Joe (3:56)

Well, and Tyler, when we consider the reporting in the Wall Street Journal, the president was actually asked by the New York Post about that and he said let the countries that are using the strait, let them go and open it. He went on to say when we leave, the strait will automatic open. And he says his sole function was to make sure they referencing Iran don't have a nuclear weapon. And Joe, this is pretty incredible as we still consider, even if it's not about reopening the strait and potential ground forces that that would require, would you still need ground forces to ensure Iran cannot develop a nuclear weapon? Would that require going into the country to seize that enriched uranium?

Kelly (4:30)

We talked to Michael Allen at Beacon Strategies about that yesterday and the short answer was yes. But he did say an option could be if the president does not want to commit ground troops, just keeping eyes, keeping a satel above that site, staring at it all day long and from time to time shooing people away from it. But I'm not sure that's a long term strategy.

Jeannie Shan Zaino (4:48)

Yeah.

Joe (4:48)

Well, let's get some thoughts on that as we turn to our next guest. And we thank Tyler Kendall for her reporting at the White House. But joining us now is Hagar Somali, the former director for Syria and Lebanon at the National Security Council, also CEO and founder of Greenwich Media Strategies. Hagar, welcome back to Bloomberg tv. And Radio. When you consider the various signals that we are getting, both on the US and the Iranian side, as they maybe are pursuing some kind of off ramp here, do you buy it or are you thinking there could be more escalation to come in the not so distant future?

Hagar Shomali (5:18)

Well, you actually really got to the heart of it. I still look at this as just a negotiating tactic on both sides. Both are playing there. It's negotiating gambits really on both sides here, and I don't entirely buy it. And the reason for that is that the two sides are so incredibly far apart. The US has not budged from its 15 point plan. We don't know all the details of that 15 point plan, but we do know that it includes folk. It focuses on not just the nuclear enrichment and the nuclear material that's left in the country, but also its ballistic missiles, also its support for terrorist proxies. And then the five point plan is completely absurd and, and is. Is. Is a non starter. And the Iranian regime has not budged on that. The regime, their only goal is to survive this war. And in their view, if they survive, they. They've won. And on the Trump side of things, it's, yes, they want regime change, but Trump is not willing to put boots on the ground to affect that regime change. His view is, I am creating the scenario and the situation for the Iranian people to rise up, and it's up to them to do that. But at the same time, he has clear military objectives, and if he can't achieve them, then it's going to be a problem. I just view this, to be honest with you, as posturing as a negotiating tactic. I expect escalation to continue, but I also don't expect this war to last for a very long time, given what the administration had promised from the beginning.

Jeannie Shan Zaino (6:41)

Mm.

Kelly (6:42)

So, Gar, it's great to have you back. What if the President actually made good on this report in the Journal, we packed up all of our toys and left. Now, without reopening the Strait, what would happen to the region?

Hagar Shomali (6:54)

Well, first I would, I would note, by the way, that that is likely a position he's taking as a message to Europe, which is currently in a coma and they're not interested or willing to get involved in this war, which I can appreciate, except the way the White House views things is, well, we don't get our oil through the Strait of Hormuz. You do Europe, and so why don't you help us? And that is likely a posturing position, a message that he's conveying. To Europe to say, listen, you don't want to get involved, fine, I might go ahead and close this war, end this war without the Strait of Hormuz being solved. But the fact is that that affects, as we know, it affects all of our, it affects inflation, it affects our own oil prices. You guys covered, of course, the price of oil right now. I would, by the way, I need to note this because I don't think it's covered well enough. And I know I'm speaking from a privileged perspective here, but when I worked in the Obama administration and at the White House, this was shortly after we imposed secondary sanctions on oil. The price per barrel was $123 a barrel, which with today's inflation would have been $175 a barrel. Gone through phases like this, and Trump is aware of that. And so there are things he's willing to pain, he's willing to take on for a short time period at least in order to try and achieve his objectives much further. But that's what this is about. Could he end this war with the straight closed? Sure, because he doesn't view it as a pain point for him so much. But he's really here trying to message

Joe (8:25)

to the Europeans, well, and I hear you on we've gone through phases like this before, but it begs the dangerous question of whether Hagar this time is actually different. If we leave Iran knowing that it can exercise authority over the Strait of Hormuz, it can control it, it potentially can charge fees in order to transit it, as we saw the parliament approve yesterday of millions of dollars, is that not going to fundamentally change the global energy market, which will have ramifications ultimately here at home?

Hagar Shomali (8:53)

Yes, well, yes, you're getting at the heart of this. There is, first of all, I don't see any scenario coming out of this where the Iranian regime gets any measure of control over the Strait of Hormuz. It never had it. It's certainly not going to get it now. Its own comparisons to Egypt managing the Suez Canal are absurd. That's a canal that needs management that the Egyptians actually run and pay in order to control and manage and keep clear and so on. That has nothing to do with what the Iranian regime does regarding the Persian Gulf or the Strait of Hormuz. And so the Iranian view of this, the regime view of this is literally a non starter. But that said, it's all of it is a risk. The regime remaining at all is a risk, which is why the Gulf, Saudi Arabia, for example, wants the US to continue this war. They don't want a Libya sitting next to them. It would affect their economies, it would affect their stability. And that's what that's largely what they live off of. So that said, though, to get to your point is that if you had this hypothetical scenario where the regime did control the Strait somehow and we somehow

Joe (9:57)

accepted, aren't they, Hagar, I'm sorry to interrupt you, but aren't they effectively controlling it now if no vessel feels safe enough to transit it because of the threat of mines or other potential or drones, like we saw with the Kuwaiti oil tanker that was fully laden just in the last 24 hours, is that not effectively control?

Hagar Shomali (10:15)

They're certainly influencing the passage, freedom of navigation through the Strait of Hormuz. But there are also options the US hasn't pursued yet. And so, for example, the US could seize and invade and seize certain islands that are near the Strait of Hormuz, like Carg Island. You're hearing a lot of discourse about that. The US could partner with Gulf nations. The UAE has already publicly called for a force that would include the UAE and others to ensure freedom of passage through the Strait of Hormuz. There are a number of military options we haven't pursued yet, and they all come with risk. I'm not trying to pretend that seizing islands is necessarily easy. There are two islands, for example, that are occupied by the Iranian regime that are actually Emirati that the emirates say is theirs. And so there's a lot here that could be pursued that we have not yet pursued yet if we decide we want to prioritize the freedom of navigation through the Strait of Hormuz. So I wouldn't jump to saying that the regime controls it for sure. It's that we have not yet decided if we are willing to hand that control over to them. I don't think we are. I think that the what the administration is trying to posture here and see who's willing to join them in this effort. They are also, by sending so many Marines to the region, Marines, by the way, that have the capability to invade. They're also trying to say, listen, we've threatened you before with our military and we've proven that we're willing to exercise it. So don't test us. And that's why I wouldn't and you know, it's hard to say exactly what will come out of these talks and that, but I wouldn't say that we are definitely ending this war or that it's definitely extending. Trump is posturing here. He himself is trying to figure out how much, how much control can he exercise over the regime?

Kelly (11:58)

Hagar, it's great to have you. Hagar shomali, Greenwich Media Strategies, thanks as ever for being with us as we turn to our panel for their take on everything that we've been talking about. Bloomberg Politics contributors Rick Davis and Jeannie Shan Zaino are with us. Rick is our Republican strategist and partner at Stone Court Capital. Jeannie is our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick, we're looking at a market on a tear here. S and P is up almost two and a half percent. The NASDAQ is up almost three and a half percent. Oil is down because of these headlines that we are seeing. And it's hard to make a lot of sense out of this, to be honest. And I'm wondering how cautious you think the market should be. Our audience should be knowing that essentially what has happened here today is Iran. The president of Iran has asked, asked to codify once again the guarantees that he is demanding for peace. Has anything actually changed today?

Rick Davis (12:50)

You know, I think it's a big deal to have the Iranian president up there articulating this, standing up, saying, I am the leader. I will be the one dictating terms of an agreement. We've been playing, you know, sort of whack a mole, literally in Iran. You know, when a leader puts his head up and it gets whacked off, who's in charge. We don't even know who to negotiate with, who are the Pakistanis talking to? So this is actually creating a little bit of stability. The fact that somebody has raised their hand, in this case the president and said, I'm the guy, I'm going to tell you what our conditions are. And, and that's where then starts to fall apart. Right? The US is like outwardly rejecting the 15 point peace plan that the US has presented in the past. They've called it maximalist, they're not going to do it. And then he reiterates the five points that he have, as Shigari mentioned, totally nonstarters to the United States. They keep their ballistic missile program, they keep their nuclear program. I mean, like they want to own the Strait of Hormuz. None of this stuff is going to be acceptable to the US or to Israel. And so are we in the beginning stages of a tit for tat that will ultimately result in a legitimate discussion of terms to solve this current crisis? Way too early to tell. So, yes, I think it's a good sign that there's someone we can actually focus on and start to get some energy around discussion. But no, it doesn't sound like there's any progress in that discussion.

Joe (14:26)

Well, so, Jeannie, as we question whether this is another example of Taco Taco Tuesday, perhaps, would you be surprised if it's a very different narrative come Wednesday?

Jeannie Shan Zaino (14:36)

No, I would not. This has kept us all on our toes. You know, when you take a step back for two sides to negotiate, first of all, there have to be two sides. And there are more than two sides involved here. We've got Israel, we've got the Middle Eastern countries. We've got a number of countries around the world dependent on the Strait, you know, so all of that comes into play. But if you just even isolate it to two sides, they'd have to come to an agreement. And it's very difficult at this point to see what we would give up and what Iran would give up to make an agreement happen. Do we hope that happens? Absolutely. But very hard to see how that happens at this point.

Joe (15:18)

All right, Jeannie, Shan Zaino and Rick Davis are Bloomberg Politics contributors. They'll be sticking with us for more later this hour as our next conversation coming up is an important one. The attorney general of California, Rob Bonta, will be here with us on Balance of Power.

Kelly (15:33)

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.

Podcast Host (15:55)

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Kelly (16:14)

Thank you for joining us on the Tuesday edition of Balance of Power here on Bloomberg TV and radio. With gasoline clocking in at $4 a gallon for the first time today, a national average, of course, reminding us that a lot of people are paying even more than that, which will be part of our conversation with the attorney general from California. We're going to be talking with momentarily. The reason why the markets have been perking up, though, Kelly, is that we heard from the president of Iran, says the country has the necessary will to end this war, but expects certain requirements to be met, quote, especially the essential guarantees to prevent the the recurrence of aggression. This was in a call with the president of the EU Council, President Costa. Those guarantees are nonstarters for the United States. So it's not clear that this moves the needle on anything more than just giving us a sense of a country looking to end this conflict. It is pulling oil prices lower. I wonder if gas prices might follow.

Joe (17:08)

Yeah, it is moving the markets, but we still remain above $100 a barrel, not just on Brent, but on WTI as well. Hence the translation to higher prices at the pump. It's $4 on average now across. It is significantly higher in the state of California, closing in on $6 a gallon. So we go now not to California, but to Bloomberg World headquarters in New York, where we find California's Attorney General, who is with Bloomberg today. Rob Bonta is joining us now on Bloomberg TV and radio. Mr. Attorney General, thank you for your time. Obviously, the president has looked to California, specifically an oil pipeline that the state wanted to remain closed, encouraging Sable Oil to pump oil through it in order to offset what we're seeing in terms of energy prices. Does the president forcing these kind of issues, forcing offshore drilling in the Pacific, for example, is that an answer somewhat to this spike?

Rob Bonta (17:58)

No. The answer is end the military conflict in Iran. He should never have gotten us into it in the first place. It has made gas prices spike. It lays at his feet, his actions, his conduct vis a vis Iran, period, full stop. His real attempts to reopen the Sable Offshore pipeline will have no impact on the prices. The amount of oil that moves through that pipeline is negligible, you know, a fraction of 1%. We don't have a national energy emergency, despite the claims of the president. We produce more oil and gas than we actually use. And so the attempt for the Trump administration to take over the Sable Offshore pipeline and provide an emergency permit and federalize it and to invoke the Defense Production act is all inappropriate. Tramples on California's state sovereignty, as well as violates existing court orders. So these things are not connected. Trump owns the increased prices across the country. And remember, this is someone who said he was going to lower prices on day one. He's done the opposite, not just with gas prices, but with his unlawful tariffs that we had to move to strike down. And we did. And then he imposed new tariffs, you know, seemingly very committed to raising the costs for Americans in California. And he's also turned his back on engaging in antitrust enforcement work, allowing for corporate consolidations that raise prices for Americans. And he's declined to protect consumers, such as trying to remove the authority of the Consumer Financial Protection Bureau, cfpb. So time and time again, he has attacked the pocketbooks of, of Americans raised prices instead of lowering them.

Kelly (19:42)

$5.88 does have a sting. And I know that you're paying $6 in Los Angeles along with some other areas of California. Mr. Attorney General, will you be looking into gouging? How bad could this get?

Rob Bonta (19:56)

We always look at our price gouging laws to make sure that they're being complied with, especially after real emergencies like natural disasters, when the governor of California issues an emergency declaration. But we will do everything in our power to protect consumers, enforce the laws. But again, the reason for these spikes are Trump. Trump alone, his decision to engage in a military conflict with Iran. We have seen that the data doesn't lie. Despite his attempts to deflect or blame others, he is responsible. This is, these are Trump's increased gas prices.

Joe (20:30)

Well, as you talk about protecting consumers, that obviously has many different facets, including ideas around competition and antitrust. Mr. Attorney General, which clearly there is a bit of a divide between the administration and the state of California when it comes to antitrust efforts, like a primary example being Paramount's merger with Warner Brothers. How are you thinking about that moving forward? Is it realistic that a state like California would be able to stop some of the federal government's moves in this space?

Rob Bonta (20:59)

The difference between the Trump administration's view of antitrust law in California is we want to enforce antitrust law in California. Trump does not. The federal government has long traditionally played a historical role in enforcing antitrust law, a leadership role, the Department of Justice, the ftc. But Trump has turned his back on that role. He has advocated his responsibility. He's retreating from doing the important work of holding corporations accountable when they break the law and engage in anti competitive conduct. And he's failing to protect consumers in the process. So if he won't, we will. And California can step up, can do this important work along with other states if they wish. We have concurrent jurisdiction with the federal government. If the federal government fails to act, we can act. We can do everything that the federal government could do, should do, but is not doing, including suing to block a merger like Paramount, Warner Brothers, if that's what we decide to do. We have said Paramount, Warner Bros. Is not a done deal. They have not cleared regulatory scrutiny. We are involved in a vigorous review right now and we will decide what we will do in the in the future weeks.

Kelly (22:03)

We want to ask you about the birthright citizenship case going before the supreme court this week, Mr. Attorney General, but just to be clear, we spoke with you the day that deal was approved. What's your timeline for deciding on whether to sue?

Rob Bonta (22:16)

We will sue timely if we decide to sue at all. We are monitoring the, you know, the scheduled shareholder vote, the regulatory scrutiny in Europe, and we believe that we still have a number of weeks to be able to make a final decision, including potentially, you know, into early summer. So we will continue to monitor diligently all developments and make sure that if we decide to act, we'll act timely.

Kelly (22:39)

We also, of course, sued the Trump administration following the executive order on birthright citizenship. And that case is now going to be heard and argued before the Supreme Court this week. The first sentence of that amendment is, of course, all persons born or naturalized in the US Subject to the judiciary thereof, are citizens of the United States and of the state wherein they reside. Is this already a victory for the president to have this language needing to be defined before the Supreme Court?

Rob Bonta (23:09)

No, his the federal government requested this, so the US Supreme Court decided to accept this case. They do not have a strong case. They do not have much of a leg to stand on here. Every lower court leading up to the US Supreme Court has found for my position, which is that the Constitution, the citizenship clause of the 14th Amendment, means what it says, that if you're born on American soil, you're an American, Period. Full stop there. The federal government is advancing a fringe theory that no court has ever adopted in saying that the amendment, the citizenship clause, does not mean what it says. And so we believe in the plain, unambiguous language of the Constitution, of an associated statute, the Immigration and Nationality act, and the US Supreme Court's own precedent, the Wong Kim ark case in 1898 interpreted the citizenship clause to mean what it says, that if you're born on American soil, you're an American. And so this is longstanding law that's existed since the 14th amendment back in 1868. The wonky mark interpretation of the 14th amendment in 1898. This is 125 to 150 plus year old standing law that the Trump administration is trying to upend and redefine unconstitutionally what it means to be an American. So I think they're going to have a bad day in court tomorrow. They do not have the facts of the law on their side. And I think it will be another humiliating loss for Trump in front of the U.S. supreme Court, but another victory for the rule of law, the Constitution, institutions and democracy and Americans.

Kelly (24:39)

Well, we look forward to having you back to talk more about that, Mr. Attorney General Rob Bonto with us. The Attorney General of California. Live from world headquarters in New York, let's assemble our panel to get their take on what will be a major story in the second half of this week. Bloomberg Politics contributors Rick Davis and Jeannie Shan Zaino are back with us. Rick is our Republican strategist partner at Stone Court Capital. Jeannie is our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. Rick, we're all going to be listening to these arguments before the court. And I'd ask you the same question I asked the attorney general. Is this a victory for the president, just the fact that we're having this conversation?

Rick Davis (25:15)

Absolutely. I think that I'd say a partial victory. Right. The fact that we're having the debate, that he's able to use it to stoke up his base. Democrats are trying to do the same with the folks who see this as a constitutional trampling of the Constitution. Yeah. This is the debate he's looking for. It's not the first one of these issues that he's thrown above the court. There's one that was decided today even, and that falls into the same category of a cultural war that he would like to have inside the United States. So yes, Donald Trump is controlling the narrative and that's what the White House allows you to do. It's a very powerful place and the bully pulpit is a very powerful mechanism to do that.

Joe (26:06)

Well, and it does seem that the president is already trying to control the narrative around what is likely going to be some skepticism from the most of the justices around this birthright issue. He took to Truth Social last night to say birthright citizenship is not about rich people from China and the rest the of of the world who want their children to ridiculously become citizens of the United States of America. He says, Jeannie, it is about the babies of slaves. He goes on to say that the rest of the world is laughing at how stupid our US Court system has become and says in quotes dumb judges and justices will not a great country make resuming attacks against a co equal branch of government.

Jeannie Shan Zaino (26:42)

Jeannie yeah, that's right. First of all, Kaylee, don't I love it when Joe Matthew is reading the 14th Amendment in the middle of a lovely Tuesday. So it has warmed my heart. The the, the thing is is that you cannot change and rewrite the Constitution with the stroke of a pen as much as Donald Trump would like to suggest he can. That's not how we change our Constitution. There is an amendment process. If he wants to amend the 14th amendment, we go through an amendment process that's not what he has done. By no means is this a win for Donald Trump. And his Truth Social post last night signals that. Because in what universe contextualists and originalists like Sam Alito and Clarence Thomas reread the 14th Amendment to say anything but what it says, which is what Joe Matthew just read, which is that if you were born in the US you are a citizen. So I think it's going to be a sad day for Donald Trump, but a win for the Constitution, which we like.

Joe (27:43)

All right, well, we'll all be listening to those arguments tomorrow. Of course, an actual ruling will come sometime later, but it'll be interesting to see the dissents if we get any. Jeannie Shan Zaino, Rick Davis, our political panel, thank you for joining us. On Balance of Power on Bloomberg TV and Radio.

Kelly (27:58)

Stay with us. On Balance of Power. We'll have much more coming up after this.

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Joe (28:25)

are trading on each and every headline it seems, coming out of the various parties when it comes to the war in Iran. Obviously a statement, basically a restatement from the Iranian president about Iran being ready to end the war if certain conditions are met, fueling some risk appetite today. But it does run counter to what we're hearing or what we have heard in the past, at least when it comes to whether or not these are guarantees that Iran is likely to get. And even maybe counter to what we're hearing now from the foreign minister who just told Al Jazeera Joe, that there hasn't been an Iranian response to the proposal, the ceasefire proposal made by the U.S. the Iranian Foreign minister telling Al Jazeera that yes, there's an exchange of messages with the US but no talks, even as the Trump administration says that talks are not only happening but they're making progress.

Kelly (29:09)

Yeah, it's curious the idea of formal talks. We know they're not at a negotiating table, so maybe that's trading messages. Does sound kind of like we are talking, but that is the latest have not sent a response to the US proposal yet either, knowing that there was a 15 point plan that included a number of nonstarters for Iran. And the five guarantees that were transmitted to the United States from the president of Iran are non starters here as well, beginning with the closure of all US Bases in the region. I don't think that's something that that's going to be considered. But the market is in its own world today, its own world of optimism. Based on some of the rhetoric that we've heard from the president himself and reports that he is considering winding down this campaign without reopening the strait. That wouldn't exactly help oil prices, but they have also been impacted, heading lower now, still above $100 in New York and above 104 for Brent crude. We want to get keep the conversation going on the markets here before we turn to what's going on or not, as the case may be on Capitol Hill. Norah Melinda, a Bloomberg's markets correspondent, joins us live from world headquarters in New York. Nora, when these headlines first broke that the president of Iran was speaking as a man who was in control and apparently interested in ending this war, albeit with guarantees he's clearly not going to get from the US the markets just took off. Are we getting a bit ahead of ourselves here?

Nora Melinda (30:29)

Well, the markets are just ripping right now, Jo. We're seeing the markets really higher. We're seeing the S&P 500 higher by about 2.3% currently on pace to close if it holds here for its best day since May of 2025. And of course, we still have to think about this in the quarterly landscape. I mean, this is the last trading day of the month and this quarter hasn't been that great. I mean, you see The S&P 500 is still heading for its worst quarter since since 2022. So we still have all these different things in focus, especially as we really keep an eye on geopolitics and we think about where we may go with this conflict. But really clearly today we see Joe Wall street really hinging on every last word, keeping an eye on every headline and really just clamoring from some sort of closure to this conflict.

Joe (31:14)

Well, Nora, how much is this just end of the quarter activity? Also, would we be seeing a volatile day to day pretty much no matter what.

Nora Melinda (31:22)

This certainly been a very volatile week, Caylee. Volatile month really. I'm looking at the VIX right now, right now hanging around the 26 handle. But there really has been a lot of rotations. We were seeing a rotation out of tech a lot this month as people are really thinking about what it may be in terms of spending when it comes to Capex for some of these companies. So it really has been a bit of a volatile start to the year. So not too surprising to see some of these swings given the fact that a lot of the headlines tend to be fixated on what's going on in the Middle East. And we do know that investors, they just want a sense of clarity. That's all the Wall street really wants in this moment. So if they see something that may indicate that we are approaching something more near term in terms of ending this war, they're of course going to trade on that.

Joe (32:09)

All right. Bloomberg Markets correspondent Nora Melinda, thank you so much as always for joining us. And as markets are trading on the end of the war, we should remind everyone watching in listening that the Pentagon is likely still going to make a request of Congress for another $200 billion in order either to A, continue to fund the war, continue to prosecute it, or B, to refill all the stockpiles that we have already spent. But either way, and we heard this from Mick Mulvaney, of course, the former congressman from South Carolina, also former acting White House chief of staff in the first Trump administration, that you do the math on a number like $200 billion and it may indicate that this war is going to go on for a little bit longer than the prevailing wisdom right now.

Kelly (32:46)

That's right. And of course, we don't have that supplemental budget. Pete Hexaf even implied that it could be greater than $200 billion when they get around to it. So clearly this is something that Congress is going to deal with when they return. Kelly, it's a ghost town on Capitol Hill right now. Save a couple of lawmakers keeping the lights on. It's a two week recess. Codells are underway and the president, well, at least he says he wants everybody to come back to deal with dhs. This is a department that is now in record territory for a single agency or any agency being closed in the United States. The TSA is being paid by the president, but others in that department are not.

Joe (33:20)

Yep. Coast Guard, FEMA still going without paycheck. So let's get into all of this now as we turn to Bill Hoagland, who is here with us in our Washington, D.C. studio. He's senior vice president at the Bipartisan Policy center and former staff member and director of the Senate Budget Committee. Bill, welcome back to Bloomberg TV and Radio.

Bill Hoagland (33:36)

Good to be back with you.

Joe (33:37)

It's great to have you here. But as Joe said, Congress is not here in Washington like we are. The president did tell the New York Post he's considering calling them back, maybe letting them have Easter, but cutting the recess short. Can we first begin on what his actual authority to do that is? This hasn't been tested really in some,

Bill Hoagland (33:53)

I don't think it's been tested, but it does have, it does have the power of the bully pulpit to say come back and force them to come back. I, I think it's problematic as to whether or not they would come back. The TSA is, is being funded as it is, and so I think it, that there will be plenty for them to do when they get back.

Kelly (34:12)

You know, pinned at the top of Senator Mike Lee's Twitter feed right now is a note that says President Trump has the power to convene the Senate under Article 2, Section 3 of the Constitution on extraordinary occasions. Indeed, the president, quote, may on extraordinary occasions convene both houses or either of them reads the Constitution. Is this like House of Cards when he sent the sergeant at arms out to arrest everybody and bring them back? Or is this Hollywood? Or is this real?

Bill Hoagland (34:38)

Well, I think it's real on the part of the president.

Kelly (34:40)

Doesn't that seem like something he would do?

Bill Hoagland (34:43)

I find it unlikely, but he, but apparently he has that authority, as you cited it.

Joe (34:49)

Well, let's talk about what he would actually be calling them back to do. It would be funding the Department of Homeland Security. Obviously, the House and the Senate on very different pages as to how that to do that right now, the bipartisan Senate compromise, not, not making muster with House leadership. And I wonder how you're expecting to get this resolved if we actually are going to see DHS funding standing alone in some form or this is more likely to get folded into something broader like a second reconciliation.

Bill Hoagland (35:16)

I think it's likely to get folded into something broader. The, the president does have this $10 billion that was in the one big beautiful bill last year that he has the authority. He put out that executive order that does say use your existing authorities, use the authorities that he has both to continue to fund tsa. As you pointed out, though, that's only tsa. Secret Service is not funded in that. As an example. Cybersecurity is not funded in that. FEMA's not funded in that. So there still are some major issues here. But I do believe that they will have to figure out a way to fund this through a different mechanism which they are talking about doing, and that's through this crazy process called the budget resolution reconciliation process, which I think, to be brutally frank about it, I think is very problematic because there's a lot of steps that are involved in passing a budget resolution and then getting around to a reconciliation bill. And with the margins as narrow as they are and as we're going into the primary season, it's going to be difficult, I think, to find that get first of all, pass a budget resolution.

Kelly (36:23)

Wow. Well, that's, that's a big deal because we have Republican lawmakers joining us on the air every day, acting like it's already happened here. Bill. And the parliamentarian hasn't even spoken yet.

Bill Hoagland (36:34)

No, let's be very clear. You first of all have to pass a budget for the fiscal year 27. And the President hasn't even submitted his budget for fiscal year 27. We may, we may see that at the end of this week, as I understand. But then Congress has both the House and Senate have to agree on that big blueprint called the budget resolution. And if they agree on the big blueprint, the budget resolution, they can put in that blueprint reconciliation. So there's a lot of steps involved here before you can do the things that some of the Republicans are and in fairness, I work for Republicans, but there's a lot of steps here that will require them to get done which will push this well into the future. And that's why I think the president going to have to continue to depend upon the $10 billion that was in the ominous, the big one big beautiful bill to fund TSA.

Joe (37:23)

Well, but it's not just about funding the elements of the Department of Homeland Security. There's other things he wants accomplished, like for example, the Save America act, which Republicans are now saying, oh, we'll try to fold some of that into reconciliation. I know you're pessimistic on reconciliation getting done in the first place, but does that even, does that even work within the room?

Bill Hoagland (37:41)

I am such a downer, I'm afraid, because those are policy issues. Those are not budget issues.

Joe (37:48)

Even if you tie it well, you

Bill Hoagland (37:51)

can there's a little clause called merely incidental. It's called the Byrd Rule. And it's a merely yes, it's a policy. Maybe it has a budgetary consequence. But is that really fundamental to the budget? As an example, if you'll try to remember, under the Biden administration, they wanted to raise through reconciliation. When Republican or Democrats controlled Congress, they wanted to raise the minimum wage. Parliamentarian looked at. Yes, that's an important policy issue, but is it really budgetary oriented? And she ruled that it was not. And that violated the so a lot of these things they're talking about with the SAVE Act I think would run into a parliamentary problem in the Senate.

Kelly (38:29)

Yeah, the birdbath can be severe in some cases. What about Democratic priorities? If we tried to get others to the table here and say, hey, we've got ACA subsidies to deal with, an expanded child tax credit. How big could this get?

Bill Hoagland (38:43)

It gets very big. And mentioned also farm price supports the president, all that. So this could come a very big

Kelly (38:51)

from an old trillion dollar, an old

Bill Hoagland (38:53)

budgeteer here who believes deficits do matter. We're, we're going in the wrong direction. And then we haven't even talked about, as you said, the $200 billion may be a supplemental. But by the way, that 200 billion is for this year. That's not for fiscal year 27, which the President indicated he was going to ask another 500 billion on top of the billion or trillion that spending point five.

Joe (39:15)

Yeah, these are massive numbers that we're dealing with. It's almost unfathomable. But Bill, when we consider all of these different policy areas that they want to pursue and the idea that reconciliation may not work so easily if, if they can't do reconciliation, are we looking at potentially the end of the Senate filibuster? If that is the only answer to getting some of the priorities for this president through this Congress, I would say

Bill Hoagland (39:38)

that we're on the cusp of doing away with the filibuster. Let's be clear. What's going on right now is using a fast tracked reconciliation process to avoid the 60 vote hurdle. And if this is the, if we're going to continue to degrade the Budget act, as I recall, as I worked on all these years, I would argue, well then just go ahead and repeal the budget act and just what, and, and do away with the filibuster.

Kelly (40:09)

That's exactly what the president would like to see.

Bill Hoagland (40:11)

Yes, that's right.

Kelly (40:11)

So, so kill the filibuster, go arrest all the lawmakers and bring them back into town and you've got yourself a bill.

Bill Hoagland (40:17)

I still think that there will be a lot of resistance to doing away with the filibuster in the United States Senate. Remember that someday maybe Democrats are in control. Sure. And both chambers. And that will then without the filibuster they can do whatever they want too.

Joe (40:32)

Well. But the Republican proponents of getting rid of the filibuster now say Democrats are just going to do it eventually, so we better do it first. John Cornyn is saying this.

Bill Hoagland (40:39)

Well, I, there are lots being said at this point that once we get to the actual situation may not be the case.

Kelly (40:48)

We need more Bill Hoaglands in Washington. He never plays into the noise or the rhetoric and we appreciate that with great insights and analysis based on your experience. Bill, Great to have you back.

Bill Hoagland (40:58)

Thank you as always.

Kelly (40:58)

Bill Hoagland, Senior Vice President, the Bipartisan Policy center and a voice of reason when we need one here. 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 book podcasts. And you can find us live every weekday from Washington D.C. at noontime Eastern at bloomberg. Com.