Trump Says He's Disappointed in NATO

Summary

Podcast Summary: "Trump Says He's Disappointed in NATO"

Podcast: Balance of Power (Bloomberg)
Date: March 17, 2026
Host(s): Joe Mathieu and Kailey Leinz
Key Guests: Congressman Michael McCaul, Elon Goldenberg (J Street), Rick Davis, Jeannie Shan Zaino, Maya McGuinness

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Episode Overview

This episode scrutinizes President Trump's recent remarks expressing disappointment with NATO allies for their perceived lack of support in reopening the vital Strait of Hormuz amid conflict with Iran. Correspondents and expert guests discuss the implications for U.S. alliances, military strategy, economic costs, foreign policy toward Cuba, domestic political ramifications, and the sustainability of America’s defense spending.

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Key Discussion Points & Insights

1. Trump’s NATO Critique and U.S. Strategy in the Strait of Hormuz

[00:55–02:20]

• Trump, in a White House meeting with the Irish Taoiseach, criticizes NATO for not aiding U.S. attempts to secure the Strait of Hormuz.
• He juxtaposed the current Iran conflict with past engagement in Ukraine, questioning NATO’s reliability.
• Pressed on possible punitive measures for European allies, Trump suggests none are pending, but his rhetoric stirs concern among allies regarding U.S. commitment, especially in Ukraine.

Quote:
"We don’t need too much help. We don’t need any help at all, actually."
– President Trump (paraphrased by Tyler Kendall) [02:00]

• European response: France and others have declined to commit military resources but are willing to help after a de-escalation.

2. Congressional Perspective: Rep. Michael McCaul

[04:44–12:44]

• McCaul acknowledges U.S. can act alone in the Strait but underscores the need for allied burden-sharing, emphasizing Europe’s dependence on Middle Eastern energy.
• Warns of U.S. overextension as forces are moved from Korea to the Middle East, highlighting the risk of undermining focus on bigger threats like China.
• Criticizes Trump’s decision to lift sanctions on Russia, framing it as a setback in countering Russia-Iran cooperation that endangers Americans.

Quote:
"Russia is not our friend. They are an adversary, they always have been. And I don't think we have be letting up pressure on them right now."
– Rep. Michael McCaul [09:16]

• Expresses concern Trump may condition support for Ukraine based on NATO’s cooperation with Iran.
• Praises Ukraine's innovative defense against Iranian drones and suggests U.S. should reward Ukraine for sharing its expertise.

3. National Security & Internal Dissent

[10:15–12:21]

• McCaul dismisses Joe Kent’s resignation (DNI counterterrorism head) and assertion that Iran poses no imminent threat, labeling it naive and a symptom of growing isolationism within the GOP.
• Recounts recent attempted attacks on U.S. soil, defending Trump's strong stance against Iran.

Quote:
"There's been an imminent threat since 1979 when the Ayatollah took over Iran and in a dark veil of terror descended on the Middle East..."
– Rep. Michael McCaul [11:36]

4. Cuba on the Brink: Trump’s Bold Rhetoric

[12:21–13:58]

• Amid a Cuban blackout and signs of regime collapse, Trump claims, “I do believe I will be having the honor of taking Cuba...I think I can do anything I want with it.”
• McCaul interprets this as symbolic optimism, arguing Cuba’s energy cutoff has created fertile conditions for revolution and possible regime change through democratic, not military, means.

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5. Panel Analysis: Political Perspective

[14:35–15:39, 25:45–28:49]

• Rick Davis: Aligns with McCaul, noting Cuba’s economic collapse is opening the door for a bloodless coup, which would benefit the Cuban people and U.S. interests.
• Jeannie Shan Zaino: Highlights tensions within U.S. support for Israel, differentiating between backing the Israeli people and Netanyahu’s government. Stresses that American policy should reflect U.S. interests, not those of Israeli leaders.

Quote:
"The buck stops with the president of the United States...the president has yet to articulate clearly how any of this is in our best interest as gas prices soar and we are all scratching our heads wondering why we are there."
– Jeannie Shan Zaino [27:32]

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6. The War in Iran: Strategic and Diplomatic Implications

Guest: Elon Goldenberg (J Street)
[19:01–25:45]

• Goldenberg warns the administration was unprepared for Iran’s asymmetric closure of the Strait, pointing out that Iran continues to ship its own oil while blocking others.
• Argues that a diplomatic solution is necessary because sustaining military escorts is logistically and financially untenable.
• On claims that Israel pressured Trump to go to war: ultimately, the U.S. president is responsible for U.S. military action, not foreign lobbies or Israel.

Quote:
"The buck stops with the president of the United States...When the president of the United States puts American troops in harm's way, he is the one who's responsible for that."
– Elon Goldenberg [22:47]

• Critiques AIPAC’s influence in Democratic primaries, suggesting “pro-Israel” has become conflated with “pro-Netanyahu,” a stance not representative of most U.S. Jews.

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7. Economic Fallout: War Spending & U.S. Debt

Guest: Maya McGuinness (Committee for a Responsible Federal Budget)
[30:38–43:33]

• The war’s first 18 days have cost ~$16 billion; a White House war supplemental of $50–$100 billion is anticipated.
• McGuinness warns the U.S. is already more in debt than ever, and record-high interest payments threaten future fiscal flexibility.
• Calls for any emergency spending to be coupled with deficit-reduction plans and critiques Congress's tendency to “Christmas tree” supplemental budgets with non-essential spending.

Quote:
"There is no ceiling on how much worse this could get... if it costs $1 billion a day...those costs could skyrocket so quickly."
– Maya McGuinness [34:55]

• Criticizes proposals like the gas tax holiday as costly and ineffective in combating rising prices.

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Notable Quotes & Memorable Moments

• Trump’s assertion of U.S. self-reliance:
  "We don’t need too much help... we don’t need any help at all, actually." [02:00]
• McCaul’s global warning:
  "Russia is not our friend... I don't think we have be letting up pressure on them right now." [09:16]
• On U.S. war spending:
  "We are already spending more on interest payments than we are in national defense."
  – Maya McGuinness [34:55]
• On presidential responsibility:
  "The buck stops with the president of the United States."
  – Both Elon Goldenberg [22:47] & Jeannie Shan Zaino [27:32]

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Important Timestamps

• 00:55: President Trump's comments and NATO critique overview
• 02:00: “We don’t need any help at all, actually.” – Trump via Tyler Kendall
• 04:44: McCaul discusses U.S. acting alone, strategic burden-sharing
• 06:14: Discussion on shifting resources and focus from China to Iran
• 09:16: McCaul’s stance on Russia and sanctions
• 10:41: McCaul’s dismissal of Joe Kent’s resignation claims
• 12:21: Cuba’s crisis and Trump’s provocative rhetoric
• 14:35: Panel begins – Rick Davis’s analysis on Cuba
• 19:01: Elon Goldenberg on anticipated and actual outcomes of the Iran conflict
• 22:47: Debate on Israel’s influence, presidential accountability
• 24:41: Political funding and influence in Democratic primaries (AIPAC/J Street)
• 30:38: Economic costs of war and outlook – Pentagon expenditure
• 34:55: U.S. debt, interest payments, and fiscal danger signals (McGuinness)
• 39:41: Budgeting challenges for offsetting war spending

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Summary

This episode dissects President Trump’s frustration with NATO amid ongoing conflict in the Middle East, his administration’s military and diplomatic challenges, domestic and geopolitical fallout, and the mounting economic costs. Guests provide diverse analyses on allied relations, on-the-ground policy choices in Cuba and Iran, and the sobering fiscal realities facing the U.S. as it contemplates historic defense spending increases. The conversation underscores tensions between American self-reliance, alliance management, fiscal responsibility, and the limits of military power in navigating a perilous global landscape.

Transcript

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[Bloomberg Host/Interviewer]

It is a St Patrick's Day celebratory day with a number of events held at the White House, including a bilateral meeting between President Donald Trump and the Irish Taoise. And of course, that meeting in the Oval Office earlier was open to the press, in which the president and the Taoiseach for that matter, fielded a number of questions from reporters and in the presence of a European leader. President Trump had many critical words for Europe itself, specifically our NATO allies who have so far not answered his call to help reopen the Strait of Hormuz. Here's a taste of the rhetoric from President Trump.

[Congressman Michael McCaul]

So I think NATO is making a very foolish mistake and I've long said that, you know, I want to whether or not NATO would ever be there for us. So this is a, this was a great test because we don't need them, but they should have been there. The other thing is, and I think, you know, very important, we didn't have

[Elon Goldenberg]

to be there for Ukraine,

[Bloomberg Host/Interviewer]

saying we didn't have to be there for Ukraine and essentially, I guess, connecting the dots between this conflict and that one. Let's see what Tyler is hearing. We go to the White House now. Bloomberg's Washington correspondent Tyler Kendall is on the North Lawn, where, yes, the fountain is dyed fluorescent green. Tyler, you would just it's not quite in your shot there. It matches the lawn. Tell us what the president is talking about here and whether there will be some sort of punitive action that follows this for our NATO allies.

[Tyler Kendall]

Well, President Trump, Joe at the moment says that he doesn't have any punitive action in mind. But I will say that our own analysts at Bloomberg Economics have pointed out that our European allies in particular are in this tough spot because they are constrained not just by politics but also by capabilities. But there is this growing fear among allies that the White House could disengage from the war in Ukraine if they don't engage when it comes to the conflict in Iran. And President Trump, they are bringing up Ukraine almost unprompted when he is talking about what has been at this point, a long, strained relationship between the US and traditional allies, particularly around defense spending in the region. And now it appears that President Trump is actually abandoning his call for our allies to surge resources to help secure the Strait of Hormuz, which is really what this comes down to with him telling reporters just moments ago, quote, we don't need too much help. We don't need any help at all, actually. Now, President Trump, of course, was addressing what has appeared to be wariness from our allies at best when it comes to his demand for them to send naval escorts to help secure the critical waterway. Take today, for example. We heard from the French President Macron confirming that his country will not send military assets to secure the strait, but that they stand ready at this point to help once the situation gets a little bit calmer. Because, Joe and Kelly, we have now repeatedly heard from our allies that at this point, they're not a party to this conflict and that NATO is this defensive alliance. It is raising questions, though, after President Trump yesterday signaled that Secretary of State Marco Rubio could announce a coalition tasked with securing the strait. When asked directly which countries the US Is currently talking about with this, he sort of sidestepped the question, but did highlight bilateral ties between the US and many, many Middle Eastern countries currently embroiled in the conflict.

[Bloomberg Host/Interviewer]

All right, Bloomberg's Tyler Kendall live on the North Lawn of the White House. Thank you so much. And we go to the other end of Pennsylvania now. Is joining us live from Capitol Hill is Congressman Michael McCaul of Texas, who, of course, is the chair emeritus of the House Foreign Affairs Committee. Congressman, welcome back to Bloomberg TV and Radio. It's good to have you. Sir, I would love to begin with your assessment as to whether or not you believe that we need allied help in the Middle east with the Strait of Hormuz right now, as the president contends, we don't need anyone's help. If that is the case, why is the strait not open for transit?

[Congressman Michael McCaul]

Well, we can do it alone, Kelly. I was in the White House yesterday, but the president's point is we're always there for NATO. We're always there for our European allies, and they should be there in our time of need. But if I could take that Further with your business audience. You know, the United States is a net gain producer of energy. It's Europe that needs this probably more than we do. Certainly China needs it a lot. I mean, their majority of their oil comes from Kharg island and from Iran. But the, the Hormuz Straits are being cleared currently by our military. The sea mines, the drones are really the biggest problem in the asymmetric warfare. But I think in terms of cost sharing, burden sharing in this conflict, it seems to me our friends and allies ought to be a part of this operation.

[Bloomberg Host/Interviewer]

You know, it's interesting. Mr. Chairman, welcome back. It's good to see you. You've been walking through modeling and, and possible scenarios like this, I know, for a lot of years. And there are a lot of questions about what the President should be focused on. As he just said, we're resetting the meeting with China. The word he used was reset. Looks like it'll take place in about five weeks. Do you worry that whether it's South America, the Caribbean, Greenland, now Iran, that the President isn't focused on the biggest threat to the United States, which is China?

[Congressman Michael McCaul]

I think, and there's a valid point there, when it comes to our military resources, we are moving like for instance, the Artad defense system out of South Korea, moving that to the Middle East. So I do have some concerns along those lines. On the other hand, I think if you look at it from a geopolitical standpoint, the pressure that's being put on on the countries that are so dependent on Iranian oil, like China, when they see a free Venezuela and American companies controlling that, when they see Cuba on the horizon, when they see their adversary alliances, you know, China, Russia, Iran, North Korea, Venezuela, Cuba, all in this together, that is now being impacted by energy. And so I think going into these talks, to answer your question, Joe, is that, you know, Kalisa Rice once told me, you want everybody to like you. They're not always going to do that. You want to respect you. And if they don't respect you, you want them to fear you. That is something that President Trump carries very greatly into these, these talks. There's no question that the dictators in the world today, whether it be Putin or Chairman Xi or the Ayatollah, the new one, now have great fear about President Trump because he is, he is unpredictable. He will negotiate. But if you don't negotiate in good faith, there will be consequences.

[Bloomberg Host/Interviewer]

Well, let's talk about one of those dictators you just mentioned for Vladimir Putin and for Russia. Has President Trump actually handed you an Incredible gift with the relief of sanctions and higher oil prices.

[Congressman Michael McCaul]

I disagree with that action. I personally, I have a sanctions bill ready to go with Lindsey Graham. Once we get the nod, you know it's time to do it. This is a setback for that legislation because we've lifted sanctions on Russia. Why am I against that? For this point, primarily Putin and Russia are providing the Iranian regime with military intelligence to take out American targets and kill Americans. Why in the world would we be rewarding that kind of behavior by lifting sanctions for a temporary decrease in gas prices? We can do that by other means. I think we need to put more pressure on Russia, not less. And these, these shahed drones, by the way, that Iran had been threatening our American troops with were basically given to Russia, have been co produced in Russia now with the Iranians and now are being used to kill Americans. So just who's your friend and who's your enemy? Russia is not our friend. They are an adversary, they always have been. And I don't think we have be letting up pressure on them right now.

[Bloomberg Host/Interviewer]

To that end, do you worry that the President might condition our support for Ukraine based on the way NATO behaves with Iran?

[Congressman Michael McCaul]

To some extent. And let's not forget Ukraine volunteered its expertise to deal with this asymmetric warfare with the drones. They have the best capability, in some respects better than we do. Think about this. We pay millions of dollars for an interceptor to take out a $2,000 drone. Ukraine for four years now have developed very innovative technology to counter these shahed drones in a very effective but also very cost effective way. I applaud Ukraine for helping the United States out. And I think the United States should reward that behavior, not punish that behavior.

[Bloomberg Host/Interviewer]

Mr. Chairman, I'm sure you've seen the news today that Joe Kent has resigned as the head of counterterrorism at the DNI under Tulsi Gabbard. And in his resignation, he in part suggested that there was no imminent threat posed to the United States States by Iran. I wonder if the briefings that you have received would dispute that. And what you make specifically of him pointing the finger at Israel, suggesting it was Israel that that made President Trump take this action.

[Congressman Michael McCaul]

Well, I think this is a bad appointment. The National Counterterrorism Center. I mean, if anyone should understand the threat level now, the fact that they've tried to assassinate the President. Mike Pompeo is under indictment. I'm under indictment in Iran because of sole mani. There are sleeper cells here. I think he was part of this wing in my party that's isolationist that's becoming increasingly sort of anti Israel, if you will. And I disagree with it. And frankly, it's time for a new leader at ntc, nctc and I look forward to that. So, you know, I disagree with his assertions. I think the threat level given the conflict in Iran right now is on high alert, as you've seen demonstrated with the last four attacks. One of my hometown of Austin, one with a Boston bombing type style attempt in New York, Virginia, in a classroom and then in a synagogue. And I think you're going to see more of these. So for the guy who's supposed to be connecting all the dots to say that there was no imminent threat, I would, I would respond to him. There's been an imminent threat since 1979 when the Ayatollah took over Iran and in a dark veil of terror descended on the Middle east, spreading terror through its proxies for almost 50 years. I think it's high time that I applaud the President for this very difficult decision because no other President's done it since President Trump.

[Bloomberg Host/Interviewer]

Chair McCaul, we've got to ask you about Cuba while we have you and our remaining question. There's a nationwide blackout and it looks like a regime that's about to fall. The President says, I do believe I will be having the honor of taking Cuba. That's a direct quote. I think I can do anything I want with it. As remarkable as that rhetoric is, what should he do with it?

[Congressman Michael McCaul]

Well, you know, the President always speaks in very bold, you know, terms. But I think what he's saying is there, there's, there are winds of change in the air. There are winds of freedom. After Venezuela fell, the people in Iran rose up to the Ayatollah and the people in Cuba have attacked the Communist Party's headquarters in Cuba. We have another opportunity, I think, with Cuba for freedom, you know, and democracy that we haven't seen in a long time. You know, John Kennedy had the Bay of Pigs operation that failed miserably. I don't see a military style invasion, but rather, as we talked about the global markets of energy. Cuba now has been cut off of their energy supply from Venezuela and Mexico and now importantly Iran. So their economy now, I believe is going to, is going to be decimated and will provide the ingredients are going to be ripe for a revolution and an overthrow of that communist dictatorship. That could be another yet hugely profound and historic geopolitical moment.

[Bloomberg Host/Interviewer]

Wow. Really important conversation with Michael McCaul, Congressman, of course, Republican from Texas, but also chair emeritus of the House Foreign Affairs Committee. Mr. Chair, thank you so much. Really interesting, Kaylee, what we learned there. We want to play this to the panel now. Bloomberg Politics contributors Jeannie Shan Zaino and Rick Davis are back with us. Rick is our Republican strategist partner at Stone Court Capital. Jeannie is democracy visiting fellow at Harvard Kennedy School's Ash Center. And again, a Bloomberg Politics contributor. Rick, what did you think about that? I want to talk about Iran, but I have to ask you about what the chair just said about Cuba. Can we do better than the Bay of Pigs this time?

[Rick Davis]

Rick yeah, well, it's nice to see someone on Capitol Hill giving us a little straight talk about these issues that you just fired off at in my that was a terrific interview. Look, I mean, Cuba's economy has been decimated for decades. And what we have done by cutting off the supply of oil from these competitors in the region is, is just to put it over the brink. The reality is it was an unsustainable political system for a long, long time and it's now collapsing under its own weight. My hope is that exactly what Congressman McCaul said, the people of Cuba say we've had enough. They've been protests in the past and have been put down by military strong arming. And it's about time that all that becomes a reckoning. I actually applaud Donald Trump's efforts to try and get the current government to step down. A bloodless coup, in essence, would be probably the best thing that could happen for the Cuban people.

[Tyler Kendall]

All right.

[Bloomberg Host/Interviewer]

Rick Davis and Jeannie Shan Zaino are going to be sticking with us. We'll hear from Jeannie in just a moment as we continue on here On Balance of Power, focusing not just on Cuba, but of course, the ongoing conflict with Iran now on day 18. We'll have more on that up ahead when Elon Goldenberg, the senior vice president and chief policy officer at J Street, joins us as to where this conflict goes next. Keeping in mind, President Trump did say at the White House that we're not ready to get out yet, but he suggested getting out could be soon.

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

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[Bloomberg Host/Interviewer]

on the markets for us. And of course checking on oil as we see Brent crude above triple digits above $100 a barrel again could close at that level for the fourth day in a row. We haven't seen a streak like that in some time as we consider that the Strait of Hormuz is still effectively shut to transit, including for energy flows, despite the efforts of President Trump to try to get allies and even some adversaries alike onside to build a coalition to reopen the Strait of Hormuz. He obviously expressed great displeasure both yesterday and today with NATO allies specifically who have not agreed to do so. And as we the situation in the Strait in this war with Iran more broadly, as we are now on day 18, we turn to Elon Goldenberg, who is senior vice president and chief Policy officer at J Street. He also served as an advisor, a special adviser to Vice President Kamala Harris on the Middle east in the early months of the war between Israel and Gaza in the aftermath of October 7th. Welcome, Ellen, to Bloomberg TV and Radio. It's great to have you. And I was struck yesterday specifically by a post on X that you made basically with your observations of this war now nearly three weeks in, including your suggestion that the options for ending it are now all bad. But I was especially struck with the fact that you years ago said convened a group of, and this is, I'm using your words here, security, energy and economic experts to walk through the scenarios for US Iran war and the implications for global oil prices. You said what we're seeing now was considered one of the least likely but worst outcomes. Do you think this administration was prepared for it and what do they do now?

[Elon Goldenberg]

Yeah, I don't think they were. And thanks for having me. The scenario that we ran looked at kind of small level war, mid level war, or something really significant. And the conclusion was only when you really threaten the Iranian regime with regime change and really make it existential for them, are they going to start doing things like shutting down the Strait of Hormuz. They want a way out of it. They didn't really want a direct fight with the United States because we are much bigger, we are much stronger. At the end of the day, things will be worse off for them than they are for us. But if you push them into a corner and give them no options, this is where they go. And the challenge we have specifically with the Strait of Hormuz is it's a very small area right next to Iran, so it's very easy for them to disrupt it. All they have to do to successfully disrupt shipping is have a small boat go in there every once in a while, drop a mine, fly a UAV in and hit a ship. All you need is a couple of ships to explode and suddenly nobody is pushing anything through the strait. And you're talking about millions of barrels of oil who aren't getting through. I actually think the one thing about this scenario that nobody really expected is one of the other reasons people thought it was unlikely Iran would close the Strait is that's how Iran gets all of its oil out. But what's been kind of crazy about this scenario and people didn't anticipate is they're still pushing their oil out. They're just not letting anybody else push their oil through.

[Bloomberg Host/Interviewer]

That's right. We see that they have in fact been doing a little traffic control in the strait. Elon, the head of the International Maritime Organization, Arsenio Dominguez, was speaking to the Financial Times and said military assistance is not a long term or sustainable solution to open up the strait. Do you believe that diplomacy is the only way to keep it open, or should our NATO allies be showing up to help us out?

[Elon Goldenberg]

I think at the end of the day, you're going to need a deal. You can have short term military escorts going through the strait and get more ships in. But the problem is that takes a huge amount of ships to actually be able to do do something like that for a sustained period of time. You know, our NATO allies don't have that many ships that are capable of doing that. We don't have that many ships that are capable of doing that because, you know, ships go out for a couple of months at a time on top of that, then they have to, you know, transport back home. Then you have to spend time at home. You're already seeing this with, if you've seen stories about the Ford, which is an aircraft carrier that's going to be at sea for almost a year now, and things are starting to break down. Ships need time at home. And so I think that becomes very expensive very fast when you're also looking at things like, like a scenario of China and Taiwan and trying to secure the Indo Pacific, you know, so, yeah,

[Bloomberg Host/Interviewer]

it's, no, it's incredible to see the military presence that we have built up despite, of course, President Trump suggesting that he didn't want to start any new conflicts in the Middle east specifically. And it was for that reason, perhaps, or at least in part that the director of the National Counterterrorism Center, Joe Kent, handed in his resignation today, saying he cannot support this war in Iran. But his reasoning here, and I'll quote him directly from his post on X, Iran posed no imminent threat to our nation. And it is clear that we started this war due to pressure from Israel and its powerful American lobby. Now, Elon, obviously we have seen even the Secretary of State Marco Rubio suggest that it was, it was clear to the US That Israel was going to make a move on Iran and that the US Was going to have to participate. I wonder your assessment here of to what extent Israel did force the hand of the United States when President Trump has suggested it was he that forced Israel.

[Elon Goldenberg]

Now the buck stops with the president of the United States. When the president of the United States puts American troops in harm's way, he is the one who's responsible for that. You know, you know, Netanyahu wanted to conduct strikes on Iran during Biden's presidency, during Obama's presidency, even like the previous Israeli prime minister pushed forward in Bush's presidency and US President said no, and Donald Trump said yes. So I think really the responsibility has to be ultimately on Donald Trump in the United States. And the other thing about this is I actually think specifically Kent's, Joe Kent's statement in his letter actually started to border on kind of anti Semitic tropes when he's talking about, you know, the media influence and, you know, Israel tricked Donald Trump into this war and Israel caused the Iraq war. That's some conspiracy level theory level stuff. And look, I work for an organization that pushes for a complex, nuanced conversation about Israel. We don't need to just be supporting Israel no matter what, blindly. We can have disagreements, we can have real discussions about policy. But for me, Kent went too far, way too far. Even if I agree with him on the fact that the war was a bad idea and in blaming this on Israelis when really ultimately it's up to the President of the United States rates.

[Bloomberg Host/Interviewer]

Interesting. Just lastly with all of that said Elon, we're looking at a massive investment, $21 million that AIPAC has, has spent in four open Illinois congressional races. This is primary day. It looks like AIPAC could see only one of the four turning to its favor as it tries to install a group of, of pro Israel Democrats in blue seats, in this case in Illinois. How important is that investment? And how concerned will you be if they don't pay off?

[Elon Goldenberg]

Look, I'm the organization I work for, J Street is pretty much opposed to what APAC is doing completely. We are, you know, very much. You know, we are one of the candidates that AIPAC went after, the grandson of Holocaust survivors in, you know, running in Illinois, who is deeply loves Israel, as I do, and is also critical of the Netanyahu government. This is the problem. What AIPAC has done is they have defined pro Israel as pro Netanyahu. And it's been very clear from the way Netanyahu has conducted this war in Gaza, the way he has behaved in terms of intervening in American politics, that there's no love for Netanyahu, who is incredibly unpopular among American Jews and among, you know, American voters. And so if definition of supporting Israel is supporting Netanyahu, that's a, that's a doubt. That's a, that's a terrible narrow definition. That's not where 70% of American Jews are. And that's why J Street exists, to make the alternative case that you can be pro Israel and critical of Israeli policies just like you can be pro America and critical of Donald Trump's policies. Those aren't the same thing.

[Bloomberg Host/Interviewer]

Yeah. Elon, thank you. We appreciate the conversation. Elon Goldenberg, J Street, he is chief Policy officer. Thanks for joining us on Bloomberg. As we play to the panel now, Bloomberg Politics contributors Jeannie, Shan Zaino and Rick Davis are back with us. Jeannie, I'm not sure your thoughts on thoughts on this because we could, we could take this in a lot of different directions here, but now that it is primary day and you have a spend on this level from apac, what do you make of Elon's response there from J Street?

[Jeannie Shan Zaino]

I think he's underscoring what a lot of people have been talking about. There was this fascinating piece and punch bowl this this morning about $21 million spent by a and to point just one candidate likely to win. Those are not good odds, but it goes along with what we have been seeing and I think Elon beautifully underscored this, which is the idea that Americans and many Jewish Americans and many people in Israel differentiate between the regime, Netanyahu's government and support for Israel itself and the Israeli people. And you have in the United States this real concern about the lobby, the ability of a peck for many, many decades going back to fund candidates in campaigns who were do their bidding in government that has made the United States almost inseparable from a policy perspective as it pertains to foreign policy. And I'm not saying that is true. I'm saying there are concerns out there, which is why I think his argument is so important. The buck stops with the president of the United States. And I want to underscore what he said. Israel. Netanyahu rightly tried to get Joe Biden twice to go into Iran and Joe Biden said no. Same thing with Obama. And you can go back presidents. That's absolutely Netanyahu's right to do that. He should be doing that in the interest of his own country. But our president should be doing our bidding and what's in our national interest. And the problem we have with this war is the president has yet to articulate clearly how any of this is in our best interest as gas prices soar and we are all scratching our heads wondering why we are there.

[Bloomberg Host/Interviewer]

All right, Rick Davis, we've got a minute left. Would love your response as well.

[Rick Davis]

Yeah, look, I mean the reality is Israel has been our greatest ally in that region for decades. It's the only democracy there. And they have been enormously helpful to our national security. And it is in our security interest interest for the preservation of the Israeli state which Iran has been avowed to destroy since the Ayatollah Khomeini took over 47 years ago. So I don't think there's much of a debate as to why we are in this war or why we think it's in our national interest to defeat the largest terrorist regime in the world. I think the issue is in this case, I would say domestic politics. Politics. How you frame that's going to be totally different.

[Bloomberg Host/Interviewer]

All right, Rick Davis and Jeannie Shan Zaino, Bloomberg Politics contributors the both of them. Thank you for joining us. On balance of power today and we still have more ahead as we turn next to Maya McGuinness, the President for a committee for responsible Federal Budget.

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

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[Bloomberg Host]

you're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube

[Bloomberg Host/Interviewer]

as we talk politics here in Washington. And there is a direct connection. Today certainly has been the last 18 days, Caylee, with our eyes, of course, on energy prices. And there's a big question about the cost of this war beyond our investments and beyond the loss of life. Never mind the more than 140 wounded Americans that we've learned about the war we know cost one or make that $11.3 billion in the first six days. That was the report from the Pentagon to Congress, following some briefings on Capitol Hill based on reports that we have seen since then. We're approaching $16 billion. This is day 18. And of course there's no sense of how expensive this conflict could be in the end.

No. And of course it's also about our stockpiles, right? We are expending a massive amount of munitions not only to strike thousands of targets in Iran, but also to act defensively as Iran is sending out drones and missiles of its own, even though that activity has indeed slowed down with the success of some US Strikes against those capabilities. But to your point, Joe, it all comes at a cost. And while the Pentagon has a massive, massive budget, there is percolating here in Washington an idea that the White House is getting ready to come to Congress with a supplemental funding request in regard to this that we've been told could be to the tune of 50 to even $100 billion.

Yeah, that's right. We haven't heard the number yet. A lot of lawmakers are already pledging to vote for it without hearing that number because it's an effort to support the troops. But Kaylee, we're looking at the first trillion dollar defense budget in history and the president is projecting a 50% increase

for next year, one and a half trillion dollars. It's a massive price tag. And of course, as we consider massive federal spending, we turn to a voice we talk to about that particular subject quite often. Pleased to say. Maya McGuinness is back with us here on Bloomberg TV and radio. She's president of the Committee for a Responsible Federal Budget. Maya, it's been a while. It's great to have you back on balance of power when we consider this supplemental idea in particular. It also is worth pointing out that even when this request does come, it might have a very difficult time getting to 60 vot in the United States Senate where you would need a significant number of Democrats to support it. And they are all largely against this war with Iran, which then points us to another potential budget reconciliation package. How nervous does that make you?

[Maya McGuinness]

All of this makes me nervous. The national security situation makes me nervous and the fiscal situation makes me nervous. And certainly what's going on right now is revealing huge new costs that we're undertaking and also probably future costs that we're going to have to deal with with both from some vulnerabilities that have been revealed and bringing down of some of our weapon systems we're going to have to build back up. So, yes, this has become a huge political hot potato. Democrats who are feeling left out of the process are likely not to support a supplemental and so it may have to go through reconciliation.

[Bloomberg Host/Interviewer]

But you're hearing a great deal of

[Maya McGuinness]

concern from even within Republicans that reconciliation may not be the way to go. There's another little piece of this which is in oba, the big tax bill, a lot of defense spending was also included in that bill, about $150 billion on top of the normal appropriations. So we know that there's more set aside for defense already. What we don't know is how it would be spent, how it's going to be spent, if there's money there that could be used before there's a supplemental or reconciliation. So I think the big question is not only is what is the strategy of this war that we're in, but where are the needs and where are the plans for spending the money we already have before we put in place new dollars? And I think everybody would agree national security is sort of the first, most important claim on budgetary dollars. But the defense budget is big and complicated and the money may already be there.

[Bloomberg Host/Interviewer]

Maya, it's great to see you. You issued a statement following the President's State of the Union that said the state of our Union is more indebted than ever. Ultimately, you wrote, the President's agenda thus far has added significantly to the national debt and we will be spending even more because of our past refusal to pay for our priorities. You point out interest payments on the debt will total nearly 17 trillion between now and 2036. That's before a protracted war in the Middle East. How much worse could this get there?

[Maya McGuinness]

There is no ceiling on how much worse this could get. First, this is one of those moments that reminds us how dangerous it is that we're already spending more on interest payments than we are in national defense. This is why we don't want to be in that situation. Second, situation like the one we're in could have huge costs in terms of if it costs $1 billion a day or anything close to that, those costs could skyrocket, skyrocket so quickly. Also, it could have profound, pronounced economic effects. What we're seeing all the time and talking about all the time right now, which could have a hard hitting effect on the U.S. economy. And this could get worse before it gets better. One of the main reasons you want a strong fiscal foundation is to be ready for moments like this. And the big concern is that the US has borrowed so much just for consumption, just for things we didn't want to pay for that when real emergencies come along, we are not in good shape to respond to them or have the fixed fiscal flexibility to do so that we should be able to if we had been in better fiscal shape.

[Bloomberg Host/Interviewer]

Well, so when we consider emergencies, the Committee for a Responsible Federal Budget put out a new break glass plan. Essentially how you withstand an economic shock without having to contribute more to the deficit, like we have seen with shocks in the past, like Covid, for example, and stimulus checks. I wonder if you see us as getting closer to that kind of break glass moment. Especially with a war in the Middle east that could potentially have dire economic, economic consequences with a supply shock and potential reinflationary effects. Are we on that trajectory right now?

[Maya McGuinness]

Yeah, exactly. When we released this a week or so ago, maybe a couple of weeks ago, we certainly didn't think that an emergency would be hitting us quite so immediately. And the concern is that if we have to borrow for an emergency, if it's a supplemental for the war that we're going through right now, if there's a recession, if there's another kind of emergency emergency that's unanticipated or a pandemic, we don't have the same fiscal space to borrow that we have had in the past because our debt is at near record levels. And so what we're recommending is that if we do borrow, if we do borrow 50 billion for what's going on right now or even more, we need to offset those costs. Not immediately, not in the same moment, if you're in a recession, but you need to have a plan not only to borrow the money for the emergency, but how to offset it.

[Congressman Michael McCaul]

It.

[Maya McGuinness]

And more than that, we think you should offset it by $2 to 1 so that we would start putting down payments towards deficit reduction. Put in place automatic changes to the budget, put us on a trajectory so we would bring our deficits down to the goal that so many people are starting to think makes the most sense, which is 3% of GDP compared to the 6% where we currently are. But don't use an emergency or don't let an emergency create an even more indebted situation than we currently have. We need to agree that whenever we borrow for an emergency emergency, we're also going to have the plan to offset or pay for those costs and use it as a moment to get our fiscal house in better shape than it currently is. I hope testimony put this in place. I'm sorry, no.

[Bloomberg Host/Interviewer]

We saw your testimony to this end before the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth. Maya, the idea of a 1 1/2 trillion dollar Pentagon budget, of course, that would, I guess, presumably go through regular order to get a number of that size. A 50% increase would, would mean what?

[Maya McGuinness]

For our national debt, we are talking trillions more. We are talking multiple trillions more just from that increase. And it's not to say that we do or don't need that. One of the things about our group, we don't, we don't really weigh in on the policies. What we want is to be able to have a National security budget that reflects the risks of the world that we're in. We don't want to be deciding national security based on our budget. And we have switched to that where that's the situation. Now that sounds like a huge increase given that we can't even audit the Defense Department. We need to understand the money that's there already. And there are certainly savings to be had in the procurement process in paying for outdated weapon systems. Right now we have basically a defense defense posture that's set up for last century's threats instead of this century. We really need to rethink all that. There will be new costs and there are probably trillions of dollars of savings we'll be able to get over time. But if there are needs for defense increases, we have to budget for them. We have to be willing to figure out where we're either going to pay more in taxes or reduce spending in other parts of the budget. But right now, this offhanded sort of approach of we can just increase the defense budget by 50%, there's no room in the budget for that. And this is the moment that people have been warning about that the world is very risky and we have a budget that now makes us very vulnerable.

[Bloomberg Host/Interviewer]

Well, in my. On this idea of finding other offsets elsewhere in the budget, we've all seen the pie chart. When you look at U.S. federal spending, we spend a lot on the military. Non defense discretionary spending is a pretty small slice of the pie. Is the money even there to offset if we're going to increase this by 50%?

[Maya McGuinness]

Well, the money is there, but it's not in places where people are willing to talk about it. One of the things we talked a lot about in this hearing was the fact that we spend $6 per senior on every $1 we spend on children. Is that a budget that makes sense? Is sending checks to people who might not need them the top priority when we should be making sure that programs like Social Security don't become insolvent in six years, which is going to happen. But we need to look at all areas of the budget. We need to put everything on the table. Look at our health care, look at our retirement, look at other areas of defense. Non, non defense discretionary. We're not going to be able to find the savings if we don't look at all parts of the budget. Doge, for instance, I think focused on very tiny slivers and missed some of the areas like health care, for instance, where some of the most savings can be found. We're going to have to get serious. The situation that we're seeing right now in the Middle east, that's kind of the wake up call. But this was true even before this. We have got to get serious. We're going to have to look at every single one of the slices of that pie chart.

[Bloomberg Host/Interviewer]

Do you worry, Maya? And I don't know what you're hearing from lawmakers on this, but the idea of a supplemental becoming a reconciliation bill, essentially the president asks for more money to prosecute the war against Iran and lawmakers say, fine, but I need to have mine too. And this turns into a very well decorated Christmas tree. By the time it reaches the floor, lawmakers see an opportunity, a vehicle to attach stuff to it they may not need a reconciliation bill. Is this going to be the next train like that that leaves the station?

[Maya McGuinness]

I so worry that everything can become a Christmas tree right now. There is no, there's no norm anymore that we basically budget. We barely put out budget regularly. The budget committees don't put forth budgets and they're almost never adopted. We don't deal with the trade offs. And basically a lot of lawmakers have figured out that the best way to kind of pander to the public is give more things without having to pay for them. And so then it becomes a race for who can borrow more. We're seeing this in the talk about how to make things more affordable, for instance. So yes, any supplemental is almost surely going to have other unrelated items. Items piled on the supplemental will probably be too large and other items that are unrelated will probably be thrown in sort of that horse trading of trying to get other people's votes. We need to bring back some real structure to the budgeting process. We know emergencies will happen. For instance, we should set aside resources in advance each year in the bub in the budget so that there's already an emergency savings pool set aside rather than having to borrow more.

[Bloomberg Host/Interviewer]

Are.

[Maya McGuinness]

But you bet I worry about this right now before a midterm election where things are getting political as if they ever aren't. We will surely see people bidding up the cost of any, any emergency bill that they start to discuss, whatever form it takes.

[Bloomberg Host/Interviewer]

Maya, we just have about 30 seconds left here. But obviously all of this is on the spending side. On the revenue side. If the administration were to decide to pursue, say, gas tax holiday because of the higher energy prices emanating from this conflict, what revenue impact. Impact would that have?

[Maya McGuinness]

Yeah. So the gas tax, depending on how many months one puts out, it's quite costly. You're talking about tens of billions of dollars adding up very quickly. And importantly, it doesn't actually end up making the costs cheaper. Those things lead into more demand for the product, which actually pushes up the cost of gas. So I know it's not what people want to hear, but gas tax holidays aren't effective and they are expensive.

[Bloomberg Host/Interviewer]

Sounds like we're going to need a bigger piece of glass to break. Maya. She is the voice of reality here in the nation's capital. Maya McGuinness it's really great to see you, Maya, President for the Committee for a Responsible Federal Budget with some sobering truths there that most lawmakers don't want to deal with right now. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, Apple, Spotify or wherever you get at your podcasts. And you can find us live every weekday from Washington D.C. at Noontime [e-mail]

[Bloomberg Host]

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[Bloomberg Host/Interviewer]

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