Trump Vows To Escalate Attacks on Iran; GOP Releases Spending Blueprint

Summary

Balance of Power Podcast – July 15, 2026

Trump Vows To Escalate Attacks on Iran; GOP Releases Spending Blueprint

Hosts: Joe Weisenthal, Jeannie Shan Zaino (with reporting by Tyler Kendall)
Main Theme:
Amid renewed hostilities with Iran and domestic political challenges, President Trump threatens major escalation in Iran, including attacks on civilian infrastructure. Simultaneously, Republicans unveil a defense-heavy spending blueprint. The episode explores the implications for U.S. foreign and domestic policy, economic effects (especially energy), Congressional gridlock, and the evolving national security-industrial landscape.

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Key Segments & Insights

1. Escalation in Iran: Will Trump Follow Through?

Timestamp: 00:55–04:35, 10:10–14:49

• Latest Developments:

  • President Trump, after a Situation Room briefing, signals potential attacks next week on Iranian civilian infrastructure, including power plants and bridges.
  • Ongoing U.S. airstrikes met by retaliatory Iranian actions, targeted mostly at vessels and U.S. military installations.

• Escalation Risk & Strategy:

  • Chris Kennedy (Bloomberg Economics):

    "There's a real risk of further escalation that could cause lasting damage to Gulf energy infrastructure..." (02:17)

    • Targeting civilian infrastructure could provoke Iranian backlash against regional neighbors (e.g., Kuwait, Jordan, Israel), damaging sensitive sectors like water desalination and energy exports—with possible long-term disruptions.
  • Jeannie Shan Zaino:

    "Nothing about this has changed...you can't bomb somebody back to the negotiating table. And that's the dilemma we've been in, and that's the dilemma we continue to be in." (13:15)

• Presidential Motives and Communication:

  • Rick Davis (GOP analyst):

    "This is a president that tends to govern through emotion...there could be some especially symbolic hits against civilian targets...to make a point." (11:30)

  • Trump, in media appearances, mentions possible strikes on strategic sites such as Pickaxe Mountain, believed to house Iranian nuclear assets.
  • Panel criticism: Such disclosures are deemed undiplomatic and potentially reckless.

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2. Energy Market Impact & Geopolitical Fallout

Timestamp: 03:49–05:20, 14:49–16:35

• Immediate Oil Price Effects:

  • Chris Kennedy:

    "Even if they don't escalate, we're going to be entering another uncertain time...emergency [oil] releases are continuing for now...Probably by mid October, we'll start to see those taper off." (03:59)

  • Market volatility driven by both the Middle East conflict and internal dynamics—e.g., China's changing import behavior.

• Broader Economic Concerns:

  • Jeannie Shan Zaino references the Goldman Sachs warning of oil prices rising above $100/barrel after Iranian attacks on UAE tankers.
  • The conflict's ripple effects extend to regional economies, global energy stability, and allied nations’ security calculations.

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3. U.S. Defense Spending Fight & Congressional Divides

Timestamp: 05:20–07:50, 20:11–27:40

• Presidential Request & GOP Blueprint:

  • Trump seeks $1.5 trillion in new defense funding, pitching military might as a deterrent to "forever wars."
  • Chris Kennedy:

    "He's facing a lot of challenges...Congress wants to have more of a say in some of these interventions." (05:20) "The U.S. is still the most powerful military...but we're seeing the limits right now." (05:20)

  • House Republicans plan to move ahead with a ~$95bn package via reconciliation, sidestepping Democratic priorities like domestic spending.

• Congressional Dysfunction:

  • Patrick McHenry (Bloomberg contributor; former Rep.):

    "This is really a test of political wills on Capitol Hill...this package is smaller than the deal they would have to do with Democrats..." (20:37)

  • Senate faces unique challenges—vacancy and health issues, plus sharp divides on immigration, voter ID, and the approach to Iran.

• Outlook on a Government Shutdown:

  • McHenry warns of “more likely than not” government shutdown by September 30:

    "That's also why they're pushing this reconciliation 3.0 so intently...It probably makes [a shutdown] more likely in the fall.” (26:30)

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4. Sanctions Policy, Tariff Authority, and Foreign Policy Tools

Timestamp: 05:55–07:50, 07:21–07:50

• Senate's Sanctions Push:
  • Renewed push for expanded presidential authority to levy secondary tariffs on those consuming Russian energy—an effort complicated by legislative gridlock and the death of longtime sanctions advocate Lindsey Graham.
  • Chris Kennedy:

    "This bill would...delegate this secondary tariff authority to the president...I would find it hard to believe the president would want to accept the bill as it's written...But...he would like some sort of congressional legislation that would allow him to again use his favorite tool, which is tariffs, in more creative ways." (06:34)

  • Potential addition of Iran and Hezbollah to the sanctions bill seen as controversial and likely to slow down passage.

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5. Data Center Moratorium & State-Level Tech Policy

Timestamp: 14:49–19:36

• New York’s Data Center Ban:

  • Governor Hochul announces a moratorium, requiring data centers to bring their own power, sparking fierce opposition from President Trump and raising fears of technology flight abroad.

• Industry Impact & Nationwide Trend:

  • Rick Davis:

    "There is a race to deploy capital...the approach [by Hochul]...is basically keeping their states from benefiting from this immense amount of infrastructure development..." (16:35)

  • Bloomberg Intelligence analysis: 80% probability of similar moratoriums spreading to other states—potentially blue and red—due to rising energy, water usage, and “not in my backyard” sentiment.
  • Jeannie Shan Zaino:

    "We may all want to use these...but we don't want them in our neighborhood. So I think this is going to be a growing issue." (18:15)

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6. Aspen Security Forum & National Security-Industrial Complex

Timestamp: 29:39–38:08

• The Defense & Innovation Summit:
  • President Trump and major defense industry figures (including Jamie Dimon) gather in Pennsylvania for discussions on drone warfare, dual-use tech, and shoring up U.S. defense production capacities.

Special Interview: John Yovanovitch, Chair & President, U.S. Export Import Bank (EXIM)

Timestamp: 30:16–38:08

• Export Financing Amid Geopolitical Tensions:

  • EXIM’s role in supporting U.S. defense and technology exporters, boosting supply chain security, and meeting surging global demand for American tech and AI.
  • Yovanovitch:

    "We've never had more demand to partner with US technology...energy security...supply chain security...become so foundational to economic and national security." (30:47)

• On American Energy "Dominance":

  • Emphasis on exporting U.S. energy (molecules and tech) and leveraging global partnerships.

• AI, Tech Exports, and Policy Hurdles:

  • Massive international demand for American AI, with EXIM launching new programs tailored to technology exports, learning from past 5G and telecom experiences.
  • Navigating concerns around export controls and European efforts to reduce reliance on U.S. tech.

• Project Volt: Critical Minerals Stockpile:

  • Initiative aimed at securing U.S. supply chains for strategic minerals, now operational with dedicated leadership.

• Institutional Independence:

  • Facing scrutiny over EXIM deals with alleged Trump family connections, Yovanovitch insists on “exact same process” for all applicants.

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7. Noteworthy Quotes & Memorable Moments

• On the Risk of Escalation:

  "Next week, it gets really bad for them because next week comes the power plants, next week comes the bridges." – Rick Davis, quoting Trump's threats (01:33)

• On the Limits of U.S. Power:

  "The US is still the most powerful military in the world, but we're seeing the limits right now, and I think the entire world is seeing the limits." – Chris Kennedy (05:20)

• On More Than Just War:

  "You can’t bomb somebody back to the negotiating table." – Jeannie Shan Zaino (13:15)

• On Policy Paralysis:

  "We'd be lucky to get a CR right now. And she expects the government likely will shut down for some period of time and could in fact be a lengthy one following the end of September." – Jeannie Shan Zaino, relaying Sarah Chamberlain's warning (26:02)

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Timestamps for Key Segments

• Threats & Escalation in Iran: 00:55–04:35, 10:10–14:49
• Energy Markets & Economic Impact: 03:49–05:20, 14:49–16:35
• Defense Spending & Congressional Battles: 05:20–07:50, 20:11–27:40
• Sanctions, Tariffs, and Executive Power: 05:55–07:50, 07:21–07:50
• Data Center Policy Debate: 14:49–19:36
• Aspen Security Forum & Defense Summit/EXIM Interview: 29:39–38:08

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Tone and Takeaways

• Direct, Analytic, Unflinching: The discussion is deeply analytical—panelists offer blunt, sometimes critical assessments of both Trump’s strategies and the broader political/legislative landscape.
• Political Frustration and Skepticism: Several speakers express frustration at the cyclical, tit-for-tat dynamic with Iran; skepticism abounds regarding Congress’ ability to break gridlock, fund defense adequately, or innovate on energy and tech policy.
• Urgency for Innovation and Adaptability: Ongoing calls for modernization of U.S. export policy and defense industrial base are presented as both a challenge and an opportunity—set against the background of new global threats and domestic uncertainty.

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For listeners who missed the episode, this summary covers the full context and critical details of a turbulent policy moment—at home and abroad—capturing political strategy, economic repercussions, and national security stakes.

Transcript

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[Jeannie Shan Zaino]

The intelligence that's surrounding the war in Iran is something that the President was presented with in in the Situation Room once again. Yesterday. It was a room full as he considers options for what might come next with full on war being one of them. And as the President made clear in an interview on Fox News, Kelly, civilian targets, infrastructure, power plants, etc. Are still on the table and could be attacked as soon as next week.

[Rick Davis]

Listen, I'll save the energy targets for last, but ultimately we'll hit energy targets. Yeah, but we're going to hit them very hard tonight. We're going to hit them very hard tomorrow night, we're going to hit him very hard the night after.

[John Yovanovitch]

And then next week it gets really

[Rick Davis]

bad for them because next week comes the power plants, next week comes the bridges.

[Joe Weisenthal]

So let's get more into this now as to whether or not this threat is real or just attempt by the President to get Iran back to the table in a more meaningful way as we turn to Chris Kennedy of Bloomberg Economics, who's here with us in our Washington, D.C. studio. So, Chris, when we consider this threat once again to go after infrastructure, which we have heard from the President before, only for him to back off, is it more real this time now that he's proved willing to resume strikes against Iran in the absence of real dealmaking?

[Chris Kennedy]

Well, we never know with the President, but clearly he's following through on the threats to continue strikes on Iran. We're seeing seeing those strikes continue through today. We're seeing retaliatory strikes from Iran. And I think the broader point is that we're at a very precarious moment in this conflict. There's a real risk of further escalation that could cause lasting damage to Gulf energy infrastructure, for instance, or you know, there's threatens, threats to open the conflict on other fronts, including in The Red Sea, which would cause further disruption.

[Jeannie Shan Zaino]

So what would that mean for Iran's neighbors, if you will, if President Trump followed through with civilian targeting, obviously Iran would have some sort of response. Whether that was asymmetric. What would it mean for Kuwait, for Jordan? We saw targeted. Or even Israel.

[Chris Kennedy]

Yeah. So so far over the past few days, Iran has primarily been limiting its targeting to either vessels or to US Military installations in some of these countries. I think you would imagine that if the US does actively target civilian infrastructure in Iran, you would see a similar response from Iran on some of its regional neighbors. Now, whether all of them are or certain elements, I think it's to be seen. But clearly the risk of escalation is there. Water desalination plants are particularly sensitive type of infrastructure in the region. But, you know, energy export facilities, if they're targeted, it could take quite some time to bring those supplies back online, especially some of these LNG facilities like we saw targeted in the early stages of the war.

[Joe Weisenthal]

Well, and if we were to see that, or even with just what we are already seeing, would you assume, Chris, that the trajectory of oil prices is going to be one that continues higher for the time being?

[Chris Kennedy]

I think for the time being. I mean, the market is digesting what's happening right now. We just had some new releases from U.S. information on oil supplies. I think markets responded positively in the sense that oil prices tamped down a little bit based on that. But, yes, I think if, if things stay where they are, even if they don't escalate, we're going to be entering another uncertain time. We've seen, you know, emergency releases are continuing for now, but those will only last for so long. Probably by mid October, we'll start to see those taper off. And then China is a, is a big wild card. They've really cut down their imports over the past couple of months. How long will that last?

[Jeannie Shan Zaino]

Interesting. Goldman Sachs, that a warning of a rise back above $100 a barrel after Iran targeted a couple of UAE tankers. Chris Kennedy, we'd love to pull you into the conversation around defense spending today because we've got a couple of events we're looking at. We just heard from Tyler at this Pennsylvania event that Senator McCormick is running. The Aspen Security Forum is happening simultaneously, and the President is asking Congress for one trillion and a half dollars. You specialize in economic statecraft, and we can bend that in a couple of different ways. But when you consider the big stick here, the President's mantra has been this is how you avoid forever wars is by having an even bigger military, will he get that money and what will it mean in terms of psychological impact globally?

[Chris Kennedy]

That's a great question. I think faces an uphill battle on the Hill right now. The president, you know, he's, he's facing a lot of challenges, I think, from both his party and of course, Democrats on the Hill. There are a lot of questions over this war. I think Congress wants to have more of a say in some of these interventions that we've seen the president undertake over the past several months, but also before. So I think it's going to be difficult. But of course, the thesis, yes, of course the US Is still the most powerful military in the world, but we're seeing the limits right now, and I think the entire world is seeing the limits.

[Joe Weisenthal]

I also want to ask you, as we consider whether or not he's going to get what he wants in terms of defense spending from Congress, whether or not sanctions, tighter sanctions related to Russia will be getting through Congress is there's now a renewed push for this in the Senate in the aftermath of the death of Senator Lindsey Graham, who, of course, was spearheading this effort. This package, as we understand it, wouldn't mandate the president to do anything, but it would give him optionality in terms of people who consume Russian energy products being able to impose 100% tariff that right there as very real economic statecraft. Is that something that could be effective and potentially turn the tide of Russia's war with Ukraine?

[Chris Kennedy]

That's a great question. So, I mean, the bill is interesting because of course, the president, before his tariffs were thrown out by the Supreme Court in February, was imposing these secondary tariffs, tariffs on countries doing business with Venezuela. Or in any case he's done this now, he doesn't have that tool because of the Supreme Court. This bill would for the first time delegate this secondary tariff authority to the president. I would find it hard to believe the president would want to accept the bill as it's written because it does sort of lock him in. But I could imagine now, you know, that he doesn't have this IEVA tool that he would like some sort of congressional legislation that would allow him to again use his favorite tool, which is tariffs, in more creative ways.

[Jeannie Shan Zaino]

You know, he said yesterday, Kelly, and you probably heard this when he was in the Oval, he'd like to add Iran and Hezbollah to that legislation. Is that realistic? Or, Chris, does that slow it down?

[Chris Kennedy]

I mean, it'll. We imagine there would be some additional markup on this bill. I'm sure the president would like to have as much flexibility as he could possibly get out of this legislation, whether or not it's realistic. I think there are many on the Hill that are skeptical of the way in which President Trump has deployed tariffs. Whether they want to give him this tool at this point, we'll have to see.

[Jeannie Shan Zaino]

He's on one of the best teams we have. At Bloomberg Economics. Chris Kennedy leads our coverage of economic statecraft. It is great to have you with us as always, Chris. Stay with us on Balance of Power. We'll have much more coming up after this.

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[Jeannie Shan Zaino]

Thanks for being with us on the Wednesday edition. We've got our eyes, of course, on Pennsylvania, where President Trump is going to be traveling today. He'll be taking part in a roundtable discussion at the Carlisle, Pennsylvania Defense Summit, where we heard earlier this hour from Bloomberg's Tyler Kendall. President's there, along with a number of luminaries from industry. Jamie Dimon is there and it's a big conversation about not only how much we're spending, Kelly, but what we're spending it on. Drone companies, for instance, are expected to be a big player in this conversation today, with some deals expected to be announced when the president talks later.

[Joe Weisenthal]

Yeah, and of course, drones at top of mind for many in the community, defense community right now and for this president, given what has been happening in the Middle east over the last several months in the aftermath of Operation Epic Fury, which I don't know if we're saying Operation Epic Fury is back on or this is just a restart.

[Jeannie Shan Zaino]

I think that's right.

[Joe Weisenthal]

Some operations, of course. The president earlier this week notified Congress that the war with Iran had resumed. Trying to restart that 60 day clock for war powers, as we're seeing today, a fifth day of strikes, daylight strikes in fact, announced by Central Command, which we haven't seen in some time. These usually happen over the evening. And of course, President Trump in an interview on Fox News yesterday, suggested that the strikes could escalate next week if Iran doesn't come back to the negotiating table, once again renewing his threats against energy infrastructure and civilian infrastructure like bridges and power plants. So we want to get into this now with our political panel as Bloomberg Politics contributors Rick Davis and Jeannie Shan Zaino join us. Rick, of course, is a stonecord Capital partner and Republican strategist, Jeanne, our Democratic analyst and democracy visiting fellow at Harvard Kennedy Schools and Ash Center. Rick, just to begin with you, this is not a unique or novel threat made by President Trump. He has threatened this infrastructure repeatedly in the past only to back down. Do you have the sense that this time would be different?

[Rick Davis]

Hard to tell. I think the level of frustration is higher than it's been in the past. I think President Trump thought that he could cow the Iranians into not only completing the negotiations that had already started, but coming out with a deal. And the fact that the Iranians have slipped out of that noose and now continue to harass U.S. assets and maritime assets in the Gulf, I can't imagine how much more frustrated he must be. So we know this is a president that tends to govern through emotion. And I'd love to have been a fly on the wall in the, in the meeting that he had on Tuesday at the White House to talk about options because I'm sure he was pushing our national security team to be ever more aggressive. So, yes, I think there could be some especially symbolic hits against civilian targets that may be dual use, bridges, things like that, that, that the president will instruct in order to make a point. The question is, does any of this really have an effect on Iran? And we have not seen anything to date that the president's done that has, that has cowed that leadership.

[Jeannie Shan Zaino]

You know, in that same Fox interview, Jeannie, where the president talked about power plants and bridges. Next week, he was asked about Pickaxe Mountain, which is something that he discussed on the Hugh Hewitt program a day earlier. He said US Bunker busters can go deep, but claimed nobody knows if they can reach Pickaxe Mountain, where the US Is monitoring suspicious Iranian activity. They think that's where they want to shelter the nuclear program from airstrikes. That the kind of conversation that should be had publicly like this in the media?

No, it's not. But of course, that's in keeping with the way President Trump governs. He says everything, presumably publicly. And I think where we are today is we just have to look back at the June 17th MOU. We signed that MOU because Iran backed us into a corner. And we signed it because we had no military, military strategy to defeat Iran. And then once it was signed, we tried to open this separate Omani channel in the Persian Gulf. Iran was having none of it, saw it as a violation of the mou, which it was. And we are back now to this tit for tat and these constant going back and forth trading strikes. But the problem for the president, and by extension the United States, is that nothing about this has changed. And the president does not have a clear winning strategy here. He's got a lot of, you know, bombastic, threatening comments to make online and publicly. But beyond that, what is the strategy to defeat Iran? There is no military strategy and you can't bomb somebody back to the negotiating table. And that's the dilemma we've been in, and that's the dilemma we continue to be in. I do think there are great people in the State Department with good ideas about how to move forward and but Donald Trump doesn't seem to be listening to them. He's listening to people like Steve Wycoff and Jared Kushner, who, for all of the things that they have to offer, foreign policy negotiations are not amongst them. And so that's where we sit today.

[Joe Weisenthal]

Well, you have to wonder to what extent the president will listen to financial markets as well. As he previously said he went for the memorandum of understanding, rather an all out resumption of the war against Iran because it risked economic catastrophe if the Strait of Hormuz remains closed. Closed in. Energy prices remained at the levels where they were. Of course, there's a lot of consternation around energy prices, and it isn't just affected by policy in the Middle East. It's also affected by policy here at home. And it's at the very heart of the debate around data centers in Particular, we of course saw action in New York yesterday as the governor, Kathy Hochul announced a one year moratorium on data center construction in that state state. And she talked about it on Bloomberg's Odd Lost Odd Lots podcast with Joe Weisenthal and Tracy Alloway. Listen, I want to make sure that we take the time to have a community investment framework to give to localities.

[Rick Davis]

But also you have to be able to power yourselves.

[Joe Weisenthal]

You either bring your own power source or you have to pay a premium to use our grid. And those are the basic foundations of what we're doing with this moratorium. This moratorium is not sitting well with President Trump who took to true social today to criticize Hochul and the state of New York saying in part New York state has made a terrible decision going on to say it should change its policy immediately. Quote, the radical left Democrats. Democrats, he says, must not be allowed to cause us to lose data centers, AI and all of this incredible new technology to China and other countries. Rick, I would love to your thoughts on this first, this notion of a data center moratorium in the first place and whether or not it could be spreading throughout the country to other states, not just New York and if that might ultimately include red states, not just blue states that are easy for the president to attack over.

[Rick Davis]

Yeah, I think that there are two separate issues here. One is states are starting to set standards by which they will allow data centers to come into their state. And Kathy Hochul, governor of York, New New York, just said here are my standards and included you got to bring your own power. But then to apply a moratorium on top of that doesn't really make much sense. Here's what you got to do to be able to come into my state, but I'm not going to allow you to do that for a while until we really study this thoroughly. There is a race to deploy capital. There is a race to build infrastructure and capacity. And I think the kind of approach that Kathy Hochul has taken and some other governors around the country are basically keeping their states from benefiting from this immense amount of infrastructure development that's going on in the country right now. So yes, I think that there are going to be states because to have moratoriums because they will follow the political crowd, right? They'll read the polls, say people, even though it doesn't affect them directly right now, boy, they're afraid of it because of what they read. But I think leadership is what makes a difference there. And giving standards to companies to do business in their state is perfectly acceptable. Why have a moratorium?

[Jeannie Shan Zaino]

So where are we going here, Jeannie? The analysis at Bloomberg Intelligence says it all. New York statewide data center ban is first, likely not last. As we write. Hyperscalers like Alphabet, Amazon and Microsoft, as well as developers like Equinix and Digital Realty Trust, all of course deeply invested in this infrastructure, faced increased policy risk. BI is putting an 80% likelihood of comparable data center rules elsewhere. Is this just the beginning?

I think it is just the beginning. I have to tell you both, I have been stunned by the number of young people who, without me even raising this issue at universities and colleges, have expressed that their families are concerned about these data centers cropping up and not just in New York, but around the country. Because it's not something I think many of us thought about, you know, a year or two ago, three years ago. But boy, is it a big issue. We saw it in Virginia with energy crisis, New Jersey and recent elections. Now here in New York, I think it spreads around. Polls on this are very difficult to sort of tease out. But Americans are concerned about the impact of on their cost for them for their electricity. They believe that they're already paying a good amount. Now they're going to pay more. They're concerned about the impact on water usage. It's they don't want them in their neighborhood. We may all want to use these online, these this as we go online, but we don't want them in our neighborhood. So I think this is going to be a growing issue. I think a lot of education has to be has to be done here to help people understand the impact. And also Joe and Kelly, I think we're going to see a lot more movement of attempts to put data centers in space and that has an impact as well.

They go into space or under the ocean. I still haven't figured that out.

[Joe Weisenthal]

Elon Musk says they're going to space even though space X. Yeah. Drop below the IPO price.

[Rick Davis]

Yeah.

[Joe Weisenthal]

Not a lot of people buying that theory right now.

[Jeannie Shan Zaino]

$133 I think last time I looked. Rick Davis, Jeannie Shanzano, thank you. Our great panel Bloomberg Politics contributors.

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[Joe Weisenthal]

Bloomberg Politics contributor and former chair of the House Financial Service Committee. Also former Speaker Pro 10, Patrick McHenry, who is back with us on Bloomberg TV and radio. Mr. Chairman, good to have you as always, your former colleague Warren Davidson is pointing to the lack of offsets in particular and saying, therefore, that this is going to be a no go. Does this $95 billion package have a chance at getting through?

[Rick Davis]

It has a chance, but this is really a test of political wills on Capitol Hill. You have fractious majorities in the House and the Senate that are really tight for Republicans there that the House is particularly challenged at passing. Legislation over the last month had been locked down over debate on immigration. It appears that House Republicans have a plan forward for reconciliation, a partizan package that will not need Democratic votes in the US Senate to get enacted. It totals nearly $100 billion. Some of this deals with election security, voter ID, and immigration issues domestically that can help sweeten the pot as well as these important defense priorities. What this means is House Republicans are trying to go around Democratic opposition to this president and this president's intervention in Iran and ensure that Democrats won't have a point of leverage to bring in their spinning policies and, and priorities and other domestic priorities into the debate. So, therefore, the package is smaller. They are saying to fellow Republicans, this package is smaller than the deal they would have to do with Democrats necessary to get their support and their votes. So in that way, Congressman Davidson is exactly right. This is an expensive package, but the alternative here is a more expensive package done with the support of Democratic lawmakers. That's really the narrow scope of the narrow range of scope and debate they're having on Capitol Hill in order to get this package done. And over the next couple of days, tomorrow will be a crucial day for House Republicans and getting that bill through the Budget Committee. Yeah.

[Jeannie Shan Zaino]

All right, so let's say Speaker Johnson, Mr. Chairman, pulls a rabbit out of a hat, and he's done it before. This thing actually comes out of committee and it passes the House. What happens next door in the Senate?

[Rick Davis]

Well, the Senate. Look, we have the untimely passing of Senator Lindsey Graham and his sister's quick appointment to that seat. We have Mitch McConnell who is ailing. And so you have an attendance problem in the U.S. senate, and you have a disagreement on the approach as well on immigration and these domestic priorities on voter id. So this is going to be a second, very, very narrow path through the US Senate. But as you said, Speaker Johnson has pulled a rabbit out of the hat before with the help of President Trump. And I think likewise, Leader Thune will be able to get this package through if it's able to get out of the US House, which then unlocks a second, a Second process, once you have a budget resolution that is just the opening act for them to actually write this policy and to pull that rabbit out of that hat is a second sort of tricky, tricky set of things that need to happen. This is a lot to do in a July of a midterm election year, but a necessary priority for the President to see this through the Congress.

[Joe Weisenthal]

I'd like to ask you about something else the President has called a priority. In fact, he mentioned that this should be passed in honor of the legacy of Senator Lindsey Graham after his passing, which you mentioned, which is the Clarity act, which it's not clear that Senator Graham was particularly passionate about crypto market structure in particular, but there are many that are in. Politico is reporting that tomorrow at the White House, a group of senators will be meeting with the President about the path forward for this legislation. Mr. Chairman, are they going to have to tell the President, if he wants to see this done, he's going to have to agree to restrictions on the actions of him and his family in the crypto space?

[Rick Davis]

Well, that's certainly what the Democratic senators are saying is their objection to passing Clarity. Look, this, this path to getting clear law on crypto is really the ethics issue for elected officials and for the private sector, frankly, we need to define what is a digital asset and its means of exchange. We currently don't have any federal law dictating those two things on a very important, very large market that now traditional finance is getting heavily engaged in. So frankly, the pitch here is that ethics is downstream of us actually having sound law and a clear set of rules and regulations at the federal level. That's what Clarity will bring. The opposition by Democratic lawmakers here, I think is, is really trying to bring this into the political debate about the President, the President's financial disclosure statement and his engagement across financial markets and investment activities, business activities for he and his family. That is a separate issue than having sound law on, on crypto, which is what the Clarity act would, would bring about. It's really an open question whether or not the Democrats in the Senate will stand firm and opposition unless we have some additional ethics language here for government officials, most specifically the president, Vice President, a lot's going to be riding on this test vote the Senate will have on Clarity, hopefully next week or the following week.

[Jeannie Shan Zaino]

30,000 foot view. Mr. Chairman, there are real concerns about whether anything is going to get out of this Congress between now and the lame duck Sarah Chamberlain for from the Republican Main Street Partnership said in our studio yesterday that the store is basically closed. We'd be lucky to get a CR right now. And she expects the government likely will shut down for some period of time and could in fact be a lengthy one following the end of September. How about you?

[Rick Davis]

Well, I think a government shutdown is more likely than not September 30th, and that's because we saw the Democratic Party pay no price for the longest government shutdown in American history, led by Democratic Senate opposition. And so because they didn't pay a political price, then they believe they're unlikely to pay a political price this fall. I think that is a really tricky thing for the Congress to negotiate. That is also why they're pushing this reconciliation 3.0 so intently. Defense supplementals have always been bipartisan over the last decades, and now you see Republicans facing unified Democratic opposition to replenishing our stocks and supplies of weaponry. That's why they're going this this partisan path. That doesn't make a government shutdown more likely. It probably Sorry, it doesn't make a government shutdown less likely. It probably makes it more likely in the fall. But time will tell. And politics, especially these days, is quite fickle day to day and week to week.

[Chris Kennedy]

Well, not the truth.

[Jeannie Shan Zaino]

We're always lucky to have you. Walk us through it. Patrick McHenry, Bloomberg Politics contributor, former congressman, of course, Republican, former speaker pro tem. He actually held the gavel for some time and I feel like he's still really glad that he's not doing that anymore.

[Joe Weisenthal]

Yeah, although I wonder if he missed chair in the Financial Services Committee, which had the chance to question the new chair of the Federal Reserve, Kevin Warsh, this week.

[Jeannie Shan Zaino]

Fair enough. French Hill had pretty efficient process today. I will say stay with us on balance of power. We'll have much more coming up after this.

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[Jeannie Shan Zaino]

Aspen Security forum underway where they're talking about strategy and spending is a big part of the conversation at the Pennsylvania Defense and Innovation Summit that's getting way underway today as well with the help of Senator David McCormick who is running this bringing together, as he says, defense and tech leaders, including senior military commanders, industry CEOs. Also a president of the United States, Donald Trump will be there a little bit later on today to take part in a roundtable and Bloomberg's Washington correspondent Tyler Kendall has made her way to Carlisle to be part of this conversation, traveling with the President and joins us right now with a special guest. Tyler, take it away.

[Tyler Kendall]

Thanks so much Joe. As you mentioned, I am joined by a special guest, the Chair and President of the US Export Import Bank, John Yovanovitch. John, it is so nice to see you again here at the summit where we are talking about bolstering the US Defense industrial base. So let's just start broadly. How can export financing for commercial dual use domestic defense manufacturers help when it comes towards meeting that supply that our allies are looking at? And how are you thinking about replenishing stockpiles even if it's indirectly?

[John Yovanovitch]

So one of the best things about revitalizing EX IM has been figuring out ways where our financial tools can help bring about not just supply chain security, energy security domestically for everyday Americans, but how we can be great partners with our allies all around the world. So really came down to it is President Franklin Roosevelt started Ex Im in 1934 and the reasons he founded the bank then rhyme with all the challenges that we're trying to meet today. So number one, how do we help American companies win all around the globe? And I can tell you right now we've never had more demand to partner with US Technology to get US Industry involved in every single bit of growth projects all around the planet. Number two, energy security. How can we help bring American energy molecules and technologies to every corner of the globe with three supply chain security Things like project Vault, supply chain resiliency, make more in America. These are things that become so foundational to economic and national security. And last but not least, you may not think about a 92 year old sleepy institution like EX IM as being focused on winning in the industries in the future. But when it comes to global, global air exports, dual use technologies, which we're talking a lot about here today, advanced mobility, these are areas where we're trying to help ensure that we can not just innovate in America, but that we can iterate, manufacture and deliver.

[Tyler Kendall]

Part of what's adding to the urgency is of course the conflict in Iran. And yesterday we saw President Trump move off of a threat for a 20% reimbursement fee and instead says that regional allies are going to increase invest in the US when it comes to trade and financing deals. I'm curious, can you give us any context here? Are these new investments or building on commitments that we've already gotten?

[John Yovanovitch]

Look, what the President's doing in Iran is long overdue. What I can tell you about exim's role is that we're focused on delivering energy dominance, which involves not just energy security all across America. Because I'll tell you what, if you are a state in America like Pennsylvania, like Texas, like Louisiana, that enjoys a lot of energy exports, you also have low cost of electricity for all of your residents. It's also about bringing about energy technology that we have to every corner of the globe. And so it's just, it's more than energy security though. When you think about what it takes to respond to a global environment like the one we're in today. It's also about fostering next generation innovation like we have here today. It's about the supply chain security. Because no matter what you're trying to build and deliver, having the foundational building blocks in terms of critical raw materials is absolutely essential. And that's why what Dave and Dina McCormick have done here, convene capital providers, innovators, some of the largest companies, but also those who really are bringing and infusing innovation into the equation. That's what's most important. And that's where XM has found new life in our revitalization.

[Tyler Kendall]

Well, how has the conflict in Iran perhaps mobilized capital to regional partners who may be thinking a little bit differently now about a reliance on the Strait of Hormuz or their own defense capabilities and holes within them?

[John Yovanovitch]

It's funny, what we've seen is a continuation of what we experienced even before the conflict broke out, which was people Coming to us at EX IM and saying, we want to partner with American energy technology, we want to procure American energy molecules. Understanding that that's the best way to build a long term strategic relationship. We want nuclear technology to be front and center. We want to partner with American SMRs or American large scale reactors. And what it comes down to is that buying American is a good bet for building your future. And so what we want to do is allow everyday working class Americans to have more well paying jobs, to have the opportunity to have opportunity to continue to flourish. All the while we deliver American goods, services and technologies to every corner of the globe.

[Tyler Kendall]

And part of this is the evolving nature of technology and AI. It's my understanding that you've just launched an initiative that would essentially help to fast track these tech exports. Can you talk to me about what the demand has been like?

[John Yovanovitch]

Absolutely. So, you know, thanks to the President's leadership, he issued a global export plan, which the Export Import bank we were very proud of to be a part of. Now I will say that we were the first federal agency named in the executive order that's delivered right. So we've revamped an entirely new export program specifically tailored to the tech stack. And we've Learned our lesson from 5G from the Telecom space only a few years ago to understand that we needed to pivot and innovate right before we had this onslaught of demand. Because what I can tell you is every country that comes and meet with us, every company from around the world, one of the first things they ask is how can we partner with American AI? They're not just asking the President, they're asking us too. And so we want to be a frontline economic tool that allows the American technology stack to win and to be brought to every corner of the globe. Because it's not just AI. AI is going to be a foundational part of every single industry. And we want to make sure American companies win.

[Tyler Kendall]

I understand the difference demand. But we're also seeing in some ways growing concern from European allies about being too reliant on US tech, perhaps highlighted by the fact that the US Commerce Department imposed and then lifted those export controls related to Anthropic's most advanced technology. I was just speaking with the Palantir CTO about how the French government moved to cut ties with that company in a bid to bolster their own technology. I'm wondering how you're thinking about financing technology that could be restricted overnight.

[John Yovanovitch]

Well, what I can tell you is that we are inundated with demand for American technology partnerships. But also, if you think about what it takes to deliver on the promise of AI, it's a brick and mortar process, right? It requires molecules, it requires processing, it requires infrastructure. And so all of those things are traditionally things that XM is focused on. And so from our perspective, we want American companies to win. We want us to be able to deliver a promise, because delivering an AI future is one that you and I want to be comfortable with, is going to ensure that these industries thrive for many more years.

[Tyler Kendall]

In the final few minutes, I have you just quickly first on Project Volt, which you did mention at the top. Can you give us an update on how that is going when it comes to building up that critical mineral stockpile? Any sort of update that, that the market could be looking for?

[John Yovanovitch]

Yeah, it's great. So, so Project Vault for your viewers at home, was actually an initiative that President Trump announced in early February where the Export Import bank partnered with the private sector to be able to bring about a strategic reserve for critical raw materials. And so we're very pleased to say that it's being operationalized. Project Vault has executive leadership in place, Brett Lampert, someone who's a career veteran, dedicated his entire career to supply chain security and resiliency. And so we're making great strides there.

[Tyler Kendall]

And then final, final question. Can you just talk to me about how you're thinking about institutional independence? Because there have been some questions raised, including by Senator Elizabeth Warren, about one financing deal that has alleged ties to the Trump family. How do you maintain institutional independence?

[John Yovanovitch]

Process is key@ex IM. Every single applicant that comes through the door has the exact same process. And what we can tell you is that we're wide open for business. But the bottom line is that the foundational elements of every deal have to pass muster. And we're very, very comfortable with what we do all day, every day.

[Tyler Kendall]

All right. The president and chairman of the US Export Import Bank, John Yovanovitch, thank you so much for joining us here live on Bloomberg Television and Radio. Joe and Kaylee, this has been a conversation conversation on the sidelines of the Pennsylvania Defense Summit. And I'll send it back to you.

[Joe Weisenthal]

All right. Great work. Bloomberg's Tyler Kendall. Thank you so much. And we'll be checking back in with Tyler throughout the day here.

[Jeannie Shan Zaino]

Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, Apple, Spotify or wherever you get your podcast. And you can find us live every weekday from Washington, D.C. at noontime [e-mail]

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[Joe Weisenthal]

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