito, thank you so much for being back with us. Is it your expectation that the Department of Homeland Security is going to be shutting down come midnight tomorrow, or do you see an 11th hour opportunity to avert that outcome today?
- [05:56]
Joe Matthew
You know, right now I would have to say that it looks fairly inevitable that we will have a partial shutdown of the Department of Homeland Security. I think it's good to frame that. Remember, we did pass a lot of bills and the president signed into law. So 96% of the government is fully functioning. But that critical piece of Homeland Security in all likelihood will shut down. But I am for extending the time for debate. I am for making improvements such as Senator Britt was able to negotiate into the Homeland Security bill. We need to move beyond this and make sure that our Coast Guard, our TSA, and our Secret Service in our FEMA are all funded along with our Border Patrol and ice.
- [06:39]
Senator, it's good to see, I wonder, your thoughts on this approach that some Democrats are taking in the House. Rosa DeLaura has a bill that would essentially strip ICE itself away from the other agencies under DHS, like the TSA, FEMA, the Coast Guard. If the House accomplished that, would that even be entertained in the Senate?
- [07:01]
You know, I don't think that's a good strategy. We've got to look at Homeland Security in the hole. It is important that we have internal enforcement of our, not just immigration laws, but our ability to work with cities and counties and states to be able to remove people that have been adjudicated and are under deportation orders. And that's what ICE does. And so I'm fully supportive of the efforts that they've moved forward. And the same with Border Patrol. I mean, can we make improvements? Yes, and improvements are built into the bill. More cameras, more training, more IG or, you know, inspectors, inspections. These, these improvements can be made. They're already built into the bill that the Democrats will not accept. And I think they're using this as a political statement. I think if we pull it out it becomes even more polarized and more political.
- [07:54]
Kailey Leinz
Well, as we consider the politicization of the ICE issue specifically, it of course has been a focal or the focal point of that has been in Minnesota and Minneapolis specifically in the aftermath of the two US Citizens who were killed. We learned from Tom Homan the borders are today that they are going to be drawing down Operation Metro surge in Minnesota. Let's take a listen to what Mr. Homan said earlier.
- [08:18]
Mike Flood
In success that has been made arresting.
- [08:20]
Joe Matthew
Public safety threats and other priorities since.
- [08:22]
Rick Davis
This surge operation began, as well as.
- [08:25]
Mike Flood
The unprecedented levels of coordination we have.
- [08:27]
Rick Davis
Obtained from state officials and local law enforcement. I have proposed and President Trump has concurred that this surge operation conclude a significant drawdown has already been underway this.
- [08:42]
Joe Matthew
Week and will continue to the next week.
- [08:47]
Kailey Leinz
So if we are at the conclusion of this operation, Senator, with the benefit of hindsight, did the operation surged too far?
- [08:56]
Joe Matthew
Well, here what I think what I'm reading and what he's saying is the key component that he's emphasizing is the coordination between state and local. And I'm not sure that that was there before the temperature went way up. And then I think this has been part of the compromise between that Tom Homan was able to forge with state and local authorities and with ICE and border patrol. Let's lower the temperature, let's work together as law enforcement officers and let's get the worst of the worst out of here. And I think those are reasonable propositions. Did it go too far? I think obviously mistakes have been made and, and had some very, very life ending and altering results. And for that I think we all wish we could go back and change that. But I think lowering the temperature, removing themselves from the operation and leaving it to state and locals, that's what we need to do. We need to have that coordinated effect.
- [09:52]
You know, it's interesting, Senator, we've talked to a number of your colleagues, Republican senators about the issue of demasking and we've heard the arguments on both sides of it. It appears to be a breaking point. And I'm wondering if demasking is a non starter for you.
- [10:07]
You know, in my view that that's just sort of an issue that I think gains a lot of attention. We just obviously as a nation went through a big masking issue during, during COVID But also the protesters in New York, they were all masked and we were saying, you know, if you were, if you're protesting, we need to be able to see your face. And then now we see the same sort of argument on the opposite side. I think that you have to do this on a case by case basis. We have to protect our officers. And I think the protesters in Minneapolis showed that they're willing to dox, threaten families and, and threaten the health and security of a federal law enforcement officer, which in and of itself is pretty frightening. So I think maybe when the temperature goes down, we'll see more, more abilities for identifications. But I do, I do, I do want to reserve the right for our officers to wear a mask if they feel their life's in danger. Yes.
- [10:59]
Kailey Leinz
Senator, I'd like to switch gears as we are expecting later this hour President Trump to be appearing at the White House with the administrator of the epa, leading Zeldin to formally revoke the so called endangerment finding around greenhouse gases. Lee Zeldin calls this the largest act of deregulation in the history of the United States. But I ask you, given your chairship of the Environment and Public Works Committee, is it too large an act of deregulation? Could this not have negative environmental consequences?
- [11:28]
Joe Matthew
No, no. We have environmental laws that are strict, stringent and they're adhered to. What this has done is taken an issue in the, in the early Obama administration and ballooned it up into what, what can we do for global carbon emissions and, and what we see. And as you read articles, different opinion articles from different papers, some that are very liberal papers, have said, yes, the endangerment finding went too far. You cannot have the executive take control of the legislative prerogatives of Congress. And that's what's happened and it's stayed. It's going to be the largest, I think, economic deregulation that we've seen. I'm sure it will be litigated, but I feel confident that he's on firm ground, especially in light of some of the past decisions by the Supreme Court that we've seen that have said the executive and the agencies have to stay within the boundaries that Congress has set. And an endangerment finding goes way beyond that.
- [12:29]
Really interesting. I don't know if you were there, Senator, but the President of the United States was awarded the undisputed champion of beautiful clean coal trophy yesterday at the White House. Peabody Energy, Jim Gretch actually gave it to him in the effort to celebrate an order that the President made directing the Pentagon to buy electricity from coal fired power plants. What does that mean for the industry in West Virginia, this Pentagon deal?
- [12:59]
Well, this, this provides the certainty to the coal industry, but it also provides a great, a lot of balance and certainty to the nation. Let's just look at this. Practically over the last two to three weeks, we've had these amazingly low temperatures. If you look at the energy, who's providing the energy to warm our homes? What, what source? Coal has had a major role here along with natural gas and nuclear. And so we have to preserve these baseload energy availabilities to do a lot of things, but just the basic needs of, of heating our homes and making sure that our hospitals are open, all of these things. So he, you know, the president's a big fan of coal. Coal country loves the President. I was there yesterday. It means more a longer life for a lot of our coal producing power plants, but also more coal mining jobs. They're doing it better, safer and cleaner than they ever have. And it just makes a lot of sense for our nation.
- [13:56]
Kailey Leinz
Senator, we just have a minute left, but I know you today have officially signed on to the Save America act that passed the House of Representatives last night. Of course, a voter ID piece of legislation. Your Republican colleague, Senator Lisa Murkowski has suggested that legislation such as this could have the effect of federalizing elections. We know President Trump has had made some comments about nationalizing elections as well. Is that an idea you stand behind or do you have concern about that?
- [14:21]
Joe Matthew
Well, yeah, I don't want to federalize our elections so that every state has the same election parameters and our secretaries of states can't form and function their election practices that their legislature puts forward. So this doesn't do this. This basically says you just have to prove that you're an American citizen to vote in an American election. It sounds simple. I would say it's probably not as simple as it sounds because I think some of the identification issues could pose a challenge to some secretaries of State. Whether you need a passport or birth certificate or a real ID card. And some of these issues have been raised. But honestly, it's a simple concept. Many states have voter id. Mine's one of them.
- [15:04]
Senator, it's great to have you back on Bloomberg. Republican Shelley Moore, Capitol, West Virginia Live from Capitol Hill, I'm Joe Matthew alongside Kailey Leinz in Washington. We'll assemble our political panel next and get into the shutdown politics once again. This is getting to be a routine stay with us on balance of power. We'll have much more coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis and powerful tools that help you connect the dots. Visit bloomberg.com podcastoffer to learn more, you're.
- [15:41]
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. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130.
- [16:00]
Kailey Leinz
We're keeping an eye right now on the Senate floor where they're trying to take at least a procedural step forward in an attempt by the Republican majority to keep the Department of Homeland Security funded beyond the deadline of midnight tomorrow. They're trying to invoke cloture on a motion to proceed on the DHS bill that the House passed. This isn't necessarily a vote on final passage, but this may not be successful either. And the anticipation here in Washington is that despite whatever effort the Senate puts up today and the efforts of negotiators maybe to reach some kind of agreement, Joe, it's highly likely there will be a partial shutdown tomorrow and senators will go on their recess and we'll have to reconvene come what, a week and change?
- [16:37]
Joe Matthew
Yeah, because House is going away too, Right. And there are some really big codels this weekend. As we've talked about the Munich security conference. The jets are taking off one way or the other here. So following our conversation with the senator, it's not sounding like a lot has changed since the White House brought its counteroffer. And boy, the headlines coming out of Minnesota today certainly have our attention as well. You wonder how this may or may not have impacted the debate if it took place a couple of weeks ago. But the administration is pulling back from the Twin Cities. Tom Holman announcing earlier today that ICE agents are coming out of the city. It was 700 removed a couple of weeks ago, remembering there were still a couple of thousand agents at work, more than 2,000. And they are now decamping, which we want to talk about with our political panel. Both of these stories collide in an interesting way. Bloomberg Politics contributor Rick Davis is with us, Republican strategist and partner at Stone Court Capital alongside Doug Farrer, principal at Maywood Strategies, former senior adviser to FTC Commissioner Lina Khan. Rick, what do you think of the move from Holman today and with some time, if we see the temperature come down, as Senator Capito said in Minneapolis, will that start to creep into the debate here in Washington?
- [17:53]
Rick Davis
Yeah, I think that this is all part of the same cycle of discussions, right? I mean, two weeks ago the administration booted Greg Bovin out of Minneapolis and unceremoniously, you know, get out of town and get out of town today and injected Homan in to run this thing. And two weeks later, we have this press conference basically unraveling the operation. What do they call it? Operation Metro Surge. Well, they're not surging anymore. They're getting out. And they've also said some things that actually add to the negotiations going on, you know, in Congress over DHS funding. And one is that they're not going to make arrests anymore around schools and churches and hospitals, which was one of the things that Democrats had asked for, and that they were going to start working better with state and local, which is one of the fundamental aspects of the Democratic negotiating positions. And I think the fact that they also pulled out of all these other towns where they had these surges, Louisiana, Portland, places like that, is a indication that this administration is raising the white flag and understands that the overreach has not only affected their ability to get Bill through Congress on funding dhs, but also it's crushing their polling numbers in advance of a midterm election. And I think those two twin pillars are exactly what's bringing us to the potential of getting a deal sometime soon on dhs.
- [19:25]
Kailey Leinz
Well, as Rick points us to the midterms, that's still nine months out, Doug. And I wonder if taking this away potentially is a talking point. If we have seen a lot of these operations unsurging, as Rick is suggesting, does that mean Democrats are going to lose one of their best political arguments as we get closer to this cycle?
- [19:41]
Doug Farrer
I don't think so, because immigration is so central to President Trump's pitch. I mean, it's really his main issue, and incredibly, he's turned it into a Democratic issue. I don't think he's going to stop. I mean, there's been reports that they are buying up these warehouses where they can hold people that they're building sort of camps for people that they think they want to deport. I suspect that President Trump won't be able to resist, you know, a state or a city, a blue state, might piss him off, might do something and he's going to respond. And so I think, you know, this may be a temporary reprieve and certainly a great reprieve for the people of Minnesota who've been through so much. But this isn't going anywhere.
- [20:15]
Joe Matthew
You know, it's interesting to see Greg Bovino back on social media. This is, of course, the gentleman who was dispatched from Minneapolis when Tom Holman went to try to lower the temperature. Back on X replying to posts, as we read, including one from the Governor of Illinois J.B. pritzker, who is calling for Bovino to be fired, quote, perhaps we could meet for a sugar free slice of heirloom apple pie. On me, he writes. So the online trolling has not ended here, Rick. And I wonder if we should be looking at this action in Minneapolis in isolation or if this is going to be what takes place around the country when you've got Bovino and others still ready to surge.
- [20:59]
Rick Davis
Yeah, first, my apologies to Greg Bovino. I think I call him Greg Bovine. And I didn't mean to imply that he was a cow or anything. So my mistake, secondarily. Yeah, look, I think this is a. This is an issue in transition, right? I mean, I think the administration came out all guns blazing. For one year, we saw nothing but chaos on the streets of, you know, blue cities around America. And, you know, it was only a few months ago that we had, you know, military dispatch to L. A. You know, and so, like, this constant increase in anxiety and tempo of the administration's efforts actually didn't work. I mean, we spoke the other day about the fact that even today, you know, only a small portion of the 400,000 people arrested, which, by the way, was less than the last year of the Biden administration were hardened criminals. And so there's all this, you know, discussion amongst Republican ranks like, hey, we've spent billions of dollars. We've created a political mess around the country. Our image is tarnished by this, and we actually aren't getting what we wanted to get done. And so I do think there's a lot going on inside the White House. I can't imagine what the conversations are with Stephen Miller these days, because, you know, this was his strategy to basically occupy blue America, you know, with ICE agents and looks like that's not happening anymore. And so we'll see. Doug's right. You know, you never can tell what's going to happen in this administration. But I think, as you see, this thing deconflict, one, it is good for the country, but two, it gives us a chance to sort of have a conversation about what is the right approach to immigration, because what's currently happening isn't being supported by the American people.
- [22:56]
Kailey Leinz
Well, as we consider, you never know what's going to happen with this administration. You also never know what's going to happen in terms of the revolving door of arrivals and departures within it. Doug, and given your former purview at the ftc, I do want to ask you about the news we got today that the top antitrust official at the Department of Justice, Abigail Slater has resigned, we understand, a resignation that came at the request of the White House. What does her departure signal to you about the current M and A questions that are underway or being considered by the doj, and what the path forward is going to look like in her absence?
- [23:27]
Doug Farrer
Well, Gail's firing is a story of just dysfunction and corruption that's going on in this administration. I mean, almost immediately after she came in, there was reports that she was being sidelined by highly paid lobbyists who have really good access to Bondi and Trump, HP Juniper being the case. And since then, basically, she's not been in charge and until been a dead woman walking. The lobbyists, Mike Davis and others take a lot of money from these companies to get their mergers through. And frankly, it's sort of Banana Republic stuff here. And so I think what I'm watching is what does J.D.
- [24:01]
Joe Matthew
Vance do?
- [24:02]
Doug Farrer
Because Gail Slater was J.D. vance's senior economic adviser, and J.D. vance, like a year ago was a populist warrior focused on big tech enforcement. So where is he on this? And how much does this drag him down in his political ambitions to sort of abandon his top staffer in such an ugly way?
- [24:19]
Joe Matthew
We're all old enough to remember JD Vance as a fan of Lina Khan. I believe that, by the way, was a 78 to 19 vote in which she was confirmed. You call it a firing? Rick Davis, the statement from Slater says, it is with great sadness and abiding hope that I leave my role. What do you make of this move? And does this usher in the animal spirits that everybody was talking about when President Trump came back in the White House?
- [24:50]
Rick Davis
Wow, that's a lot. First of all, when in doubt, blame it on the lobbyists. This administration came in with a lot of, you know, energy and activity around the idea that, you know, you were going to go after big corporations. And, and so. So at the end of the day, you know, that's just not been happening. And if anything, there's been this big hug of, you know, Silicon Valley and that kind of thing. So at the. It'll be interesting to see whether or not this administration can change course and go back to where J.D. vance was versus where Donald Trump has put him. Democrats are seeing this as a huge gain for them. They, they had a base around the country for protecting small business and things like that. And, and they lost that mojo. And Doug has written eloquently about this, but they need an opening to create a rallying call around that. And maybe this is the kind of thing that that will generate that kind of response.
- [25:53]
Kailey Leinz
I think we may have seen an appearance of a Rick Davis grandchildren just now on Bloomberg tv. I think you're opening the door, Rick, for me to bring a baby boy on the show at some point and make an appearance just quickly on the Animals.
- [26:07]
Joe Matthew
I love that.
- [26:08]
Kailey Leinz
Just finally, Doug, in our last minute here on the animal spirits notion, should we expect that this is like if you want to get a merger done, now is your window of opportunity to strike?
- [26:18]
Doug Farrer
Look, if you want to pay the lobbyists who are in charge of merger control, yeah, you can get your merger done. They haven't blocked a single merger at this point. So, I mean, you know, the animal spirits are fully in effect. But I think the concern is the breakdown in the sort of rule of law that we have here. And the thing I'm going to be watching, it's been reported and I've heard from sources that the Live Nation lawsuit, which seeks to protect people buying tickets, Kid Rock, famous friends and allies of the president, they're looking to settle that potentially favorably for the company. And that was the last straw for Gayle. If that happens, people are going to feel that in their wallets amidst an affordability crisis. So it's a real mess up there. And I hope Democrats will ask them to preserve documents and if they take the House, do some serious oversight.
- [27:00]
Kailey Leinz
All right. A perfect day to have Doug with us here. On Balance of Power, Doug Farrer, principal at Maywood Strategies, former senior adviser to FTC Commissioner Lina Khan, alongside Rick Davis, our Bloomberg Politics contributor, Stone Court, capital partner, and of course, proud grandfather as well. We'll have much more coming up here On Balance of Power. We're going to go back to Capitol Hill. Republican Congressman Mike Flood of the Main Street Caucus will be with us next.
- [27:21]
Joe Matthew
Stay with us On Balance of Power. We'll have much more coming up after this.
- [27:30]
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.
- [27:46]
This is the Thursday edition of Balance of Power with important votes happening right now on Capitol Hill as the state Senate follows on the House in voting for this DHS funding package that is expected to fail. It's looking like as they go through the procedural motions here, this is kind of inevitable. As we discussed with Senator Shelley Moore Capito, there is one idea here before we bring in Congressman Mike Flood. We're going to hear From a Republican point of view here, the gentleman from Nebraska will give us his take on this. Still in town here. There's still a chance. There was a piece of legislation that emerged in the House Yesterday, Democrat Rose DeLauro put forth, that would essentially take ICE away from the other agencies, separate it from everything else under dhs. That includes the agencies we've been talking about, fema, the Coast Guard, the tsa, and handle ICE on its own. Knowing that ICE was well funded in the big beautiful bill. Wouldn't that solve this right now? We asked a member of the Democratic leadership, chair of the Democratic Caucus in the House, Pete Aguilar. Here's what. Here's what he said. ICE and CBP and the secretary's office, we have huge concerns about their leadership, about the direction and about their continuous.
- [28:57]
Doug Farrer
Terrorizing of our communities. And that's something that we should continue to have disagreements about and work through.
- [29:03]
Joe Matthew
And if our Republican colleagues meet with us about that, then that's something we can talk about.
- [29:08]
Doug Farrer
But that doesn't mean that we should.
- [29:10]
Joe Matthew
Have these other entities within government a lapse in funding.
- [29:14]
Edward Harrison
Rosa DeLauro put out a bill that.
- [29:16]
Mike Flood
Would do just that.
- [29:17]
Joe Matthew
I haven't heard anything from our Republican colleagues about it.
- [29:21]
Kailey Leinz
Well, so let's ask one of his Republican colleagues. Republican Congressman Mike Flood of Nebraska is here with us in our Washington, D.C. studio on Bloomberg TV and radio. Congressman, good to see you, as always, when we consider this notion, and obviously it probably is too late for today, as you've taken your last votes before recess. Could this be the solution upon your return?
- [29:39]
Mike Flood
Well, for the record, if they pass something, I'm still in Washington, I could be there. I could be the first vote for that because I knew I was coming on here. But hey, we've already done this once as the House. We've passed all 12 bills. We funded DHS. The one big beautiful bill funded DHS. That's the big fallacy here is that Democrats have sold their base on the fact that they are holding the line on ice. Ice is funded until 2029. What's not funded when this goes down is TSA, Coast Guard, you know, the folks that work at the Federal Emergency Management Agency. That's why you see ranking member Rosa DeLaura doing some fancy footwork to kind of carve it out and put it somewhere else. Listen, if we're up to them, there would be very limited, if any, immigration enforcement at all. So let's not think that this is a play that is rooted in any kind of strategy. It's just to show their base, hey, we don't support what ICE is doing.
- [30:34]
Joe Matthew
So here we go again. I guess this will be, well, 12:01am Saturday. I guess the question is for how long TSA will start missing paychecks. I believe the beginning of March. Is that kind of your expectation? That's the pressure point that ends the standoff.
- [30:48]
Mike Flood
I think it usually does. Sadly. I think this could go for a while.
- [30:51]
Joe Matthew
Yeah.
- [30:52]
Mike Flood
The Democrats, you know, their base wants them to be very tough, very out there. You see Gavin News and Newsom using the F bomb, you know, when he's challenging another state's governor. That's the attitude over there and that's what we see in our communities. The Democrats, they're based, they are very invested in protesting. I fear this could go for a while. It's not going to impede or impair ICE enforcement. It's really just going to hurt the TSA agents, the FEMA folks and the Coast Guard.
- [31:22]
Kailey Leinz
When we consider ICE enforcement, though, in the announcement we got from the border czar, Tom Homan, that those operations, at least in Operation Metro Surge in Minnesota are going to be now unwound. Do you see, do you see that pullback as the right move in a moment where things got incredibly hot?
- [31:37]
Mike Flood
I do. And I think Tom Homan and Governor Walz deserve a lot of credit for that. And in my opinion, here's what happened. The state and the municipal law enforcement under the direction of the governor and the mayor, decided to be more cooperative with the federal enforcement under the direction of, in this case, Tom Holman. Tom Holman said a week before that second tragedy, he said, if you just let us into your jails, into the county jails, into the state prisons, we can be out of here and we can do what we need to do and move on. You go into a secure detention facility, you find somebody here who's been here illegally, you take them into custody, you run them through the administrative process. That's what's happening in states across the country. That's why there's no violence in the streets in the city of Lincoln or Omaha, Nebraska, because our city and state police, they understand that there's one team for law enforcement. Doesn't mean that they're out enforcing the laws, but they are providing scene security to make sure if a warrant is being served that it's being done. So everybody's protected, including the person that warrants for.
- [32:36]
Joe Matthew
I just want to mention, Congressman, that President Trump and his EPA chief, Lee Zeldin, are making their announcement on Greenhouse gases right now. If they come to take questions, we'll put an ear on that. And I'm loathe to interrupt this conversation because we've been looking forward to it. I want to ask you about tariffs. In this vote that we saw yesterday, six I believe Republicans voted with Democrats to check the president on tariffs in Canada. Now that this threshold has come down, Democrats are promising a series of votes on different countries. What's going to happen, if anything to the tariff regime? Is this just a matter of putting Republicans on the record?
- [33:14]
Mike Flood
I think this is not a lawmaking exercise. Three things here. Number one, one, we're going to hear from the Supreme Court at some point in the first half of this year as to where they're at on tariffs that could substantially change the landscape in a very meaningful long term way. Number two, the President is negotiating the USMCA and we have to give him the negotiating power to do what he has done with tariffs to get us the same or better deals that he's gotten for us in the past. And number three, this is not a lawmaking exercise. Six Republicans is an anywhere near enough to overcome a presidential veto. And so while I get you put your name on the record and all this stuff, all you're doing is hurting the hand that the president is playing. And by the way he's used tariffs before. We'll have a long conversation about tariffs use in the future. But got to look at where we're at and be practical, you know and you got to think two steps down the road why are we trying to handcuff him when he's not going to be handcuffed or I mean it's not even going to work.
- [34:12]
Joe Matthew
So will you vote against all of these?
- [34:14]
Mike Flood
I did vote against the one yesterday obviously and I will continue to like I actually think the Supreme Court's going to answer this question.
- [34:21]
Kailey Leinz
We're all waiting for it.
- [34:22]
Mike Flood
We're going to live with whatever, whatever happens there and we're going to have an opportunity as a Congress to say what should the tariff policy be. But until then we're on a path. Don't tie the president's hands on his ability to negotiate with Canada and Mexico.
- [34:36]
Kailey Leinz
Well when we consider the role of the president in all of this with the point you just made that six may not be enough to override a presidential veto. Six is enough with this current majority to make sure nothing can pass on the House floor. If you're Speaker Mike Johnson and knowing how fragile and narrow that majority already is, is it not a mistake for the president to be threatening members who vote against him and suggest that they should not be holding their positions. Does that not create a problem for those who are seeking reelection, like your colleague, Congressman Patrick?
- [35:03]
Mike Flood
We're talking about Donald Trump, right?
- [35:04]
Tyler Kendall
Yes.
- [35:05]
Mike Flood
Same guy We've known for 10 years. His calculus is different than everybody else's. So I was not surprised in the least about that. Hey, listen, this was a very specific issue, tariffs. And I would argue that even some of those folks that voted to unlock this barrier would even probably at some point say, hey, maybe we should go back and put the cap back on from stopping these from coming to the floor. It's an issue by issue basis in the House, obviously. And we have been united on far more this Congress than anybody thought we could get done. The one big beautiful bill. I mean, that alone, the fact that we passed 12 appropriations bills for the first time in over a decade to fund the government in regular order. It wasn't a backroom deal with the speaker and the minority leader and the Senate leader and the Dem leader. It was done with all of us. So we have a record of getting things done in a tight majority. This was a one off yesterday.
- [36:00]
Kailey Leinz
But as the midterms get closer for moderates specifically, is that not going to get harder to do to get to 217 when some of these votes are going to be very politically tricky for these members?
- [36:09]
Mike Flood
Yes, yes. This is like a Rubik's cube that's almost impossible to solve on any given day. But we do unite around a vision for the future of America. And by the way, we had 130,000 jobs announced today. People don't know this, but the average tax return for the average American is increasing 15%, 4.4% this year because of the one big beautiful bill. We are entering an era of economic growth. The results will speak for themselves. The American people are going to see where this economy is going. The American people are going to see GDP growth that was unthinkable under President Biden. And they will be better off by the time it comes to decide who should be their congressman.
- [36:48]
Joe Matthew
Well, to talk to you as a member of the Financial Services Committee, because there's a discussion today on Capitol Hill about what your colleagues in the other chamber should do with a new Fed chair in the confirmation process. Thom Tillis has of course promised to block that until the DOJ investigation into Jay Powell is resolved. This idea, though, is floated that DOJ end its investigation. Senate Banking pick it up and do their own work here and proceed with the confirmation process. Tiller says he's not in favor of that. Do you think though that that would be a good approach? It seemed reasonable, yeah.
- [37:20]
Mike Flood
I mean, I am somebody that values reasonable solutions to tough problems and in that way both sides kind of get what they want. We can move forward with a new Fed chair. I am confident that the Senate will arrive finally confirming someone. This is a very, very important spot for our nation and some of the names that have been kind of floated out there are very impressive. So we are going a good direction.
- [37:46]
Kailey Leinz
Well, as we consider this notion of compromise and specifically areas in which you're focused, not just with your seat on the Financial Services Committee, but on the Housing and Insurance Subcommittee as well. Housing, for example, we saw a big bipartisan vote on the 21st Century Housing act in the House. Unclear though how as we talk about Senate banking that's going to match up with the road effort in the Senate. Are you having conversations with your colleague?
- [38:10]
Mike Flood
Well, I can say I wrote most of that bill, yes. And I've been working with my Democratic colleagues league for 15 months to do it. 390 votes, nine no votes. I mean, that is something to celebrate. Unfortunately, it doesn't make news anywhere on an issue that matters. Housing. The good news is in the Senate they have a near unanimous bill that they've moved to the floor and tried to pass before. And you've got the President who has ideas about housing. So here we have House Republicans and Democrats, Senate House Republicans and Democrats and the President all saying housing is Republican a priority. If we can't find a deal among those three entities, there's not a deal to be had. So I'm actually an optimist. I think that the fact that the Senate has its road to housing means we are going to have a sit down about how this can work and listen. A compromise means we accept some things that we might otherwise do. They do the same and the President does the same.
- [39:03]
Joe Matthew
Even if you passed it today, how long would it take to start breaking ground on new homes? This is, this has become such a massive inventory problem and a red tape problem.
- [39:13]
Mike Flood
Not many people know this outside of the bill we passed during last July. With one big beautiful bill, we greatly expanded the use of low income affordable home tax credits. That program, aside from anything I've worked on, is the gold standard for creating affordable housing in America. It will contribute to another 1.2 to 1.3 homes in America. And these are developers that know how to do it and they work in concert with a bunch of other programs in the states. So we are already well on our way to addressing what is anywhere from a 3.85 to 5 million unit shortage just with the one big beautiful bill. And then you come in with what we worked on in the house and you remove a lot of the well intentioned but real barriers to building. You give cities more latitude, you get states with more authority. I think we could see an unlocking of the housing market from a building perspective given the fact that the government plays pretty large there.
- [40:07]
Joe Matthew
Do you share the President's concern that lowering housing prices could simultaneously raid people's nest egg and become another affordability problem?
- [40:16]
Mike Flood
Well, there's certainly to be said that most people's number one asset is their home. Yeah, you know, I don't have any interest in seeing that go down. But you have a 5 million unit shortage. One of the great things that we did with this bill this week is that we it basically said to the manufactured home builder, you do not have to put a chassis in your house. These are stick built homes that end up getting put on a foundation. The chassis does nothing and cause another $25,000 in cost. And what we need are homes across America that you can get into for 225,000 or 250,000. A new stick built home in Columbus, Nebraska, not pre manufactured 415,000. That's not affordable to a family of two. No matter the overtime they're working.
- [41:00]
Joe Matthew
Really interesting real conversation. Congressman Mike Flood, Republican from Nebraska Financial Services Committee. Stay with us on Balance of Power. We'll have much more coming up after this.
- [41:14]
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. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30.
- [41:32]
Thanks for being here on Bloomberg Radio. I suggest you dial up YouTube right now unless you're already watching us on Bloomberg Originals because it's an important day here in the bureau, the annual chili cook off and we're smack dab right in the middle of the United States Congress and the White House here and we're going to find some bipartisanship, I guess when it comes to the chile. Edward Harrison is going to help me out with this because we wanted to get down to risk today. Right? We've been talking about some pretty important economic data. We had a weird jobs Wednesday. We've got jobless claims today and then we've got obviously cpi. Well I shouldn't say obvious. This is all jammed up because of the government shutdown. So they're falling on weird days. And the market's not sure what to do because there's a lot of conflicting data. So we thought we would bring in Edward Harrison in while we also. If you're on YouTube now, good job, because we've got our chili cam set up here now. There are. Edward, great to see you. There are 10 chilies, I guess, here that there have been. Okay, so we got three. We're gonna do a blind tasting. Let me just give you a spoon here.
- [42:36]
Edward Harrison
Excellent.
- [42:37]
Joe Matthew
And we'll try to make this work for everybody on the radio as well, because there is one of these chilies. There's. Now, if you're just listening, this is a blind tasting. They're not labeled. Okay. We're not sure exactly what we're having. One of these, though, is Tony's chili that won last year, and it's called the Balance of Peppers. Edward. So here, why don't you get. Get us rolling on one of these? I'm going to start this one, and let's just see if we have a winner in the works. Been pretty cold out. I mean, it's good chilly weather, obviously. This is. Wow.
- [43:09]
Edward Harrison
Not bad.
- [43:10]
Joe Matthew
I hope that's Tony. It's your chip. Some of the other names that we have here, by the way, everybody's super clever. We have K Street Heat. We have the Green Bee. Honey, I brought the heat. Chili, Chili, Bang Bang. But again, the balance of Peppers is looking for another win. Here we go. Thank you, Edward. If we don't get fired today, it'll never happen. There's a nice shot for us here on YouTube, everybody. Oh, that's really good, too. That's your winner.
- [43:41]
Edward Harrison
Yeah, I think that was the one. The darker one.
- [43:44]
Joe Matthew
I think there's sausage going on in there. Okay. Wow. All right, I'm going. This is my winner here. You guys tell us before this segment is over which one that is, and we'll be good. I don't even need lunch now. This is great. So now that we've taken care of that balance of peppers, Tony wins again. Fantastic. Good job, Tony. The Balance of Peppers, everybody, on Bloomberg Radio. This is a market that is supposedly in the middle of this massive rotation that doesn't seem to care about tariffs, that doesn't know what to do with economic data because it's arguing with itself. Is that the definition of everything risk?
- [44:23]
Edward Harrison
It is. I mean, today we have this rotation on no news, really. It suddenly there was an air pocket. People de risk they got out of the riskiest assets, the NASDAQ was down the most. We saw oil fall, we saw bitcoin falls, silver's down a lot. So, you know, there's a lot of nervousness about where we are in this cycle, especially because the AI theme is coming under pressure to a degree because debt has introduced to the picture there. And so people are looking at this economic data to find out how should we think about the US Economy at this juncture.
- [45:03]
Joe Matthew
Interesting. It's been really interesting watching this rotation occur with The S&P 500 kind of sitting in one place, but a total reordering happening under the hood. So we believe the rotation is, is real. Does it, does it stick? I guess is the question.
- [45:20]
Edward Harrison
Yeah, I mean, I think it depends on how the data come out in the future. Because if you look at the AI trade, half of the, the companies, the largest companies, the mega cap tech companies, have actually traded down over the last six months. We're talking about Metta, we're talking about Microsoft, Oracle in particular, and the other half have traded up. So over the last six months, people have already started to make that rotation to start to discriminate between potential winners and potential losers. And now we're seeing a wholesale sort of. Let's actually go beyond that and move within sectors of the US economy.
- [46:02]
Joe Matthew
Interesting. I've got a slow burn going here. I think that was Tony's chili. That's the nice heat. It's working. It's working really well here at the lunch hour. Now, how are you reading jobs data? We're going to, we're going to get inflation tomorrow, as I mentioned, but we've got a jobs report. Report yesterday and jobless claims today where you can pick your number.
- [46:19]
Edward Harrison
Right.
- [46:19]
Joe Matthew
You can call it the golden age, like the White House or the end of the world as we know it. How are you interpreting this?
- [46:25]
Edward Harrison
I'm looking at it as a relatively good market, but one that's deteriorating.
- [46:30]
Joe Matthew
We lost a million jobs last year.
- [46:32]
Edward Harrison
Right. What is compared to the benchmark that we originally had?
- [46:36]
Joe Matthew
Downward revisions, worry or not, I think.
- [46:39]
Edward Harrison
That scale, I think that, you know, that is in line with what we saw the previous year and it was definitely known. It shows that at this point in the cycle that as we should expect, the jobs are not as plentiful in terms of the number of people who are being hired. And when you look at sort of the immigration crackdown as well, that's also going to have an impact.
- [47:03]
Joe Matthew
Really interesting.
- [47:04]
Edward Harrison
If you think about the end of last year, year, there was all that angst about the numbers, especially because of the shutdown over the holidays, that went away. It to a degree, you could say it's coming back. It's not that the economy is terrible, you know, the labor market is terrible. It's just that it's, it's weaker than we thought it was. And that's having some residual negative impact on equities, but it's having a positive impact on bonds.
- [47:28]
Joe Matthew
As you write, the labor market is weakened enough to expect rate cut expectations to move forward over the coming weeks. Are expectations the same as reality?
- [47:38]
Edward Harrison
Yeah, I think that the question is, is we have the Powell Fed. How are they setting themselves up for the next Fed chairman? Because Powell basically told us in the last fomc, you know, we're happy with where things are. We're going to see how things pan out in the exact same way that the markets are looking and that means basically hold. And if you look at how the market to price, it's like 5% chance of a cut in March, 20% in April, and it's only starting in June and July that we're really on the table for that. But obviously if the, if the jobs numbers get worse, then that could move up substantially.
- [48:19]
Joe Matthew
All right, so jury's out. It sounds like there are a lot of people who again are saying we're not going to get any cuts the rest of the year.
- [48:25]
Edward Harrison
Right. But I think that that's probably aggressive. It could only happen if the jobs numbers stay as good as they had been in the past. What I would say, by the way, is, as we all know here in D.C. we had terrible weather. None of that was in the numbers for January.
- [48:42]
Joe Matthew
Got it.
- [48:43]
Edward Harrison
So the numbers that we saw earlier this week, those numbers are not reflective of where we are right now.
- [48:50]
Joe Matthew
So Snow Crete will show up a month later.
- [48:52]
Edward Harrison
Definitely.
- [48:53]
Joe Matthew
Can we talk about crypto? I don't ask you a lot about bitcoin and so forth, but man, this has been. You want to talk about the Everything Risk newsletter here. You could have your own special note on bitcoin alone. And I'm. We're back below 70,000 people don't know how to read the technicals and say there are no fundamentals. So what do we do?
- [49:10]
Edward Harrison
I think it's very much in line with this de risking trade that we're seeing. And if you look from day to day and you look at silver, you look at bitcoin, you look at the nasdaq, what you're seeing is the most volatile assets having the trading selling off or Going up and in general they've gone down. That is the most volatile bitcoin, then silver, and then to a certain degree, the Nasdaq have taken the brunt of this rotation that we're seeing really something.
- [49:43]
Joe Matthew
Look at this. It's be to going just about to slip below 66 up there. Just went. We got a 65 handle on Bitcoin down $1800 right now or two and a half percent. So does this just trade with the Nasdaq? Now? The whole point I thought was that it was some sort of decentralized idea that that would protect you as this was a hedge on the market.
- [50:03]
Rick Davis
Right.
- [50:04]
Edward Harrison
But I mean, it's just like with silver, when, when a lot of people get into that trade, then the momentum of that trade causes a lot of speculation that needs to be unwound. If you were a pro bitcoin person, you would say, okay, we're unwinding that speculation a floor. But today's price action tells you that's not necessarily the case. You have two things. One, you have the fact that miners are not going to be able to make money at levels close to where we are now. And secondly, one of the biggest holders, that Strategy, Michael Saylor Co. They're, they're below water, they're 10,000 brutal below where they need to be in order to be broke.
- [50:44]
Joe Matthew
That's right. He's got a $76,000 cost basis.
- [50:47]
Edward Harrison
Right, Right.
- [50:48]
Joe Matthew
And he's still buying, Edward.
- [50:50]
Edward Harrison
He's not, he's not buying. And that's a, that's a sign we've gotten to a level now where there's no extra bid. No one, none of these, these, these bitcoins, treasury companies are going to get in there and take on that risk when the price action, the momentum is in the opposite direction. So you could say that that's actually, that adds an extra flavor of negative momentum there.
- [51:17]
Joe Matthew
Really amazing. He's going to have a pretty serious margin call at some point here. The debt is a big deal for strategy. There are very few people, maybe none at Bloomberg, who have your global view of the markets. Markets, we just went through economic data. We touched the bond market, we hit fed funds. You're talking to be about the rotation out of tech crypto. Edward, what will have your focus now that we're coming around the back end of earnings season to give us either our next leg up or down a correction or another rally in the weeks ahead?
- [51:49]
Edward Harrison
I think the tax cuts, the question is, is how stimulative can they be? Yeah, because at this point, we're looking at two things. We're looking at AI investment and we're looking at government deficits as being overwhelming everything else. No matter how bad things get, that's a huge boost to the economy. And you know, we're at this inflection point where people are starting to worry about the employment market. If you get that extra boost from the tax cuts, perhaps that can also be overcome. And I would say that given, given where we are, we've seen, you know, 12% year on year growth in EPS earnings for this last quarter. That's a good number. And if you take that forward, you can still hit new highs on, on the S and P. Fantastic.
- [52:38]
Joe Matthew
Edward. This is great. One of the smartest minds we have in our bureau. Hey, we'll shake hands to Edward Harrison, the Everything Risk newsletter and a connoisseur of Chile. Balance of Peppers is our winner. Right? Thanks for helping me do this. I'm going to get a napkin and some water. Live from Washington, this is Balance of Peppers only on Bloomberg Radio. 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.