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- [00:01]
Joe
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- [00:45]
Bloomberg Announcer
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Or watch us live on YouTube.
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Joe
Thanks for being with us on Bloomberg TV and radio streaming live on YouTube and on your satellite radio at channel 121 with big questions about health care and what will happen at the end of this month with enhanced Covid era Obamacare subsidies that you hear us talk about every day set to expire, we do have a bit of a status update. A lot happened yesterday and you heard much of it take place here in real time on Bloomberg. We spoke with Mike Lawler just a short time after he and three other moderate Republicans crossed the aisle to sign a discharge petition that would force a vote on a three year extension. A clean extension. This is the Hakeem Jeffries discharge petition. And so that was a pretty big deal that they walked across the aisle on this. But there is more. You know, the House Republican leadership also had its own bill. It emerged Friday night. We've talked about this as well. It does not extend Obamacare subsidies, but it did pass on a party line vote 2 16, 211 while you were out at the holiday party last night. So what's going on here? Is it possible to avoid the cliff? Senate's getting ready to go. Even if these things pass now, you can't do anything about it till January, right? That's when the discharge petition would see action on the floor. Either way, Hakeem Jeffries, the Democratic leader in the House, thinks everybody ought to stay until it's done. Here's what he said. Under no circumstances should the House of Representatives adjourn until we successfully extend the Affordable Care act tax credits for tens of millions of Americans. American people deserve a vote today. Not tomorrow, not next week, not next year.
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Public Sponsor
Today.
- [02:52]
Joe
Of course, that would require a Christmas miracle. And that discharge petition I mentioned, that's seven legislative days before it hits the floor. That brings us likely well into January. So let's figure out the path forward here and exactly how we're going to fund the government past the end of the month in January. Will there in fact be regular order? Jody Arrington is with us right now live from Capitol Hill, the Republican congressman who chairs the House Budget Committee, the Voice of Texas with us on Bloomberg TV and radio. Mr. Chairman, welcome back. It's great to have you on Bloomberg. And I'm wondering what you see here with what seems like a dozen different bills to attack health care reform or extend subsidies to some extent. Is there any chance of a deal coming together between now and the end of the month?
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Jody Arrington
Not one that's going to become law. Joe, let me start by saying Democrats created this additional layer of COVID or Obamacare subsidy during COVID and then they extended it for another two years so they had total control of Congress. They had the White House. They didn't extend it then. They didn't make it permanent. They did make the green energy tax subsidies for corporations permanent. So they had a choice. So these are expiring as designed, just like every other Covid program has wound down as Covid is behind us. So the other piece that is important is the COVID subsidies and the underlying program. Obamacare has increased deductibles and premiums every year. So the question should be how do we make health care affordable? And at least the bill that was passed, I don't think it will become law. But the Republicans passed out of the House last night will reduce premiums, according to CBO, by 11%, save $30 billion. Those are the things we need to be working together on, not throwing good money after bad and propping up a failed system.
- [04:48]
Joe
Well, you know, Congressman, we've even had some Democrats on the air here who, who say, you're right, this is a program that needs reform, but we also need a bridge, whether it's a year or two, whatever the extension needs to be so people don't get bit when they wake up the first morning in January with what I realize are already higher premiums, but you've got open enrollment that goes to the 15th. Is there a world in which that could be extended and a shock absorber essentially could be put on?
- [05:14]
Jody Arrington
You know, I don't believe so, Joe. And I got to tell you, my position is we already have tax subsidies buil into Obamacare that effectively subsidized people at the bronze level at 90% of their premiums. So that's the subsidy that taxpayers front at about 60 to 70 billion a year. Now, that's. That cost is doubled when you add these Covid era subsidies. So you would have to do a lot. The Democrats haven't included any of these things, but you'd have to put an income cap. So you're not subsidizing wealthy people. You've seen the CBO reports in the GAO reports about the tens of billions of fraud, the millions of ineligible people. So I understand some of my colleagues wanting a bridge, but the point is we're well beyond Covid. They design these things to wind down and go away. We should focus on the things like we did in last night's bill. Close the loophole that allows insurance companies to actually direct people to higher cost coverage plans that they don't want or need, and that will start reducing the premiums and the cost of care. And there are plenty of other ways to do it, many of which, Joe, are bipartisan. So I think we throw plenty of subsidy. Unfortunately, we're throwing the subsidy at the wrong place. It's at. It's to the insurance company and not to the individual and family. So we should work together to make ACA actually affordable, the private market affordable, and bring costs down altogether.
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Joe
You saw the Republican bill in the Senate inspired by Senator Bill Cassidy that features health savings accounts. Mr. Chairman, is that an idea that we should be considering in the House?
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Jody Arrington
Absolutely. We actually put we expanded health savings accounts in the big beautiful bill that passed. We should do more again to provide federal assistance to people, let them keep more of their money to provide health care for their families and not line the pockets of insurance companies. They're the only ones that have actually done well since the advent of Obamacare. So there's that. There's the health reimbursement accounts. It's similar where small business businesses can provide these health savings accounts for their employees. There are things that we're doing now that are just plain ridiculous. We're paying hospitals more for the same outpatient procedures that we pay physician groups to do. And if we equalize those payments, by the way, the outcomes are the same. If we equalize those payments, we'd save $150 billion and we'd stop this consolidation of physicians in one big hospital, big hospital, big insur, Big Pharma. These monopoly forces are making the markets not competitive and they are not giving the choices to the consumer and patients. And that as at the, at the crux of it. That's what the problem is. Too many mandates, too many loopholes, too many regulations, too many taxes. We got to clean it up and let competitive markets do what they do best. And that's providing the best quality at the best cost for a product for, for consumers.
- [08:28]
Joe
You're the chairman of the Budget Committee, of course, Congressman, what are we in for here when you come back in January? Because there seems to be a little bit louder talk. And I realize Chuck Schumer was very clear he doesn't want a government shutdown, but there's talk about sleepwalking into a shutdown again with a lack of trust between Democrats and Republicans. Maybe we want to park that over here from now because I know that you're hoping to see regular orders come back into fashion on Capitol Hill. Do you have enough time to write a budget and pass it?
- [09:00]
Jody Arrington
We do. And what I would hope is that we could actually, actually use budget reconciliation again. Because unfortunately, Joe, I don't think the Democrats and Republicans are going to be able to work together. I think many of the Democrats, not all, but the leadership, wants health care to be a wedge issue for November. There are others who want to actually address it. We have different ideas on that. But. But Republicans have the tool that actually Democrats use to create these Covid era subsidies called budget reconciliation. It gives us the simple majority in the Senate, so we don't need Democrat support. We did that with the big beautiful bill. Let's do it to make health care affordable, not just lower taxes, not just better energy policies, not just cutting spending so we can actually reduce the pressure on, on the higher prices and inflation. Let's make health care affordable. That will bring costs down, make life more affordable. Cost of living will go down. Things will get better. But health care has got to be addressed. And I think the only way to do it, Joe, and unfortunately, because I think it's better when we can work together. But we shouldn't apologize for using reconciliation and having taking a unilateral approach as Republicans. If we believe in our policies, and.
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Joe
I certainly do well, it gives us a bit of a sense of where we're heading in the new year. Mr. Chairman, it's great to have you back. Thanks for being with us. He's chairman of the Budget Committee in the House, Jody Arrington of Texas. On this CPI day. I know you're having trouble following the data. Everyone is right now because it's dropping at various times still because of the government shutdown, the longest in history. And we don't even have a complete View, not all the data were collected here, but we've got a number for November on inflation in this country, dare I say affordability. The President talked about it a lot last night and what we have here is the headline he was hoping to read. Core CPI easing to a four year low in shutdown Impacted report. First person we wanted to call today was Liz Pancati, the Managing Director of Policy and Advocacy at the Groundwork Collaborative. She's been digging through the numbers since 8:30 this morning with us now live on Bloomberg TV and radio. Liz, it's great to see you do the numbers when you look under the hood, fulfill the headline.
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Liz Pancati
You know, it's tough to see what we're looking at under the hood today given the missing data that we've got from bls. Given the effects of the government shutdown, it feels a little like we are flying blind. You know, the headline number ticked down a little bit. I assume the President had seen that by the time he gave his primetime speech last night. But when we look under the hood, there is a little bit of funny business going on. For one, the BLS imputed zeros for shelter inflation in October, giving missing data. Unfortunately, as a result of that and some other collection issues, we probably won't have a really solid accurate accounting of inflation until probably the April print as things iron out. And so I think as the Fed looks at this ahead of their January meeting, I think we're probably set to really look at that January print for December data and potentially even into February with that January data to see things iron out.
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Joe
What worries you in here? I know the core number impressed a lot of people. Markets are feeling pretty good about it. We're talking about a rate cut in January, but you're still looking at beef prices up 21% in November, coffee up 19%, banana prices up 7%. Real people buy this stuff, right?
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Liz Pancati
Yeah, that's right. I think especially as we head into the holidays here, we are really seeing grocery prices affect people. Utility bills are up, energy is up 6.9%. I think those pressure points in the winter are always a little bit tougher given large holiday gatherings and high heating bills, especially in the colder regions, the Northeast and the Midwest, those are really going to take effect on people. At Groundwork. We had analysis out just two weeks ago that showed that popular holiday gifts are up 26% this year given so many of those are imported from China and tariff rates are just really high. So while the headline number might seem a little bit optimistic as we look at what expectations Are the New York Fed's November survey, conference board data, University of Michigan, all of those are showing that American families don't feel like relief is coming.
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Joe
So does the market have this right about January or does the Fed need to see more?
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Liz Pancati
I think the Fed will want to see more. I think given the missing data, you know, we'll see where PCI comes in and what was imputed for that. But just given the lack of data we have for October, November, I think the Fed is going to want to see things iron out a little bit more. You know, also with the labor market ticking, the unemployment rate ticking up earlier this week, I think that the combination of those things will probably see the Fed hold off in January to get a little bit more information under our belts. Additionally, I think as part of the price collection for November, a lot of that data was collected during Black Friday sales and other promotions. And so just waiting to see what price decreases or lower price increases stick. I think the federal one a little bit more information before making a policy movement.
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Joe
You stay up late to watch the president last night, Liz?
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Liz Pancati
I did, though it wasn't a very long speech. As you said, we're running on a speedboat.
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Joe
I think a couple minutes ago that it was. It was a speech on a speedboat. But he talked a lot about what you and I are talking about and in fact ran through prices. He had Thanksgiving Turkey down 33%, eggs down 82%. He said everything else is falling rapidly. Here's a sense of the president in his primetime address.
- [14:43]
Jody Arrington
We're bringing our economy back from the brink of ruin. Wages are rising much faster than inflation. There are more people working today than at any time in American history. 1,450,000 military service members will receive a special we call Warrior Dividend before Christmas. I'm also taking on the gigantic health insurance companies. I will announce some of the most aggressive housing reform plans in American history.
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Joe
Okay, a lot of that. We're bringing the economy back from the brink of ruin. He said there, Liz, wages rising faster than inflation. More people working today than at any time in American history. Is all of that supported by data?
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Liz Pancati
You know what we saw in the jobs report this week? We saw the unemployment tick up a little bit. We have seen retailers say that they are hiring a lot fewer seasonal employees this year. Real wages are not looking so high. I don't see a lot of truth in the president's statement. You know, it was kind of funny. I think Mike Konzol pulled the spreadsheet of CPI data and just sorted by descending to see what price points he pulled out. I was confused by airfares and sports tickets, but I thought those were funny ones to pull out and apparently if you just sort by the biggest numbers, that's where you got them. I think for most families, they're not even thinking about the price of airfares or sports tickets right now because they're struggling to pay the grocery bill in the electricity bill.
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Joe
Oh, you're making me want to fly somewhere. Just 30 seconds here left. Liz, are you still waiting for the real impact of tariffs because of front running? When does it show up?
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Liz Pancati
Yeah, I mean I think we're seeing this in Christmas presents right now under the tree. Harvard pricing lab shows that goods prices are up about 7% from their pre Liberation Day trend and I think Goldman still has the estimate at about 55% of tariffs being passed through. I think we are at the tail end of those inventories that were kind of inflated rushing ahead of that Liberation Day. The President has still not figured out exactly what's going on with China. So TBD there.
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Joe
Yeah, TBD could be an interesting new year for a lot of reasons. Following our conversations with Liz Pancati. Thank you Liz and Jodi Arrington. Better fasten the chinstrap. Our conversation coming up with Congresswoman Sarah Elfreth, a Democrat from Maryland on Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.
- [17:11]
Public Sponsor
Support for the show comes from Public. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated Assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures you're listening to.
- [18:21]
Bloomberg Announcer
The Bloomberg Balance of Power podcast. Catch us live weekdays at noon and.
- [18:26]
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- [18:30]
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- [18:39]
Joe
The press secretary Caroline Levitt just a short time ago announcing on social media that there's a new name for the Kennedy center taking to X to write. I have just been informed that the highly respected board of the Kennedy center, some of the most successful people from all parts of the world, have just voted unanimously to rename the Kennedy center to the Trump Kennedy Center. Congratulating in this note, not only President Trump, but likewise, she says, congratulations, President Kennedy, because this will be a truly great team long into the future. We need to get to Tyler. She's on the North Lawn of the White House right now. Washington correspondent Tyler Everyone saw this coming, right? The president made himself the chairman of the board, right?
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Tyler Kendall
This was, I guess, long expected considering it's really the latest effort under this Trump administration to remake the institution here in the nation's capital. Of course, you'll recall back in February, we saw that major shakeup of the board. Many members that had been appointed under the last administration were fired. And as you mentioned, we saw President Trump himself appointed as the new chair. Now there is reporting that this vote happened with President Trump phoning into the meeting. That's according to some media reports that have already started circulating after this tweet was posted by the White House press secretary, Caroline Levitt. Worth also mentioning the last part of that post on X. She says that the building will no doubt attain new levels of success and grandeur. In her words, important context here you'll call when the one big beautiful bill passed this summer, tucked in inside of it was $257 million appropriated specifically for a renovation of the Kennedy Building. So, Joe, this really as we're discussing is the latest in what has been a series of steps this year, both with the institution itself, but of course, the backdrop that this is in the nation's capital and President Trump has tried to assert his authority here in the nation's capital, including when it comes to the National Guard and crime and working with the local government.
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Joe
We've of course seen ticket sales impacted by the politics around the Kennedy center and even some touring shows cancel appearances. Tyler, I thought only Congress could rename the Kennedy Center. Is that the case?
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Tyler Kendall
I'm going to have to get back to you on the exact specifics of that. According to the White House press secretary, this was a vote by, by the board, which as we've been discussing, was experienced a shakeup earlier this year under the Trump administration. So I'll get back to you on the exact specifics on how this happened. But as you alluded to, widely expected.
- [21:23]
Joe
I appreciate this, Tyler. And we'll keep our eyes on this EO signing that's set to begin a couple of minutes from now. And it looks like they'll be running late at the White House. Tyler Kendall on the North Lawn today with news on now I get, well, the Trump Kennedy Center. We'll see if that's codified. Sarah Elfreth was listening to our conversation. The Democratic congresswoman from Maryland joins us now on Bloomberg TV and Radio live from Capitol Hill. Congresswoman, it's great to have you back on Bloomberg. I didn't think I'd be asking you about this, but does Congress need to have a say in renaming the Kennedy Center? And as a Democrat, would you buy tickets at the Trump Kennedy Center?
- [22:01]
Sarah Elfreth
Thanks, Joe, for having me on. And I was giggling over here while I listened in on that conversation. Just like the president trying to rename the Department of Defense the Department of War. This is a similar situation. It requires an act of Congress. And so this is pretty make believe at the moment. And unfortunately, taxpayer dollars might be used to, to, you know, change the name on the wall. But the truth of the matter is we have a system of checks and balances and shared governing here in Washington. And Congress is going to have to approve that. I would be a no vote. As you mentioned, ticket sales are down. There's kind of ramifications of the president's getting so involved in the Kennedy center politics. I don't quite understand it when we have so many other issues, serious issues the American people are counting on us to address. Why he's spending so much time on this. It boggles the mind.
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Joe
Yeah, well, it's just something we thought we'd get your take on, Congresswoman. And we're a little more interested in your take on health care right now because we had a remarkable conversation yesterday with Mike Lawler, the Republican from New York who signed on to Hakeem Jeffries discharge petition to extend Obamacare subsidies. He was one of four Democrats to do so. Now, I realize Republicans passed their bill last evening that doesn't touch Obamacare subsidies. And I'm wondering what you think about the next step here. I just asked Congressman Jodi Arrington this same question. Is there a deal to be had here or we're as good as over the cliff?
- [23:29]
Sarah Elfreth
Listen, I'm an optimist. I wouldn't be in this business if I weren't. I would like to believe that cooler heads can prevail, particularly as upwards of 20 million Americans are set to experience this huge affordability crisis on January 1st. Because Congress has chosen not to act. House Speaker Johnson has chosen, willfully chosen not to negotiate with Democrats to get the votes he would need to pass something actually meaningful and lower the cost of health care insurance for tens of millions of Americans. You know, maybe we'll get a Christmas miracle, cooler heads can prevail and we can come together. I'm grateful for, for Mike and the three other Republicans for, for signing on. I think they heard, they saw the light. They heard from their constituents. They're doing something about it. That's what every, everybody watching at home should expect of their members of Congress. But, you know, do I think the speaker is going to call that up for a vote before we adjourn? I don't know. Maybe an hour? Not likely.
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Joe
Maybe an hour. Well, yeah, because I guess by the rules, with it being discharged, that would likely put you into the beginning or middle of January when you get back. Right. Is this, is this the issue that defines the midterms? Is this what brings Democrats back into power?
- [24:39]
Sarah Elfreth
I think this is one part of the issue that brings, you know, hopefully the confidence of the American people back to the Democratic Party. I think it's, it's the affordability crisis broadly. You were just chatting about the impacts as we're going into the holiday season. I spent, you know, my small business Saturday a few weeks ago visiting small shops in Annapolis and in Ellicott City in my district, and just talking to those business owners about the tariff hits that they took, purchasing a lot of the products, the products they had on shelves for the holiday season, pre tariffs. And then to come to find out that they're going to have to pay, depending on the country, 30% tariffs. They can't afford to eat those, those costs. They're being passed on to the American people. And that's just one part. We talked about groceries before. We talked about, you know, I just paid my electricity bill and it was staggering. We talk about health insurance, housing, childcare. I hear constantly, you know, the Republicans promised to solve it, the President promised to solve it on day one of his presidency. We're, we're almost a year into that with no meaningful impact. At least, least folks back at home in my district aren't feeling the impact of his actions. And so I think this is a mantle that Democrats are really charged up to lead on over the next year and prove not just that we're against the President or against Republicans, but we're actually for solving this affordability crisis.
- [25:56]
Joe
Congresswoman, you represent Maryland's third District, which includes all of Annapolis, and of course that means our great Naval Academy. You're also a member of the Army Armed Services Committee, so I'm sure you're knee deep in conversations and briefings around what the President's referring to as a naval blockade around Venezuela. There was a closed door briefing earlier this week and I'm wondering what questions you have going forward and whether you think this is the march to war in the Caribbean.
- [26:26]
Sarah Elfreth
It's really unclear. I was in two closed door classified briefings this week and I left with more questions than answers that I have received from both Secretary Hegseth, Secretary Rubio and the Navy. 14% of our fleet is now engaged in some type of conflict, undefined conflict. I was with the Secretary, Secretary Hegseth, when he talked just two weeks ago about not entering the American people and our service members into meaningless and endless wars. And yet our goals with Venezuela are completely undefined. And as a member of Congress, member of the Armed Services Committee, that, that really troubles me. It's keeping me up at night with so many of my constituents, including a lot of folks from the Naval Academy down there right now. At the same time, the American people deserve to have answers. This is, you know, months long engagement in a part of the world that the President can't define our goals or what we're we have, why we have 14% of our fleet down there in the first place. And as I've said, I can't tell you how many times in my first 11 months in the House, our founders and framers structured the Constitution intentionally putting war powers in Article 1 with, with the Congress. Unfortunately, we had two resolutions yesterday that, that did not pass to kind of regain some of that control. I hope the American people are equally concerned.
- [27:49]
Joe
14% is a remarkable number. Congresswoman, I've only got a minute left. The President said yesterday, having framed this about drugs until now, that this is about the oil. He said Venezuela took our oil illegally and we're going to take it back. Is that what this is about? Oil?
- [28:06]
Sarah Elfreth
I don't know what it's about. I also think that it's a false bill of goods that he's selling to the American people. Listen, I've had family members who have, have unfortunately lost their lives to fentanyl. But if we were focused on fentanyl we'd be focused on China and not on Venezuela. What they're taking, what they're sinking are boats carrying cocaine, not boats carrying fentanyl. And at the same time, the President is pardon pardoning literal drug kingpins who are been convicted by juries of of actually killing people through the drug trade. So there's a mismatch of messaging here that is also deeply, deeply concerning.
- [28:37]
Joe
Democratic Congresswoman Sarah Elfreth of Maryland. It's great to have you, Congressman. Congresswoman, thanks for being part of our conversation. We'll assemble our political panel next, only here on Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.
- [28:54]
Public Sponsor
Support for the show comes from public On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated Assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisors Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures.
- [30:05]
Bloomberg Announcer
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- [30:10]
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- [30:17]
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- [30:21]
Joe
Last evening it was the Diplomatic Reception Room, the venue for a primetime address from the White House adorned with the Christmas trees and decorations. The President walking into people's living rooms to deliver a message. Well, I guess on a lot of things, but mainly affordability and the fact that the guy before him made all of this a problem president. As we mentioned a little bit earlier, starting with 11 months ago, I inherited a mess. That was the first line out of his mouth and I am fixing it. He went on to say the reviews have been interesting. This morning, White House Court says he knocked it out of the park. And that's been the case pretty much from maga, Twitter. The Atlantic described him as drenched in panic, the president racing through the script, barely taking a breath and speaking at high volume, right up on the microphone, actually distorting it at times. Axios calls it a fiery, combative president insisting the economy is stronger than people think. Trump's speech, Mike Allen writes, was closer to a festivus airing of grievances than a Christmas message of hope. A festivus for the rest of us. Listen, here at home, we're bringing our.
- [31:35]
Jody Arrington
Economy back from the brink of ruin. The last administration and their allies in Congress looted our treasury for trillions of dollars, driving up prices and everything at levels never seen before. I am bringing those high prices down and bringing them down very fast.
- [31:54]
Joe
18 minutes. They say it was the speech that Susie Wiles wanted him to give in Pennsylvania last week. Worth noting. Did not hear the words hoax or con job with regard to affordability. So let's play it to the panel. I have intentionally not had a conversation with Rick or Jeannie. I wanted to save this for air. They were both watching, just like you were. And they're with us now. Bloomberg Politics contributors, Republican strategist Rick Davis, partner at Stone Court Capitol. And there's Jeannie Democracy visiting fellow at Harvard Kennedy School's Ash Center. All right, Rick, did anything change in this speech? And what were people thinking in their living rooms who don't follow politics every day? Well, first of all, I'd like to.
- [32:39]
Rick Davis
Say it was a beautiful speech in the sense that it was a really pretty location. I love the festive nature of it. It's, it's different than most presidents do where they show the long hallway with a red carpet. So, you know, kudos to the events folks at the White House for doing such a pretty thing. But I would say, you know, I think it was an attempt to change things. It was very clear that the goal of this speech was to get Donald Trump out of the hot box that he put himself in by calling affordability a hoax. And, and the disastrous speech he gave in Pennsylvania that did the same. So clearly they were rocked by that at the White House, needed to get something done before the holidays. This was the one opening he had. They'll follow this up with a North Carolina visit and with hope that he doesn't do the meandering negative Donald Trump on the economy and on affordability. But I think they did accomplish that goal. He spoke about affordability in a way that you would you would pretty much want him to do it. But other than that, the balance of the speech was kind of a waste of time, I think, you know, even though it was a Short speech at fifth, at 18 minutes, I think he could have done the whole thing in five, considering what I thought was the good parts.
- [34:00]
Joe
Wow. Okay. Lindsey Graham, ally of the president, of course, on Twitter, high energy, great delivery, grand slam, home run on making the case that the best is yet to come. Jeannie, is he right?
- [34:17]
Bloomberg Announcer
You know, Donald Trump came across last night. He was screaming, he was red faced. He looked like he was some kind of prisoner who didn't want to be there giving the speech. And in fact, after, afterwards, he told reporters in the room that Susie made him do it. And I thought that was a perfect encapsulation as to what happened last night. He did not want to be there. He does not have the interest he said he had on the campaign trail of making lives better for all Americans. His interest is apparently retribution and attacking his opponents. And that's what he spent most of the speech doing. He started off on Joe Biden and he never got off him. And, and how does that help? He's been in office nine, 11 months now. Everybody knows it is his economy and much of the facts he talked about were not true. So I don't know what speech Lindsey Graham heard. This was not a home run. This was a home run if you are a Democrat and want to run against Republicans in the new year.
- [35:21]
Joe
Wow. Okay, Rick, let's talk about style. You know, he was shouting and he raced through the script. Wasn't a lot of breathing. He was, he was clearly trying to be high energy and impactful and I get that. But did it remind us that Donald Trump needs an audience to be effective?
- [35:39]
Rick Davis
I could. As you point out, there was no audience for this. It was basically like a stage with only a few aides standing behind a camera. It was also a different kind of camera in the sense that the teleprompter was directly in front of him. Normally he likes to move that head back and forth reading the teleprompter, driving the teleprompter operator crazy because he'll stop and tell other stories. The quote meandering that he likes to do none of that last night. So it is not the Donald Trump that we have gotten to know. And again, I mean, I think you must punctuate it with this. I mean, I don't think Donald Trump in his lifetime has given a speech that didn't get to 20 minutes. I mean, that was really amazing in and of itself. And as you say, stylistically, rather than meandering, he rushed through this thing. I mean, it was, how quick can I get this done and get back to my watching the White Christmas episode? So, I mean, like, I really thought I was seeing a different guy up there. Maybe they got a doppelganger to call this one in.
- [36:53]
Joe
When I got into the radio business, Jeannie, it was a really different experience than it is now. And everybody was fast talking and deep voices and whiz bang and lasers and the rest of it. And there used to be a term in the newsroom called news on a speedboat. That was literally what you were trying to deliver. It was insane. The president kind of did speech on a speedboat last night. Can you deliver stylistically, as you move away from the politics here, just as a communicator, can you deliver a message that lasts with voters on a speedboat?
- [37:25]
Bloomberg Announcer
You know you can. You absolutely can if your heart is in it. And the problem with Donald Trump last night was the fact he was talking fast, obviously, just watching and listening to him, because he didn't want to be there. And that's what he told the pool reporters after Susie made me do it. What he wanted to say was, everything is great, everything is fantastic. If it's not, which the polls say people don't believe it is, then blame Joe Biden. That was his message, and that is not a winning message. And so that is the problem. You couple that with the. The number of misstatements, I think is the best way to put it, that he made on everything from inflation to unemployment to immigration to tariffs. I mean, the list goes on and on, and he simply cannot find his way back to where he was on the campaign trail, saying to people, I understand what you're contending with, and I am here to make it better. That message he has not been able to deliver since he's gotten into the White House. And so, yeah, you can talk fast and do it, but he was not able to do that last night. And so I think the big question is, what happens in North Carolina?
- [38:37]
Joe
Mm, that's right. Friday night, we're all going to be listening. See if it is a little more like Pennsylvania or was a little more like last night. I think we probably know what to expect here. But I wonder if you guys saw what the President did with the so called Presidential Walk of Fame outside the White House colonnade, right outside the Oval Office. This is where he hung all the pictures of the presidents and put a Framed photograph of an auto pen. In place of Joe Biden, he's added plaques that add context and biographical information. There you go. If you're with us on YouTube. Thank you, Cece. You see what I'm talking about here? It looks like something you'd catch in a museum. These are like brass plaques below the framed photos. In the words of Caroline Levitt, the White House press secretary, as a student of history, many were written directly by the president himself. Indeed, Joe Biden's reads Sleepy. Joe Biden was by far the worst president in American history. Nicknamed both Sleepy and Crooked Obama. Barack Hussein Obama was the first black president. A community organizer, one term senator from Illinois, and one of the most divisive political figures in American history. George W. Bush created the Department of Homeland Security, but started wars in Afghanistan and Iraq, both of which should not have happened. Bill Clinton served as Attorney general, governor of Arkansas before winning the presidency. In what was called a major upset over George H.W. bush in 2016, he writes, Clinton's wife Hillary lost the presidency to Donald J. Trump. Rick, taxpayers are going to have to pay to have these removed, right?
- [40:16]
Rick Davis
Yeah, I'm sure taxpayers have already paid to have them put up. And that should anger some taxpayers because it is an incredible waste of money. Look, if Donald Trump wants to write a history book and settle scores, I think it's great, right? Write it. You can even do it while you're president. I don't care. But then at least people who buy it, buy it with their own money, and he's not writing it with taxpayer money. The White House is an iconic building that should not be partisan in and of itself. And the fact that these are tacked up there indicates a different kind of role for that, that structure.
- [40:55]
Joe
Jeannie. Ronald Reagan was a fan, he wrote, of President Donald J. Trump long before President Trump's historic run for the White House. Likewise, President Trump was a fan of his. Even Republicans get a backhanded compliment here.
- [41:10]
Bloomberg Announcer
That's right. I'm sure George Washington was a fan of Donald Trump's too, as well. Joe, you know, listen, this is indicative of what we saw last night. This is somebody who is much more interested in attacking Rob Reiner, who is interested in putting up plaques, attacking his predecessors, who is interested in doing all kinds of things except dealing with the health care and the issues and the cost of living that people are feeling that he rushes.
- [41:36]
Joe
I'm starting to think the speech didn't change any minds, at least on our panel. Stay with us. On balance of power. We'll have much more coming up after this.
- [41:47]
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- [42:58]
Bloomberg Announcer
The Bloomberg Balance of Power podcast.
- [43:01]
Catch us live weekdays at noon and.
- [43:03]
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- [43:06]
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- [43:16]
Joe
This story jumps off the page. Speaking of which, jumps off the terminal with a scoop that you're not going to hear about anywhere else. As usual, Jamie Terrabe is way ahead with the headline the Trump Administration Turning to Private Firms in Cyber. Cyber Offensive. Yeah, you know we ask this question a lot around here when we talk to cyber officials with the White House smart folks at csis. What are our offensive capabilities? Can we do a stuxnet around here? Can we turn the lights out in Moscow if we need to? Nobody ever answers that question. Have you noticed that? I get really long answers but not really a sense of what we can do or what the country is interested in doing. Enter Jamie's story. The administration preparing now to enlist private companies in more aggressive efforts to go after criminal and state sponsored hackers, according to people familiar with the matter. She's with us right now. Bloomberg National Security Capital Influence Reporter Great work. Great to see you. Are we talking about the crowd strikes of the world, the Palo Altos? Or is this a different class of cyber company?
- [44:21]
Bloomberg Announcer
There's a different kind of company that you don't really hear a lot about, particularly people who've come out of the intelligence community. They've left NSA or CIA, and they create their own companies. And what they do is they have technology that they've developed that could be considered dual use, but they frame it as defensive tech. And so it's usually contracted to U.S. cyber Command, which is really the place where a lot of this offensive cyber normally happens. And they can deploy it for defensive or offensive means. But the fact is, once that contract is signed and the tech is handed over, the company does not then know what.
- [45:00]
Joe
Wow.
- [45:01]
Bloomberg Announcer
What. What the government does. That's technology. Yes.
- [45:03]
Joe
And these are privately held companies, not publicly traded companies that our listeners own shares of right now?
- [45:08]
Bloomberg Announcer
I don't think so, but you never know. I think that definitely this is the signal that this is sending is to industry, that there is an opportunity here. So a lot of people are very excited about it. Some of them are extremely gung ho, but others are quite reticent because it does get rid of that gray area where they can say that they're developing defensive use versus offensive use tech. But also because, you know, if they do have shareholders or investors, for some people, they could be very leery about getting on the wrong side of that. There's a lot of risk inherent in the activity and in the operation. And so we still don't know any of the details, but we, you know, but there's been speculation, and I've been tracking this since April this year.
- [45:54]
Joe
Wow.
- [45:55]
Bloomberg Announcer
So there's been a lot of conversations and chatter about what this would look like and what that posture is.
- [46:00]
Joe
Well, we've got a lot of questions for you here. For starters, is the United States government not capable of doing this work? Do we have the brain power? Do we have the resources to do this on our own? Or is this clearly telling us that we don't?
- [46:12]
Bloomberg Announcer
We.
- [46:12]
We have the brain power? I don't know that we have the scale. And that is something that people who have left government will tell you as well as people who are in government. And we saw this in the previous administration, the sort of the cyber workforce gap of 500,000. The new national Cyber Director, Shawn King Cross thinks now it's closer to a million short. And this is something where industry is saying, we can bridge the gap.
- [46:37]
Joe
Yeah.
- [46:38]
Bloomberg Announcer
And that's really. You're dealing with adversaries. For example, China, which denies a lot of the cyber attacks, or Russia, which don't really sort of see a divide between military and civilian, and they just throw everything they can or they want to at different targets. And this is combating not Just all those nasty ransomware attacks that we've been reporting on for so long, but also the nation state activity, which is the, the espionage, the sabotage, the intelligence gathering, the IP theft. So it's a whole of House approach, very, very aggressive.
- [47:10]
Joe
Wow, this is fascinating. Speak to us about the legality of this now. I guess if the companies don't know what you're doing with the software, that's the whole point. Right? Because technically what you're describing is a new class of defense contractor, are you not? And wouldn't Congress have to have say in that?
- [47:25]
Bloomberg Announcer
I think that there's. Well, we know for sure there's going to be at least one executive order once this strategy is announced sometime next month. But no one I've spoken to says that that's going to be enough. There needs to be legislation because you know that EOS can obviously turn on a dime, be cancelled, et cetera. So that doesn't really kind of give anyone any kind of real legal protection. It doesn't spell out or codify authorities or protections for people who want to be doing this. So it's going to be really interesting to see how the Hill takes it. And I know I've been reporting that there have been obviously investigations into what that policy would look like, but everyone that I've spoken to about this, people have been very senior in the intelligence community, have come back to me and said, the devil is in the details. We don't know what it looks like yet. So.
- [48:15]
Joe
Wow.
- [48:16]
Bloomberg Announcer
So we're still waiting.
- [48:17]
Joe
Well, to that end, you write that a new National Cyber Strategy to be released by the Office of National Cyber Director will outline this plan that you're talking about. I'm picturing you in some sort of dark parking lot being handed a copy of. Have you seen this draft? Is that what's it, what's it going to say and when's it coming out?
- [48:35]
Bloomberg Announcer
There are six pillars under the strategy. It's five pages long. It's five pages and it's being sort of shown and shared to industry think tanks, former government officials, former security officials to get their take, get their feedback. Some of the wording may change, but the substance of it is going to be the same. And the thing that everyone was struck by was how short it was. But also that the first pillar in these six pillars was the offensive cyber and quote, unquote, unleashing the private sector.
- [49:10]
Joe
Wow. So what do our allies think about this? And are they going to get in on this game? Will they start hiring these same companies?
- [49:16]
Bloomberg Announcer
So some of the conversations that I have had with folks overseas is that they have been really waiting for something like this. And it's going to be really interesting to see how the US threads this needle legally and what example or precedent that will set for its allies. I have people in the UK who are very keen to see this happen, people in Japan who are very keen to see this happen, people in Europe. So. But what it does say is that there's a sense of urgency, there's a sense of necessity, of scale, and that everyone sort of feels like they've just been taking these hits for so long that they really want to start pushing back and doing it in a very aggressive way.
- [50:00]
Joe
Does this create a new family of digital blackwaters?
- [50:05]
Bloomberg Announcer
That's the risk. And I think that that's why everyone's waiting to see what the legality is. Because right now, the way that it's sort of described to me is when private contractors go and work for an agency, they share the same keyboard. Right. And now, under this new policy, potentially they could be working off different keyboards and they may even know who they're targeting. Or they could say, you know, go into this electricity grid and take this actor out of the infrastructure, like just out of the network. Get the mouse. So they'll know they're not stupid.
- [50:41]
Joe
Correct.
- [50:43]
Bloomberg Announcer
You know, and so. But it also exposes them. So if I'm. If I'm going after you and I've seen you in, like, a network, and you see me and you're like, you know what? I'm gonna go in there and I'm gonna burn your entire architecture.
- [50:56]
Joe
Oh, my gosh.
- [50:57]
Bloomberg Announcer
So it does. So it has this. So the sort of.
- [51:00]
Joe
The.
- [51:01]
Bloomberg Announcer
There's almost a kinetic response to this, but it also can. And the fear that I've heard from a lot of industry CEOs who do have shareholders is the fear of, you know, people who are already on Putin's bad list, possibly being indicted or extradited if their companies are known to be carrying out this sort of activity for the government.
- [51:24]
So this.
- [51:25]
Joe
I can just imagine the Congressional hearings a couple of years from now. Right.
- [51:28]
Bloomberg Announcer
But it really tells you that there's so much that we don't know, but at the. The same time, there's so much that everyone is talking about. People have been looking at this in so many different ways. The idea of letters of marque, which is what privateers operated under during one of the American wars in the 1800s. I can't remember the date exactly, but what it allowed them to do was the idea that they go in, they disrupt the British Navy or whoever, and they take the booty. Right. As a maybe this happens.
- [51:58]
Joe
Now.
- [51:59]
Bloomberg Announcer
That has been dismissed by a lot of the experts, but a representative in the House has introduced a resolution regarding Letters of Marx. So it's not out of the realm of possibility.
- [52:09]
Joe
This is absolutely. So this is the future of warfare.
- [52:12]
Bloomberg Announcer
Definitely one side of it. Cyber is a tool.
- [52:15]
Joe
We spent so much time talking about spending billions of dollars. It's the first trillion dollar defense budget this year for all of this hardware that will purportedly be used in a war with China someday. When you're talking about a whole different level here. Are these companies prepared to meet these requests? Because I'm guessing these would be monster contracts with the Pentagon.
- [52:37]
Bloomberg Announcer
There is a billion dollars in the one big beautiful bill under Indo pak.com that is meant for offensive cyber operations. The money's there. And industry. It's going to be interesting to see who steps up and who. Bet you they're getting ready now those conversations are happening. I'm being told that they're happening. And everyone is waiting to see what the contracts look like. So we don't know yet. We have to see.
- [53:03]
Joe
I want to know who Jamie's talking to here now when I just quickly. We've got about a minute left here. Are we talking about what I mentioned? Something in the. In the spirit of Stuxnet turning the lights out, or is this about embedding ourselves in infrastructure the way China has done to us?
- [53:17]
Bloomberg Announcer
That's a really good question.
- [53:18]
Joe
We don't know.
- [53:19]
Bloomberg Announcer
Maybe we will Never know what NSA and CyberCom do for all sorts of reasons. They could be there right now. We have no idea.
- [53:30]
Joe
This is too much. The call's coming from inside the house and it's Jamie Terrabe. Great reporting, Jamie. Thank you for bringing that to us. If you didn't know about this story, find it on the terminal and online. The Trump administration turning to private firms in cyber offensive. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already. 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 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 Support for the show.
- [54:32]
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