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Carol Massar
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Bloomberg Announcer
Bloomberg Audio Studios podcasts Radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
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Joe Matthew
Day 31 Happy Halloween everybody. I have no news on when we're going to reopen, although the president seems to think that he has the thought of going nuclear. The nuclear option in the Senate and the filibuster. That was his post on Truth Social that we'll talk about in a moment here. But of course, lawmakers are gone, most of them. The Senate is now out for the weekend. Everybody is getting ready to go pass out candy. And tomorrow is a big day. November 1, SNAP benefits begin to expire. Open enrollment begins for those seeking health care with subsidies not yet addressed. And Head Start also starts to go broke tomorrow. We also have elections ahead next Tuesday. So there are some thoughts that as talks begin behind the scenes in Washington, maybe something's about to shake loose. But the talking points haven't changed. Listen to House Speaker Mike Johnson from earlier today.
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Laura Davison
The same Democrats who've been perfectly fine with defunding SNAP and WIC for over a month now are suddenly claiming to.
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Joe Matthew
Be outraged that Republicans and President Trump.
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Laura Davison
Can'T just wave some magic wand and fix the mess that they themselves have created. If they're suddenly waking up to the.
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Joe Matthew
Pain their reckless decision is causing, then.
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Laura Davison
There'S one simple way to fix it. They can come back in here and vote to reopen the government.
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Joe Matthew
Of course they're not back in here. As I mentioned, everybody's away for the weekend. And while the House has been out of session for more than 45 days, Laura Davison covering all of this here in our Bloomberg Washington bureau. Our deputy was bureau chief with us now at the desk. The president says go nuclear. And the filibuster, this thing would be done in just moments. What's the majority leader think of that?
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Laura Davison
He does not like this idea one bit. He, you know, have four months, has been saying he doesn't like it. He came out, you know, his spokesman came out and After Trump made this post yesterday, you know, saying he wanted Republicans do that said, nope, this is not on the table, this is not happening. And Thune rightly recognizes that, you know, that Republicans, Republicans are not going to be in control of Washington forever. And they don't want Democrats to have the ability to just enact sweeping changes when they're in power. You know, whether that be, you know, two, four, six, eight years from now.
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Joe Matthew
Well, short of that, we have no off ramp at the moment. There has been chatter, as you've been reporting, Laura, that there are some rank and file talks underway, although we've heard that before. I am compelled though by this headline that Chuck Schumer met yesterday with Senator Katie Britt. Does that give us a sense that the gears are starting to turn?
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Laura Davison
It could.
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You know, Katie Britt's state of Alabama is a state that relies heavily on stat benefits. You know, we were doing an analysis of all of the districts and there are lots of Trump districts that, you know, are very reliant on this, this food aid. So that could start to see Republicans seeing pressure from folks at home. You know, you have head starts closing. You also have, you know, military worker, rather federal workers who are going without pay. The thing I think we really need to watch, that's going to be the pressure point though are airports. And we've seen some sporadic closures, you know, ground stoppages, including a decrease DCA yesterday where Thune was stranded at the Capitol, couldn't get back to South Dakota, but sort of far from temporary. We haven't seen system wide outages. That will really be the thing that could tip this into negotiating mode.
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Joe Matthew
Do we hear any chatter about a walkout? I mean, obviously the air traffic controllers are not being paid and they're all working overtime just by the nature of their jobs. When does the union say it's sick out day?
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Laura Davison
That's, you know, what our team here is very closely trying to figure out. You know, they have not indicated that even, you know, last shutdown back in 2018, 2019, you know, we had a, where you had Miami, Philadelphia, LaGuardia and Newark that were basically all had ground stoppages and just totally messed up all air travel across the eastern seaboard. And that, you know, later that night is when the shutdown ended. So and that wasn't even a coordinated thing. That was just enough people saying on day 35, shut down, I can't, it doesn't make sense for me to go into work. I've got other priorities. I need to be driving for Doordash or Uber or whatever to, to pay the bills.
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Joe Matthew
What a thought. Day 35, by the way, is Tuesday. So we'd set a new record next Wednesday for the all time, all time. There's new polling out, Laura. Pretty incredible. And it's what I guess C.H. schumer was probably hoping for. ABC News Washington Post poll finds Americans blame Republicans over congressional Democrats. There you see it on your screen, 45 to 33%. Independents blame Republicans by a 2 to 1 margin. Do numbers like these start to pull a meeting together at the White House?
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Laura Davison
It could.
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And this is also why you see Democrats saying that they're not going to the fold. They want to stay in this fight. You know, they've had sort of the edge and polling the entire time. You know, this polling is better than some that have were even, you know, a couple weeks ago. So it seems that they've been able to keep public opinion on their side during this. You know, Republicans, you know, they also think that they have the edge. This poll doesn't necessarily indicate that, but they're both kind of waiting to see where the chips fall. You know, problems with the shutdown compound the longer it goes. So Republicans are betting that people are going to get fed up and blame the Democrats. Democrats are betting that people are going to see their premiums increase and say, what the heck, we need to get this solved.
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Tony Capaccio
Wow.
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Joe Matthew
Boy, it's, it's going to feel different when, when we start the new week here on Monday and these benefits have actually begun to expire and real people are telling stories. We'll just have to see how that goes and of course, what the reaction will be on election Day. Laura, I want to ask you about the president, though his comments on Venezuela was on Air Force One. He's on his way to Florida right now. They actually stopped the jet on the tarmac so he could go back, talk to reporters. When asked about imminent strikes against Venezuela, as the Miami Herald reported, he said no.
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Laura Davison
He said no. He's not thinking. He said no, he's made no decision and no, that no, no attacks are imminent. This, you know, there have been two reports, but one from the Wall Street Journal that said this was under discussion and another one from the Miami Herald that was much more definitive, saying that this, you know, could be coming within days or hours. Poured a lot of cold water on that. I think that is, you know, kind of lessen the flames and the, the sort of discord around that topic. But this has been, you know, Trump himself a week ago said that land strikes would be next. So I think the question is still here, not necessarily, you know, if, but when, but clearly he's not ready to come out and say he's made that decision.
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Joe Matthew
That's fascinating stuff. This is what we're going to be getting into. Coming up next with retired General Wesley Clark. Laura, thank you as always. Happy Halloween. I'm supposed to say as well, it is October 31st. Big Halloween bash, I hope, for you. Laura Davison, our deputy bureau chief. We thank you. I'm Joe Matthew in Washington. And thank you for being with us here on the Halloween edition of BALANCE OF power. The president has said a lot about Venezuela. These reports shouldn't be a surprise to anyone, knowing as well that a carrier strike group is on its way right now. The USS Jerry Ford soon to arrive in the Caribbean. Here's the latest from President Trump on this.
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Tony Capaccio
Our sea drugs, as they call them, they use the term sea drugs. The drugs coming in by sea are, are like 5% of what they were a year ago, less than 5%. So now they're coming in by land. And even the land is concerned because I told them that's going to be next. You know, the land is going to be next. And we may go to the Senate, we may go to the, you know, Congress and tell him about it. But I can't imagine they'd have any problem with it. I think, in fact, while we're here, I think it's a good idea.
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Joe Matthew
It's a good idea. All right. The land is next, he said that was October 23rd. His most complete remarks on this to date until again, he said no to the reporters asking him this morning. So this may not be done. It may just really be a question about timing, to Laura's point. And that's what we want to talk about with the general. Wesley Clark is with us. Retired four star general, U.S. army, served as commander of U.S. southern Command. So he knows this region rather well. Founder of Wesley K. Clark and Associates. General, it's great to see you. I wonder how you're interpreting the remarks by the president, knowing the flotilla, the armada that we have assembled that's about to get even bigger in the Caribbean. How do you read his remarks and what do you think is about to happen in Venezuela?
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Laura Davison
I think it's like jiggling the skeleton key in the lock. It doesn't always engage the first time you move it back and forth and play with it a little bit. So you've got military force. Rumors is rumors are that there are some special operators inside Venezuela you're not quite sure what the target is. That's Maduro's problem. Is it him? Could he just suddenly disavow Russia, Iran and China and say, no, no, no, I don't want them, I'm on your side, America? Could he suddenly say, I'm going to crack down on all. Could he say, I'm just going to accept the results of the next election? And I mean it this time? He doesn't know what the objective is. So he's under a lot of pressure. And I think this is part of the strategy. We don't know what the objective really is of the administration, but if it really is about drugs, then, yes, most of it is coming through Mexico by land. And if you're going to do something with drugs, you have to look at the demand side as well. So we're just in the early stages of this yet. This is a pressure building up on Maduro.
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Joe Matthew
It is, it is something you mentioned, the demand side. We never talk about that. As if these drugs are, you know, being pushed on Americans. They're coming here because Americans are demanding them, which is its own problem. The USS Gerald Ford is on its way right now, General. It's apparently not in theater yet. Would the administration take action without that platform being there?
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Laura Davison
Well, it depends on what the objective is of the administration. If the objective was to go in and snatch Maduro and put him on trial somewhere, then maybe you don't need the Ford there. If the objective is to intimidate, be prepared, then you want overwhelming force, and that's what we're assembling there. They do have aircraft. They do have aircraft, anti aircraft, they have radars, they have ships. But, you know, that could all be taken out in a few hours. I think what you couldn't do, even with the two amphibious groups that are there from the Marines and so forth, what you can't do is really go in and occupy Venezuela. It's just too big, too many people, too many weapons distributed. You can't quite do the same kind of takedown that we did in Panama against manuel Noriega in 1989. That was an entirely different case legally, militarily, geopolitically. So this is different. We're not still. We still don't really know what the objective is of the administration. And it could be that really it is drugs. It also could be. That's just what you say when there's a private set of objectives that are coordinated through Congress. And he has briefed at least the Republican members of Congress in The big committees. I hope he'll bring the Democrats in too. Because national security shouldn't be partisan. It should be beyond the country's borders. We should all be one nation.
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Joe Matthew
Well, this is a great point that you make and maybe that will actually tell us a bit if we start seeing briefings across the aisle on Capitol Hill. I know that the Pentagon has not been terribly fond of talking to Congress at all lately. But General, we've seen B1 bombers and B52 bombers buzzing Venezuela's airspace. We also saw Venezuelan F16s buzz a couple of of US ships weeks ago when we first started striking these alleged drug boats coming out of Venezuela. You mentioned the fact that they do have some aircraft. They have, they've got anti aircraft missiles and the like. What kind of a job would it be for us to knock all of that out? Or would there in fact be an air war over Venezuela?
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Laura Davison
You never want to discount an adversary. So yes, they've got pilots, they fly F16s, they have some air to air weapons, but they don't have the modern air to air weapons. They don't have the system that we have. So there might be an air war over Venezuela, they might get some aircraft actually off the ground. But in terms of our ability to reach out and strike, our ability to use stealth, our ability to name the time and manner of attack and so forth, I don't think there's any question about the outcome. And it, you know, the Israelis have, have really pioneered this in their operations. They typically strike, they're effective, they're using our technology. Of course, we know all those systems. I wouldn't think there'd be much of a problem. But for the pilot in the aircraft, a, he's put his life on the line for the country. He's got to succeed and we would do everything possible to make sure we can do this effectively without losses.
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Joe Matthew
Yep. As we're speaking, General, we're showing images, video of some of the alleged drug boats that we've blown up recently. Too many to count at this point. There was a sub, we've got the boats as well. This is quite a gallery that we have these things blowing up and catching on fire. A lot of people have died. As someone who actually ran Southern Command, what is your thought on the legality of this operation so far?
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Laura Davison
Well, you know, it should have been briefed as legal. Presumably there's some legal authorization to it. We haven't been told that. And the evidence that has been presented to Congress, at least as it's been explained publicly doesn't fully justify that. We know for sure that these are drug boats. And if they are, then it would be a violation really of maritime norms to attack them. We would normally seize and secure them, use them to collect information and run it back to the source. This is a different approach. And it's, it's really, it's more about sort of naked power than it is the international rules based system. And this is one of the concerns that so many have today. When you look at the shape of the international environment, what's going on in Ukraine, what's happening might happen in Taiwan and so forth, how do we use all the tools of statecraft, not just the military and not just tariffs, but international law, diplomacy, and how do we put it all together in a package that best serves the interests of the American people? And so when you look at what's happening with these boats and you have to ask, what if Russia decides to do this? What if China decides that it makes up anything in the South China Sea that's moving must be a threat to China and starts knocking off boats? Certainly wouldn't like it. So I think we have to be very careful about the example we set. I hope that the administration will come forward soon with more of a legal justification and make sure that this is not a partisan but a bipartisan thing. It's got the support of the entire Congress. That's, that's the way that American foreign policy is strongest.
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Joe Matthew
Yeah. General, I only have a minute left and I, I hate to bring up a whole new topic. I don't want to have to cut you off, but this headline just ran from cnn. The Department of Defense has okayed Tomahawk missiles for Ukraine and it will leave the decision finally to President Trump in our remaining 30 seconds. Should those missiles go to Ukraine?
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Laura Davison
Absolutely right. Yep. Puts more pressure on Putin, brings us closer to an end of the war. Yes, absolutely. Great decision.
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Joe Matthew
Fascinating. We'd love to talk to you more about that when we learn more. General, it's good to see you. Retired General Wesley Clark with us live again on Bloomberg TV and radio. We thank you as always for the insights. Tomahawks for Ukraine cleared by the Pentagon. We'll see what the president has to say about this. Maybe he'll be asked about it if he talks to reporters when he lands in Florida. He's on his way there right now for a weekend at Mar a Lago. The Halloween edition of Balance of Power continues next with our panel, Rick Davis and Archie Siddiqui together as we look ahead to election day next week. The impact of the government shutdown should not be discounted and we'll get their take next on Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.
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Carol Massar
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- [19:06]
Bloomberg Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30.
- [19:24]
Joe Matthew
The numbers in California are eye popping as we follow the money here on Prop 50. You know next Tuesday is an election day and We've talked a lot about on this program about the gubernatorial races certainly in Virginia and New Jersey. We've talked a lot about the New York City mayoral race and we're going to get into all three of these. But also what's taking place in California is extremely important. Prop 50, this is redistricting. Right. We talked about it a lot when this first emerged and it has started a cascade now of other states rewriting their congressional maps following what is expected to take place in California. Gavin Newsom put this up for a vote. That was the way they decided to handle it in Prop 50. Looks like it's going to pass quite easily. Over the past 11 weeks, Bloomberg News reporting, Newsom and his allies brought in more than $120 million for Prop 50, about three times the total raised by the proposal's opponents. Yes, George Soros name is on there along with others including Reed Hastings. And this is where we start now with our political panel. Bloomberg Politics contributor Rick Davis is with us for our Republican strategist and partner at Stone Court Capital, Arshi Siddiqui with me here in Washington as well, former aide to House Speaker Nancy Pelosi, founder CEO of Bellwether Government Affairs. It's great to have you both with us. Arshi, I'd love to start with you on Prop 50. Are you expecting a blowout and what would this mean for the redistricting efforts around the country and just the aura for Democrats that might follow nationally?
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Arshi Siddiqui
Well, I think there are two important pieces about California. One is it's a defensive measure and I think the governor really went out of his way to structure it in a way that really was not a unilateral decision by him, but actually going back to the voters. So and then it was a really quick ramp up time. So it's a defensive measure for Democrats in a very aggressive push by Republicans to go state by state and try to try to rewrite these districts.
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Joe Matthew
What do you make of the money involved here, Rick? You've run enough campaigns and elections to have a sense of this. You expect a blowout?
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Rick Davis
Well, it certainly is what's indicated in the polling. I mean recent polling, as you Pointed out, Joe, 6 in 10 Californians are supporting Prop 50. Hundreds out of 160 million being spent, 125 of that is pro Prop 50. So it's overwhelming force politically. And so we'll see. Early voting is very favorable to the Prop 50 demographics. But but early indications are that there'll be a significant Republican advantage on election day which is pretty traditional in an early voting state.
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Joe Matthew
Mm. Indeed. Rick makes reference to the poll out last 24 hours from the Institute of Governmental Studies at the University of California, Berkeley. 60% are issue of likely voters back the proposal compared with 48% of registered voters who were surveyed in August. So there's been some real momentum here. Really interesting. Will Democrats regret this move knowing that of course this started in Texas by Republicans, but it's tipped off a cascade of states that really could end up favoring Republicans in the end?
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Arshi Siddiqui
No, I actually, not at all. I think if anything it is a defensive mood that, that really Democrats were backed in.
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Joe Matthew
You saw no choice.
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Arshi Siddiqui
Yeah, there's no choice. And honestly that's just unilateral disarmament where, you know, it's not, it's not a fair fight going into the midterms. So I think even now with this California move that, that still doesn't get Democrats where they need to be because you saw this in Indiana. In Indiana, the Republicans are very skittish and it's just been this barrage of pressure by, by Washington Republicans in Washington and the administration on getting that piece done.
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Joe Matthew
Really interesting. As we gather here on day 31 of the government shutdown, there are implications, according to some at least, that will play out here in these elections again. We've got governor's races in Virginia, New Jersey, we've got New York. Might kind of be its own thing with the Mamdani factor, but let's keep these two gubernatorial races in mind. Rick Davis. People start losing SNAP benefits tomorrow. Open enrollment is going to be in everybody's face when it comes to Obamacare. We've got Head Start on ice. All of a sudden because of the shutdown, people are going to be talking about ground stops, most likely at airports. How does that play in favor potentially of Democrats or Republicans in these two races?
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Rick Davis
Look, I mean, the polls that we've been talking about around the government shutdown penalize Republicans, especially with independent voters who tend to be deciding vote in a lot of races and certainly will be in this very close New Jersey governor's race that is within the margin of era. And, and turnout will be a major contributing factor to the outcome of this race. In other words, who shows up in early voting and on election day? Is it going to be Democrats who are motivated because of the anger they have toward the government shutdown? Is it Republicans who are supportive of the Donald Trump agenda? And so I think that's the one to watch of all of these. The outcomes are pretty much assured except for New Jersey and, and if Democrats win, Republicans are going to say, wow, you know, if without a government shutdown, could we have, could we have taken that race? And I think that's, that's not an academic issue. That could be pretend serious considerations for how to handle then the midterm elections.
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Joe Matthew
Yeah. If the polls like today's from ABC News, Washington Post show Americans blame Republicans, does that favor Democrats on Tuesday?
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Arshi Siddiqui
I think the government shutdown nexus in New Jersey is interesting because if you look at it is a margin of error race, as Rick pointed out. But also importantly, there's been a lot of campaigning in communities of color, and some of these benefits are really disproportionately. Cuts are impacting communities of color. So I think from that perspective, there's a nexus, but I do think turnout is going to be critical in New Jersey, and it is a very tight race. And, and as you know, for the past 60 years, voters in New Jersey, they alternate between a Democrat or a Republican in the governor's office.
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Laura Davison
Right.
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Joe Matthew
So how worried are you about New Jersey as a Democrat?
- [25:49]
Arshi Siddiqui
I think what is very exciting is Mikey Sherrill is just the whole package. She's smart, she's driven, she has a national security background. She's a moderate pragmatist, a problem solver. So I think that that's a lot of room for hope there.
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Joe Matthew
Well, it's being looked at as a bellwether. Rick Davis, how important will the results in New Jersey specifically be for these two parties?
- [26:13]
Rick Davis
Yeah, look, I think that if Republicans can win this, and we, as, as Archie pointed out, we haven't been that successful in most recent statewide election history, they're going to, they're going to rally around the President's agenda in a way that right now you don't see happening in the other races. And so, so it will give an impetus to Republicans to double down on this strategy. It'll make it more difficult to cut a deal to open government, assuming we're not open by, you know, the 4th of November. And so it could really change the mental attitude that Republicans have about, you know, whether they're leaning back or leaning into this agenda going into the midterms.
- [26:54]
Joe Matthew
Really interesting. We haven't talked enough about Virginia, probably because a lot of folks see this as a foregone conclusion. By the way, we should note that Virginia's General assembly advanced a proposed constitutional amendment today that could bring redistricting to the Old Dominion. Archie, is this a blowout, as many are casting in the media? I live in Virginia, although I'm in Northern Virginia. So, you know, I'm not seeing a lot of winsome signs around. How do you expect this to pan out?
- [27:22]
Arshi Siddiqui
I think no one should take Virginia for granted. And we've seen that. And you look at Youngkin's win last time and you also, we've seen some indications that Trump is really focused on Virginia because of redistricting. So he's engaging. And so in that, as we know, he can be a very powerful advocate on the campaign trail. So in this final stage, I think Democrats aren't taking anything for granted and they cannot afford to. Now, the great thing is Abigail Spamberger is a fighter. The congresswoman knows how to really run a really aggressive and strong campaign and she's really focused on issues of affordability and delivering for rich new families.
- [27:57]
Joe Matthew
Well, as my fellow Virginian Rick Davis would tell you, we can't get through a single commercial break without seeing ads in this campaign. It's just been dominating the airwaves and dominating the conversation. Rick, to what extent could the shutdown impact results in Virginia as well, knowing how many federal workers live here?
- [28:15]
Rick Davis
Yeah, we've been looking at turnout in Fairfax county, competitive county that has been trending more blue than red in the last few cycles. And the turnout as of today is on the same par level as a presidential election. And, and you know, remember, this isn't even a midterm. This is an off year election, which means turnout usually is off. And, and so the fact that you've got that level of activity at the ballot box before election day usually indicates that, you know, you've got to change election coming, which would of course advantage the Democrats in this case. But, but I got to believe that you have that kind of a strong move in Fairfax County. It is a direct corresponding factor to the shutdown. And of course we, we see all that news and we have hundreds of thousands of people who've been affected. And so you got to believe that's translating into some political activity.
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Joe Matthew
Really interesting. This is going to be a fascinating night, actually. I'm really looking forward to it in our coverage here on Bloomberg. We'll have special coverage for you on Tuesday. Live from world headquarters in New York. Everyone's expecting Mayor Mamdani to show up at some point, maybe later in the evening on Tuesday. What do you make of the Republican effort to elect Andrew Cuomo a Democrat turned independent?
- [29:40]
Arshi Siddiqui
Yeah, I think the fear factor, there's certainly a excitement factor on the Democratic side for Mamdani. I think on the Republican side there's a fear factor. And they, and there has been a fear factor and then also an attempt. You know, it's interesting, we were talking about Spamberger, Mikey Sherrill, nobody talks about them as our standard bearers and great examples of Democrats. People are also looking at Mamdani to really kind of characterize him as a, a radical. Whereas we have these other two governor, governor, potential governors who are really middle of the road pragmatists.
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Joe Matthew
Fascinating. Rick, we've only got about 30 seconds. Does Wall street vote Cuomo?
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Rick Davis
Wall street votes Cuomo? Absolutely. You know, everybody I've talked to over the last few months prepping for this election on Tuesday are sick with concerns about what that agenda that Mondami has is going to result in for, for New York City. And so we'll see. But I think fear and loathing is the nature of the election in New York City.
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Joe Matthew
Fear and loathing in Manhattan. Rick Davis, Arshi Siddiqui, many thanks to both of you for a great conversation. Again, we'll have special election night coverage here on Bloomberg. Stay with us on Balance of Power. We'll have much more coming up after this.
- [31:02]
Carol Massar
This is the Bloomberg businessweek Minute brought to you by Amazon Business. I'm Carol Massar. The 84 year old leather goods maker Coach is on a hot streak lately thanks to a new generation of consumers after years in the retail doldrums. Coach logged almost $1.3 billion in revenue in the most recent fiscal quarter, up 15% from the year before. BusinessWeek's Avalon Purnell writes the revival has been a decade in the making as Coach worked to rebuild its cool factor by getting out of the mall and into the hands of tastemakers, closed and consolidated retail locations and ran ad campaigns featuring Selena Gomez, Jennifer Lopez and other high wattage names. Coach also tapped into the cultural zeitgeist as young consumers look for brands with some customization. TikTok influencers are often seen carrying Coach purses dripping with charms shaped like cherries, pears and pretzels. That's the Bloomberg businessweek Minute brought to you by Amazon Business, your partner for small business buying. Running a business, it's a lot, right? Orders to place, expenses to track, procurements to manage. It feels like there are never enough hours in the day. We could all use more time. That's where Amazon Business comes in. They offer smart buying solutions to help you make the most of yours, like spend visibility, a cloud based system to track your buying pattern so you can optimize your savings and bulk buying so you can continue to save costs on select products with quantity discounts. Now that's smart. Amazon Business handles the heavy lifting so you can finally focus on growing your business instead of drowning in admin. From customized recommendations to real time spend tracking and delivery options tailored to your schedule. They've got your back every step of the way. Why not spend less time sweating the small stuff and more time crushing your goals or maybe even sneaking in some well earned downtime. Discover more about smart business buying@amazonbusiness.com a business prime membership is required to access spend visibility.
- [33:01]
Bloomberg Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg Bloomberg 1130.
- [33:20]
Joe Matthew
Yeah, have you seen this new movie, A House of Dynamite? It's on Netflix and it's the big thing to watch. Well, this weekend, last weekend I actually had a chance to see it myself and it's making news because it's a pretty scary proposition. The idea here is that there, and I give you, I'll give you the spoiler alert right now. There's no way I can't ruin this movie for you. And just wait till Tony Capacio starts talking. There's a nuclear attack against America. There's an icbm. We don't know where the heck it came from. It's coming in on Chicago and we try to knock it out of the air. Think, dare I say it out loud, Golden Dome. Think Iron Dome, right? We've got interceptor missiles. They go up there and knock the thing down, shooting a bullet with another bullet. Except in this case, it misses a terrifying thought. This movie is from Kathryn Bigelow. The latest Remembering Zero Dark Thirty and the Rest. And it got the attention of the Pentagon because when we start talking about missile defense, this isn't exactly the kind of message that the Pentagon wants to send to everybody around the world. Now, again, watching this movie, enter Tony Capaccio. He got his hands on a piece of paper inside the Pentagon. Remember, this is the Pentagon that kicked all the reporters out, making clear that they think this movie is inaccurate and they're trying to set the record straight to some extent here. Now, Tony's been picked up. He's the only person with this document. He's been picked up everywhere from the New York Times to the Hollywood Reporter to Esquire, and they even got Kathryn Bigelow to respond to this. And no one's getting along. So we're delighted, as always, to have Bloomberg's national security reporter with us, Tony Capaccio. Good to see you.
- [35:02]
Carol Massar
Hi.
- [35:03]
Joe Matthew
They must be glad they kicked you out of the building because now you're breaking more news than you were when you were in the building, which I find hysterical.
- [35:08]
Tony Capaccio
Here's the irony. It was dated October 16, the day after we all left.
- [35:11]
Joe Matthew
How about that?
- [35:12]
Tony Capaccio
Yeah. This is the kind of memo they. They wouldn't want us to get. It was not stamped cui, but it was for internal use only. They underlined internal and not releasable to the public. Okay.
- [35:24]
Joe Matthew
Someday I want to know how you got this. Yeah. Okay, so tell us what the problem is, because this is not a documentary. What's the Pentagon care about the movie?
- [35:32]
Tony Capaccio
Okay, the memo is not a slash and burn that everything stinks in the movie. It's fairly measured and fairly muted and fairly technical. Basically, it was meant to be a heads up for those in the Pentagon.
- [35:44]
Joe Matthew
If you get asked about this kind.
- [35:45]
Tony Capaccio
Of thing, if they get asked about it, and if it shows up in conversation. It had a limited run in theaters and not every Pentagon official gets Netflix. So this was like a heads up memo, but it was fairly detailed and it was not a slash and burn. Okay. They actually acknowledged that some of the film laid out the messages. They wanted, you know, that the US could be attacked by a nuclear weapon.
- [36:04]
Joe Matthew
Right.
- [36:05]
Tony Capaccio
The value of deterrence. So it wasn't slash and burn, but there were. It was a critique.
- [36:09]
Joe Matthew
A critique. They called it inaccurate and went so far as to say we have 100% capability of knocking said missile out of the air. Is that even true?
- [36:18]
Tony Capaccio
Okay. This is an area I've covered for quite a while. Yeah, Literally for the last few years. Four of these things. It is true. Between 2017 and 2023, the last time it happened, they had scored. They hit four times in a row.
- [36:29]
Joe Matthew
Last time, what happened, though?
- [36:31]
Tony Capaccio
There was an intercept test.
- [36:33]
Joe Matthew
Okay.
- [36:33]
Tony Capaccio
These are always high visibility issues between like 2001, when they started doing these, or 2002, I think it was. They've had 12 of 21 hits.
- [36:44]
Joe Matthew
Got it.
- [36:44]
Tony Capaccio
Those are with new, older prototypes, elementary radar, elementary warheads. But the last four were with better warheads, better discrimination technologies, and better command and control and detection technology. Excuse me. One of the tests, one of the five, or one of the four, excuse me, was so significant that the Pentagon's test office, which has been. Was a critic of the program for quite a while, that said, it only had a limited capability to defend the United States against a small number of Missiles. One of those tests was convincing enough where they dropped the word limited and said it's demonstrated a capability to defend the United States against a small number of missiles fired from an adversary that was significant. People don't realize that. I found that actually the memo in when I was cleaning out my desk at the Pentagon. Yeah, it stayed in 2017, but that to me, it's a leading indicator. Sync's not perfect, but it's been been the target of arms control critics over the years and it's been embraced by the military industrial complex that has invested interest in missile defense. So to measure it, it's had a 57% success rate if you look at all the tests. But literally for the last four, the last one in 2023, it hit four times in a row and it changed the test office's opinion from it has a limited capability to demonstrating it has a capability. So.
- [38:10]
Joe Matthew
Well, listen, that we just learned a lot. Katherine Bigelow didn't love what she heard from the document that you uncovered. Nor did Noah Oppenheim, who I guess was the writer of the film.
- [38:25]
Tony Capaccio
Right.
- [38:25]
Joe Matthew
Says, quote, as we see it, it's not a debate between us as filmmakers and the Pentagon. It's between the Pentagon and the wider community of experts in the space saying that their consultants agree our current missile defense system is highly imperfect. What do we make of this?
- [38:42]
Tony Capaccio
Well, it's two reasonable people, reasonable sides making their arguments here.
- [38:47]
Joe Matthew
But you've got data saying this is 100%.
- [38:49]
Tony Capaccio
Yeah, I mean, the Pentagon is their own worst enemy on missile defense and the system it's gotten. They rarely do briefings on it. Over the years, they've had one briefing at budget time that lasted a half an hour and it was the last briefing of the day. Congressional hearings, maybe one congressional hearing a year and they just don't want it. They haven't talked about this very much to defend this system. So this movie comes out and raises legitimate questions that the public should ponder if they care about the subject, about whether things are effective. I mean, I got a couple questions myself as someone who's pretty agnostic. One, would we only fire two ground based interceptors at this missile if we've got 44 of them?
- [39:28]
Joe Matthew
Now we're really spoiling the movie. I don't understand what the missile.
- [39:31]
Tony Capaccio
That's an unknown question that, you know, people may want to ask their congressmen representatives.
- [39:36]
Joe Matthew
Right.
- [39:36]
Tony Capaccio
Is that really. Would that be the case?
- [39:38]
Joe Matthew
And then we'll watch the thing just come on down into Chicago with. So you might want to try Again.
- [39:42]
Tony Capaccio
My kind of town. I'm from Chicago.
- [39:44]
Joe Matthew
I don't know why they picked Chicago, by the way. That's a whole other thing.
- [39:47]
Tony Capaccio
Yeah, they don't even have stockyards anymore. But the other point I want to make too, yeah, we, we definitely would know where the missile came from. That, to me, was unexplained. Maybe it was explained in a. An apocryphal side comment that I missed. But if I'm a citizen, I'd want to know.
- [40:02]
Joe Matthew
You'd know where this thing launches.
- [40:03]
Tony Capaccio
We spend billions of dollars on all these space based constellations of satellites and we couldn't find where this thing's coming from. And then we launched a preemptive nuclear attack on Russia or China based on a missile coming from an unknown location. That, to me, struck a strange credibility.
- [40:19]
Joe Matthew
All right, talk to us about the golden dome. Does this mean with 100% accuracy that we don't need to spend all this money on a space.
- [40:29]
Tony Capaccio
Okay. The golden dome is like the way Russia was described by Churchill, an enigma wrapped in a cloud. In terms of. From World War II.
- [40:36]
Joe Matthew
Yeah.
- [40:36]
Tony Capaccio
They haven't disclosed much about the program, except that President Trump said it'll cost $175 billion.
- [40:42]
Joe Matthew
Is that forbidding now, is it not?
- [40:44]
Tony Capaccio
That's pieces are out there, but it's very, very elliptical that he wants this operational by the end of his term.
- [40:53]
Joe Matthew
Not possible.
- [40:54]
Tony Capaccio
Not possible. There's no details on it, but if I'm a citizen who doesn't follow much about missile defense, and I see this movie, which was a lot of it was terrific, by the way, I would say to myself, wow, if these ground based systems don't work and President Trump wants to have a golden dome, an umbrella over the country to protect us, maybe that's not such a bad idea.
- [41:14]
Laura Davison
Right?
- [41:14]
Joe Matthew
Yeah.
- [41:14]
Tony Capaccio
That's a point of debate. I'm not making the point, but it's a point of debate if I'm a reasonable citizen watching this film.
- [41:20]
Joe Matthew
Exactly. Sure. So fascinating to watch all of this. And it comes against the backdrop of this meeting the President had with China and news about some of the weapons systems that China's working on. Incidentally, hypersonics would be part of that, which we've discussed before. And I don't know how you knock a hypersonic missile out of the air, but we're hearing things about this nuclear torpedo that could cross an ocean. We're hearing about a drone, an undersea drone that could start a radioactive tsunami. Is this propaganda or do they have this stuff?
- [41:53]
Tony Capaccio
Well, there's a song. Everything old is new again.
- [41:55]
Joe Matthew
Yeah.
- [41:56]
Tony Capaccio
I found a 2018 missile defense review from when I was clearing out my desk.
- [42:00]
Joe Matthew
This was also in your desk.
- [42:02]
Tony Capaccio
And there was back then they were talking about the status to a Russian autonomous intercontinental nuclear armed nuclear powered undersea autonomous torpedo. Everything old is new again.
- [42:14]
Carol Massar
How.
- [42:14]
Joe Matthew
That was 2018.
- [42:15]
Tony Capaccio
2018. So.
- [42:16]
Joe Matthew
So this doesn't sound real to me then.
- [42:18]
Laura Davison
No.
- [42:18]
Tony Capaccio
They're packaging it like it's real and.
- [42:20]
Joe Matthew
That's right.
- [42:21]
Tony Capaccio
I would hope our. Us, our intelligence community would tell the President this is an iteration of something we looked at. We saw 2018.
- [42:29]
Joe Matthew
The heck else did you find on your desk? Nothing we could have. Yeah, I bet that's right. We're going to have like a segment called Tony's Desk because apparently you've got the history of the Pentagon in there. Are they reconsidering this decision to kick you guys out because it's only increased the news flow to your earlier point?
- [42:49]
Tony Capaccio
Well, it's double. They doubled on, you know that they've certified.
- [42:54]
Joe Matthew
They brought in like Lindell TV and Owen. Are they. Are they sitting in your old desk?
- [42:58]
Tony Capaccio
The cream of the right wing media? Yeah. My understanding is they're starting to move in next week in various races.
- [43:04]
Joe Matthew
Yeah.
- [43:04]
Tony Capaccio
Okay.
- [43:05]
Joe Matthew
So this won't be reversed as long as this.
- [43:06]
Tony Capaccio
I don't think so, no. So I'm not sure.
- [43:08]
Joe Matthew
Different Defense Secretary?
- [43:10]
Tony Capaccio
I would hope so. Yeah. I would bet on that. That's like a plus 200 if. If I'm betting means I'm putting out 200 to win 100.
- [43:18]
Joe Matthew
Because it's so certain. Yes, but you'd be ready to move back in if that happened.
- [43:22]
Tony Capaccio
The organization, Bloomberg as an organization would have to make that call. But yes, I would think so.
- [43:26]
Joe Matthew
Just wouldn't be signing any documents.
- [43:27]
Tony Capaccio
Plus we wouldn't have the same space, probably.
- [43:29]
Joe Matthew
Maybe you'd get an upgrade. Although you had a pretty nice one as I understand. Yeah.
- [43:33]
Tony Capaccio
We have a great DSL line.
- [43:35]
Joe Matthew
A DSL line. Okay. What's the next story that's going to come out of this Pentagon? The President says no attack or no decision has been made to attack Venezuela. Are you taking him at his word at this point?
- [43:45]
Tony Capaccio
You have to because he's in the. He's in the Far East. Hex is in the Far East. And you maybe know what he's saying.
- [43:51]
Joe Matthew
Timing as opposed to.
- [43:52]
Tony Capaccio
Yeah, as opposed to timing. Plus the moving in of assets, bringing in the carrier. He's got to explain to the American people why this is necessary. This is a president who came in wanting to keep us out of foreign entanglements. You know, this is like Venezuela, Haiti. Excuse me, Haiti, Panama, Cuba. Cuba, grenada. Grenada in 1983. American public's got to scratch their head, really. Why do we go down there?
- [44:22]
Joe Matthew
Why do we go down? Panama too, but I guess It's Venezuela.
- [44:25]
Tony Capaccio
Panama's 1989. Noriega was indicted for it. A drug dealer. So there's a. There is a rationale for that. Quick action.
- [44:33]
Joe Matthew
Interesting. Well, let's keep tabs on this. I love that. I personally, I know this doesn't help Bloomberg at all, but I love the fact that he's in the bureau all the time. Now Tony Capacio, covering the Pentagon from a distance, will say national Security Reporter, thanks for uncovering this for us.
- [44:48]
Tony Capaccio
Thank you for the.
- [44:48]
Joe Matthew
You like the movie though, right?
- [44:49]
Tony Capaccio
Excuse me?
- [44:50]
Joe Matthew
I liked the movie. I had a blast.
- [44:52]
Tony Capaccio
I thought it was terrific.
- [44:53]
Joe Matthew
But producer James you gotta see it. Let us know what you think. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at Noontime eastern@bloomberg.com.
- [45:10]
Carol Massar
Every business starts with an idea. How can you go from daydreamer to industry leader? Amazon Business accelerates your journey with smart business buying. Get everything you need to grow in one familiar place. From office supplies to IT essentials and maintenance tools. Amazon Business takes the buying experience you know and love from Amazon, plus tools that help you save costs and make insights based decisions ready to bring your visions to life. Learn how@amazonbusiness.com what does being financially invested sound like?
- [45:41]
Joe Matthew
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