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- [00:00]
Joe
So there's a lot of noise about
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Mark Short
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Joe
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Mark Short
Let's create smarter business IBM
- [00:33]
Joe
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android
- [00:47]
Jeannie Shan Zaino
Auto with the Bloomberg Business app.
- [00:49]
Joe
Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [00:55]
Kayleigh
There's a lot going on, specifically when it comes to foreign policy considerations today after we saw once again the volleying of fire between the US And Iran near the Strait of Hormuz over the weekend, conflicting narratives from the US And Iran as to whether or not the Strait of Hormuz is indeed open for transit but for Iranian vessels. President Trump says it is not, in fact open, as he posted on True Social today, that the US Will be reinstating the blockade just for Iranian ships and cargo. For everyone else, though, he suggests the US will be charging a 20% reimbursement fee for effectively keeping the strait open. As he explained in an interview on Fox and Friends earlier, we'll probably run
- [01:37]
Rick Davis
it will become the guardian of the strait.
- [01:40]
Joe
Maybe we'll call it the guardian angel
- [01:41]
Mark Short
of the Strait, and we should be reimbursed for that.
- [01:44]
Joe
When we do that, we're going to
- [01:45]
Mark Short
be reimbursed because the other nations are very wealthy. They're on our side, and we can't
- [01:50]
Rick Davis
be expected to do that for nothing,
- [01:51]
Mark Short
unlike we had for many years.
- [01:53]
Joe
You know, if we we guarded the
- [01:55]
Mark Short
strait for 50 years more and we never got paid for it.
- [02:02]
Joe
The president writing in that post on Truth Social, the process and formation will begin immediately. And that's where we start our conversation with Bloomberg Washington correspondent Tyler Kendall, who's on the North Lawn of the White House right now. Tyler, are we already charging for this reimbursement? That's what the president seems to be suggesting, yeah, Joe.
- [02:21]
Tyler Kendall
I mean, President Trump saying that this is going to happen immediately, though we haven't gotten confirmation from the White House on the specific details of this proposal and how it's going to work in practice, because at first glance, experts are saying that it will very likely counteract international law, which for the most part does state that vessels are allowed to have freedom of navigation through international waterways. Though, as you and I spoke about last hour on this program, there is a prevention of provision in one treaty that could allow certain states to charge for fees related to services that are rendered if that helps to ensure safe passage. But under this law, it stipulates that that would have to be any of the countries that actually have territory that borders the Strait of Hormuz, which wouldn't qualify for the US So a lot of big questions here, but it has become absolutely evident that the White House's patience has worn thin when it comes to getting Iran to the negotiating deal, raising prospects and questions about what the prospects for negotiations look like going forward. Because now the US Is ramping up that economic pressure that we saw the administration dial back last week, revoking that waiver when it comes to allowing Iran to sell its crude to market. And Joe and Kelly, that's notable because it's also highlighting how Iran wants to maintain its leverage, is prioritizing control over the Strait of Hormuz, over getting what those potential financial benefits could look like. So a really closely watched dynamic here. We're going to have to see how it ultimately pans out because as you both know, the escort, the rhetoric was escalating today as the two sides traded these threats. But over the weekend, we saw them actually trade strikes and the kinetic action just heat up.
- [04:02]
Kayleigh
Indeed we did. Bloomberg's Tyler Kendall live on the North Lawn of the White House. Thank you so much. And as we consider the US And President Trump's decision making when it comes to Iran, we know that one man had a great deal of influence on this subject and one was one of the most vocal advocates for pursuing a non nuclear Iran in the United States Senate. One of the most hawkish Republicans, Senator Lindsey Graham of South Carolina, passed away at the age of 71 over the weekend from what his office described as a sudden and brief illness. We now know that there will be someone appointed to replace him, set to be announced by the South Carolina Governor McMaster later this afternoon. President Trump on Truth Social suggested he would like that person he recommended to the governor, that it be Lindsey Graham's, which according to Politico, is what the governor has selected, though we have not seen confirmation of that yet. So for more, we turn to Bloomberg's Eric Watson, who covers Congress for us and is joining us live from Capitol Hill. So, Eric, obviously we don't know who will fill Lindsey Graham's shoes on at least a temporary basis in the Senate. But they are very big shoes to fill whoever it is.
- [05:17]
Eric Watson
That's right. It does look like it will be Darlene Graham. Nordon, probably as a placeholder, reached out to try to have found if she plans to run on it. Certainly if she is the interim senator, she would have a leg up on others. But there's a large cast of characters from Nancy Mace to Ralph Norman to Republican representatives who ran for governor and failed to Lieutenant Governor Pam Everett who could try to run in this special primary by August 11. But it will be very tough shoes to fill, at least on the foreign policy side. For the hawk contingent. This was someone who had regular contact with Trump speaking to the president even hours or perhaps minutes before he died to, to advocate for his world vision, which is one in which the United States stands strongly with Ukraine, stands strongly with Israel and takes a very militaristic approach towards Iran. You know, my one of my colleagues said to me over the weekend, I think it's very true the Iran war wouldn't have happened without Lindsey Graham. I think that's true. He's very much promoting that idea of regime change there. So, you know, this is someone whose death is going to be really impactful in terms of foreign policy. And as well, one of the things Congress is trying to do this month is potentially move a $350 billion military budget. He was the budget chairman, would have helped facilitate that. I think that my mind is in a bit of an uphill battle, a bit of a wish list. But we'll see if they can try to cobble together some kind of budget reconciliation bill in his absence.
- [06:38]
Joe
I'm glad you mentioned that, Eric, because word is that Ron Johnson, the Republican from Wisconsin, will be taking the gavel. I'd be curious to hear if you can confirm that as chair of the aforementioned budget committee and what that might mean for a real hawk like Ron Johnson, a spending hawk, to take control of that committee. There's also the matter of Mitch McConnell who actually posted a photograph over the weekend with his wife, Elaine Chao, and explained that he was unconscious after falling, that in fact that was why he was out of Washington. He'd been moved to a rehab facility. Do we know when he might be back?
- [07:15]
Eric Watson
We don't know when he'll be back exactly. But you know, he suffered polio as a child. He's been diagnosed with post polio syndrome. So he has weakness related to the long term effects of that unfortunate infection. You know, so he is battling that. But yeah, his absence is certainly felt by John Thune and other leaders who rely on his wise counsel to run the conference. And certainly Ron Johnson is in line to become the budget chairman. You know, that's not the appropriations, a bit confusing to our listeners, but you know, the appropriations chairman controls the nitty gritty, the spending decisions on projects. But the budget chairman will be part of this larger push to go around those guardrails and do this big military budget. And I think Ron Johnson will insist on offsets. But calling for spending cuts to entitlements to pay for the military, that's not going to fly with a lot of moderate Republicans up for re election swing districts. So I think it was would tend to stall progress on this, but we'll see.
- [08:16]
Joe
Great reporting, Eric, and thanks for being there this weekend. When we all woke up to this news on Saturday, it was Eric Watson who helped us on Bloomberg this weekend understand the significance of this moment. And Rebecca Heinrichs has been awfully busy on social media. I've been watching her newsfeed since that news broke and we have a lot to talk about with Rebecca, senior fellow at the Hudson Institute. Welcome back to Bloomberg TV and Radio. It's great to see you. I'm wondering your thoughts on the practicality here. Not to sound cold, Rebecca, but everything that Eric just said is important when it comes to getting an ndaa, a supplemental, a trillion and a half dollar Pentagon budget across the line, not to mention the work that Senator Graham did in supporting Ukraine in its war with Russia. Who will fill those shoes?
- [09:04]
Rebecca Heinrichs
Well, those are big shoes to fill. I know Senator Graham was an inspiration to me, even though I didn't always disagree on the specifics of the recommendations. I was always inspired by several things. One, his consistent defense of the United States having a robust military, robust defense, and the importance of the United States having good alliances that were very, very strong. And for the United States to have a realistic foreign policy that was also principled that the United States would always be on the side of those who wanted freedom and against totalitarian. So those are huge shoes to fill. But there are other senators who have been working alongside Senator Graham, Senator Tom Cotton, Richard Rounds, Wicker Risch. And so there are other senators. So I would expect that they're going to continue to push President Trump's agenda, especially when it comes to getting the right defense budget necessary for the threats today, which is that $1.5 trillion top line.
- [09:59]
Kayleigh
Well, and obviously the pursuit of that increased defense budget is something that the Senate is going to be considering. I wonder too, Rebecca, if You believe that the Senate will, in fact, take up more stringent sanctions on Russia, as Lindsey Graham, of course, was just in Ukraine shortly before his death, talking about how there had been an agreement reached with the White House on that package. How quickly do you believe it could advance?
- [10:22]
Rebecca Heinrichs
Well, I hope it'll be immediate. I would love to see this, because all of the ingredients are there for increased sanctions against the Russians. The Russian economy is flagging significantly. You even have Russian officials and operations oligarchs speaking publicly against some of the. Against the war and talking about the economy flagging. And then you have the Ukrainians advancing on the battlefield and then Ukrainians contributing to European security. And even Zelenskyy was the only European leader who publicly went to the Gulf states and provided air defense during epic fury, siding with the United States and Israel, essentially. So Ukraine is in a great position. Russia is failing. And so I think it's a great moment for the United States to impose these sanctions that Senator Graham so valiantly pressed for for so long. And so it is my hope, and I think that there's lots of momentum from the Congress, and you even saw some positive signals from President Trump at the NATO summit in Ankara. He was very warm towards President Zelensky. And it does seem to me like there's momentum there to get these sanctions passed. And I would name him after the late Senator Graham. Hmm.
- [11:29]
Joe
As someone who studied national security and strategic studies at the Naval War College, Rebecca, I'm curious your thoughts on what's happening right now in the Strait. Some would say it's closed because traffic has come down to a trickle here. Most of the boats that are getting through have their transponders off, but the President posting, it's open. There is an Iranian blockade and a 20% reimbursement fee for everyone else who gets through as the guardians of the strait, as he puts it, will be investing in military protection that will need to be reimbursed. Is this sustainable? What will it require of our Navy?
- [12:07]
Rebecca Heinrichs
So I think on this last part about collecting a tax, I think what the President is indicating is he's just frustrated that it's the United States obviously taking the lead role for ensuring safe passage of the strait. But I think that putting a tax on these, on the ships going through, is actually going to undermine the purpose of trying to get ships through the strait, which is to lower gas prices, energy prices for this global commodity. I think a better way would be what Secretary Bessant suggested weeks ago, which is that perhaps if you want to compensate those Gulf states who have had infrastructure degraded or destroyed because of Iranian missiles and drones, or American bases destroyed because of Iranian missiles and drones, that you can take some of the frozen Iranian assets and use it for those purposes. That makes more sense to me. Or if the President is just frustrated that other countries are not participating in sharing the burden, he can bring in the French and the Brits who have been wanting to participate in clearing the mines out of the Strait of Hormuz. And we saw that out of the NATO summit that there's still a coalition developing, so perhaps push on that diplomatically. But I do think, you know, we don't know exactly how many ships are getting through the Strait because this transportation responders are off. We'll think that information will come to light in coming days, but it is because of US Navy basically creating a safe corridor along Oman and getting ships through. I saw the US Central Command said there's something like 800 ships that it has shepherded through that corridor over the last two months. The problem is the Iranians want to manage the strait entirely, which of course is a no go for the United States.
- [13:38]
Kayleigh
Well, so they're a no go on that. Obviously a major point of contention. There's also contention over the fate of Iran's nuclear program, hence what feels like a real lack of any progress on the diplomatic front if we are to believe that the diplomatic process is continuing. Rebecca, ultimately, is the military option the real way forward here if. If there aren't prospects of a negotiated breakthrough?
- [14:06]
Rebecca Heinrichs
Yeah. So I'm very skeptical that the Iranians are anywhere near a place where they're going to negotiate in good faith. And because the Iranians are focused almost entirely at this point on the Strait of Hormuz, the head of the irgc, Fahidi, is determined to continue to use aggression in the Strait of Hormuz. So even if there was anybody in the diplomatic channels working with the United States, those are not the people who are in the seat of command. It's the irgc. And that means that until we get the straight fully wrested out of control of the irgc, all these other issues are not going to be things that we make progress on. So I suspect it's going to take increased military activity on the part of the United States to further entomb or degrade Iran's nuclear capabilities if we make progress there.
- [14:54]
Kayleigh
All right, Rebecca, thank you so much for joining us. Rebecca Heinrichs at Hudson Institute, where she is a senior fellow with us here. On balance of power.
- [15:03]
Joe
Stay with us. On balance of power we'll have much more coming up after this.
- [15:10]
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- [16:06]
Mark Short
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- [16:20]
Joe
the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android
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Jeannie Shan Zaino
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- [16:29]
Joe
You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30 Oil
- [16:39]
Kayleigh
is on the march higher today, back above $80 a barrel on Brent, nearly at $76 a barrel on WTI as the oil market contends with. The headlines we are getting pertaining to and from the Middle east, of course President Trump announced announced today that the US Will be reinstating a blockade against Iranian vessels in the Strait of Hormuz and charging a 20% reimbursement fee to any other vessel that would like to transit that crucial waterway. And I would call attention to some headlines that just crossed the Bloomberg terminal as well, coming from Saudi Arabian TV that Saudi defenses are dealing with a Houthi missile attack that targeted the southern region, the Houthis, of course, and Iranian proxy who have shown an ability to disrupt transit through the Red Sea in particular. And of course this could, as we await further confirmation, represent an escalation as we are seeing once again a reheatening of the tension between the US And Iran and groups affiliated with the Iranian regime. It's all, of course, something that we have been watching closely here in Washington that President Trump talks about on almost a daily basis and talked frequently about with one man in particular in the United States Senate who was a vocal advocate for the US Pursuing the operations against Iran originally. And that would be Senator Lindsey Graham, the Republican from South Carolina, who died of what his office described as a brief and sudden illness over the weekend at the age of 71, leaving behind quite a legacy, obviously, Joe, but also a big hole in the United States Senate in terms of his ability to liaise with this White House and liaise specifically the opinion of one of the more hawkish members of the Republican conference in the wing that that represented maybe
- [18:20]
Joe
the biggest Iran hawk of them all in Washington. And pretty remarkable to see this market reaction. Kelly, this does not look like an effort that we are about to wind up anytime soon. And when you consider the looming debates about a supplemental budget request, what was that, $67 billion, a trillion and a half dollar defense budget. Lindsey Graham was a central figure in pushing that along. Also, as chair of the Budget Committee, you're going to have, as we just discussed with Eric Watson, Ron Johnson up there now, who might want to do this a little bit differently when it comes to the dollar signs. We want to get to the policy here in the straight, but also the politics of the man, Lindsey Graham with our great panel, Bloomberg Politics contributors Rick Davis and Jeannie Shan Zaino are with us. Rick is our, of course, Republican strategist, partner at Stone Court Capital, who worked for many years with Lindsey Graham by way of his relationship with John McCain and the three amigos.
- [19:13]
Eric Watson
Of course.
- [19:14]
Joe
Jeannie is our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ashe Center. It's great to have you both with us here. Rick, will the president be able to get what he wants and what he needs to comport this war without Lindsey Graham as a guidepost for himself and also for lawmakers on Capitol Hill?
- [19:33]
Rick Davis
Yeah, Joe, there's no question Lindsey Graham was his fiercest partner when it comes to trying to prosecute a successful war against Iran. You know, he was a champion of our relationship with Israel for decades, really Israel's best friend in the United States senate since John McCain's passing. And really the key component to making the connection between, you know, what needed to get done for Israel's security and bridging it to the final conclusion, which is, you know, going after the ayatollahs in Iran. And so without him, not only is it going to be more difficult in the United States Senate to speak with really one unified voice, but even in the region, I mean, Lindsey's work with Saudi Arabia, crown prince, those in UAE and Qatar, I mean, he was a tireless traveler to those places to try to secure their support for this war in Iran. And without him, I suspect it'll be more difficult to keep all our allies even together. So his, his, his passing will have a real profound impact, I think, on this debate. Hopefully we're getting to the point where there's less debate and more sort of, I'd say conclusion to this storyline, but certainly today it doesn't seem so well.
- [21:05]
Kayleigh
And as you talk, Rick, about the Late Senator John McCain as well, both of these men, of course, you worked with very closely over the course of their careers and yours, how many of their ilk are left in this Republican Party as it exists now and in this Republican Senate in particular?
- [21:24]
Rick Davis
Yeah, certainly like Eric Watson said, there are plenty of Republican hawks still banging around. He mentioned Tom Cotton, chairman of the current chairman of the Armed Services Committee, others who I think have shared the global vision of the United States being the greatest country for good in the world and our importance to being engaged with our allies and opposing our enemies. But certainly I don't think anybody really invested the kind of time it takes to build those relationships overseas in addition to articulating the need for those relationships at home. So that part is probably irreplaceable. It will be interesting to see if some of these Republican senators try to step into that role and play the relationship building card that Lindsey Graham, John McCain, Joe Lieberman, others have played over the last few decades. And it certainly is important. You know, the White House, State Department can't do everything and countries look for long term support port and where you get that is the United States Senate. And those senators have an important role to play in doing that.
- [22:42]
Joe
Really interesting. This is, of course, going to kick off a process that we can discuss here. And it does appear that Lindsey Graham's sister Darlene is going to be the caretaker. We'll find out at 4pm Eastern Time when the governor of South Carolina makes that announcement. But then, of course, there will be an election to follow here and this is going to be something that we're covering much like other primaries on the trail. Jeannie the evolution, the political evolution of Lindsey Graham is something that must be noted remembering that he was actually running against Donald Trump ahead of the first term, 2016. I'll never forget the day Donald Trump put his cell phone number, Lindsey Graham's cell phone number on tv. And of course, he was not a supporter of Donald Trump even after he got out of the race. He then supported Jeb Bush when he got out of the race. Lindsey Graham supported Ted Cruz, but eventually came around to be one of Donald Trump's most important supporters and advisers, as I think we've established this hour. Listen to the way he spoke about the president back in 2016. The goal for the Republicans is say I'm for the working man, not just the rich man, rich woman, working woman. That's sort of the goal. That's sort of where we stuck. And I think he's instinctively onto something trying to broaden the party's appeal to working folks by putting on the table things that we normally say no to. It's interesting, Jeannie, a lot of other Republicans who might have considered themselves never Trumpers might have had difficulty arriving at that point. What do you make of the evolution of Lindsey Graham?
- [24:15]
Jeannie Shan Zaino
Yeah, and it was quite an evolution, Joe. I mean, he was one of the chief Republicans who, when Donald Trump was impeached for 2020 election interference, he pushed them to acquit. He was the primarily responsible for getting Donald Trump's three Supreme Court justices onto the bench. And of course, Donald Trump mentioned that on Meet the Press yesterday. His work on the Kavanaugh hearing, which was for many Democrats was the beginning and the end of Roe versus Wade. And Lindsey Graham was all over that. You know, it seems that Lindsey Graham was able to do whatever he could. Some people describe him as a shape shifter and in order to stay in, in the room with power and in order to advocate on issues that he believed in. And one of those is the quagmire in Iran that we're talking about now. I mean, Donald Trump is somebody who famously ran against this muscular foreign policy that we have now seen over the last year. And one of the chief architects of that on apparently the golf course was Lindsey Graham. And it was interesting yesterday, Benjamin Netanyahu said after Lindsey Graham passed that it was Lindsey Graham who pushed him to say you should aggressively take military action. And he said, quote, bibi, you have to do it. Knock out these nuclear weapons program before they knock us out. So he was in that. And Bibi Netanyasa also mentioned how he was trying to coach him on how to deal with Donald Trump. So he was staying in the vicinity of power in friendship with Donald Trump in order to further his own aims. But we also have to be realistic. These are aims that are opposed by many members of the Republican Party today and increasingly and of course, the vast number of the American public who oppose the war in Iran.
- [26:12]
Kayleigh
Well, as Jeannie suggests, that the president and Senator Graham were frequent golf buddies. We know they spoke Frequently, Rick. In fact, President Trump said shortly before Senator Graham's death they did talk on the phone. He said they talked about a number of things, the Save America act included, and whether it's that election legislation that's a priority of the president, the defense budget that Joe mentioned, other members that or, or other matters the Senate's going to have to take up, including confirmations of some key cabinet appointments like the attorney general. Rick, how much harder is that going to be now with Graham gone, knowing there will be a caretaker named. But you still have questions about when Senator Mitch McConnell will return to.
- [26:54]
Rick Davis
Yeah, look, the math has never really worked out for some of those issues you talked about. I mean, we couldn't even get a Republican majority, simple majority for the SAFE act five times when it was voted on. So anybody else would say, okay, I don't have the votes for that. Which is exactly what the, you know, the majority Leader Thune has told the president. But for whatever reason, president seems dug in on that. It I would say the Senate malpractice not to immediately put Lindsey Graham's name on the Russia sanctions Bill that has 85 co sponsors and pass it immediately and send it to the president's desk. The reality is this is one of the last things that Lindsey Graham was working on, you know, at the NATO conference this last week. And I think it really would be a great way to start this session.
- [27:45]
Joe
Really glad we could have, we could have you with us. Rick Davis and Jeannie, thank you so much for your insights. Our great panel. Stay with us On Balance of Power. We'll have much more coming up after this.
- [28:00]
Public.com Sponsor
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [28:56]
Mark Short
Investing Brokerage Services by open to the Public Investing Inc. Member FINRA and SIPC Advisory services by Public Advisors, LLC. SEC registered advisors complete disclosures available@public.com disclosures
- [29:10]
Joe
you're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android
- [29:18]
Jeannie Shan Zaino
Auto with the Bloomberg Business app Listen
- [29:21]
Joe
on demand wherever you get your podcasts or watch us live on YouTube.
- [29:27]
Kayleigh
As we mentioned earlier this hour, Saudi media is reporting that the Saudis were dealing with with an incoming attack from the Houthis that were targeting the south of Saudi Arabia in particular. And as we consider that Iranian proxy previous action that they have conducted in the Red Sea that was disruptive to commercial shipping, it all could point to not so good things as we consider that the Strait of Hormuz also effectively seems to be closed off at this point. President Trump says at least it's closed off to Iranian vessels and cargo as the US Is getting set to reinforce, force the blockade and charge a 20% reimbursement rate to all other vessels trying to get through. Essentially, Joe, the president saying it's the cost of administration, the cost of the US Being the guardian of that critical
- [30:11]
Joe
guardian of the strait is how he's terming it. Price of gas, Kelly 387. That's the national average today. If we keep seeing moves like this in crude, it's going to start leaning back to $4. This is really something. And back to our highs of the session or carving out new highs. $81 for Brent is pretty remarkable here. We're looking at almost 77, as you mentioned for WTI. Just some of the stories that we're covering here in terms of the fallout of the president's actions in Iran. But we'll have a lot more to consider when the speaker of the House sits down with the president in the Oval Office a little while from now. It's a busy day at the White House, actually. We can give you a quick view if you're with us on Bloomberg TV or on YouTube of what's happening right outside the West Wing. We're actually waiting to hear from the president himself at an IndyCar event. This is a view you never see, Kelly, here. This is the driveway between the White House and what we used to call the old Executive Office Building. You see that portico there? That'll take you right into the West Wing and they've set up a podium for the president to speak. I guess you've got the IndyCars out there. We've got a big race set up for August. I was curious what it would cost with these increases in gas prices to fill up an Indy car. They don't use gas. 100% renewable race fuel. I never knew this. Indie.indycar.com It's E85, which I guess this is going to help when they're doing laps around the capital come August. Are you going to go to that thing?
- [31:38]
Kayleigh
The more you know? No, I don't think I'd be able to physically get here. They're going to have to close off a lot of D.C. they're going to
- [31:43]
Joe
be actually on Pennsylvania with these Indy cars.
- [31:46]
Rebecca Heinrichs
Yes.
- [31:46]
Joe
I guess we'll see what the president has to say about it in a little bit here. We're actually covering a couple of other things. As soon as the president's done with that meeting, he'll sit down with Mike Johnson to talk about reopening the floor. It has been closed, essentially held hostage by a single congresswoman, Anna Paulina Luna, who is upset about the Save America act. And it's really kept everything else from moving. The president needs to see an ndaa. He wants to move a supplemental budget request on Iran. He wants to get a new defense budget across the board and government spending in total, which is why some of us are asking about the prospect of another government shutdown. It's where we start our conversation with Mark Short, I'm glad to say, is back with us in our studios in Washington, the chair of Advancing American Freedom, former director of legislative affairs in the first Trump term, and former chief of staff, Vice President Mike Pence. Great to see you, Mark.
- [32:35]
Mark Short
Thanks.
- [32:36]
Joe
I hope your summer's going well. I can't imagine what lawmakers are going through as they come back to town here knowing that they're handcuffed. How do you get the floor back open?
- [32:45]
Mark Short
I think that they're going to have a challenge getting the floor back open. I think they're making the right case by going to the president. He probably has as much leverage over Luna as anybody else. But I still think that you have such incredibly narrow margins right now and any legislation they're passing, I think it's getting more and more difficult as you get closer to November because your margin, the Senate's pretty tight, too.
- [33:05]
Joe
Yeah, sure is.
- [33:06]
Kayleigh
Well, certainly so. And we'll get to that margin in the Senate in a moment, Mark, when we consider, though, that the president does seem to have a fixation on the very same thing Anna Paulina Luna does, which is the Save America act, despite repeatedly being told by leadership that the votes are not there as it Stands he's not abandoning the effort. Is he going to be forced to at some point?
- [33:28]
Mark Short
Well, I think that some of us are more cynical think that the President, knowing what the prospects look like in the midterms, can say, look, I told you guys what would happen if you didn't pass the SAVE Act. And so this is a little bit of, I think setting up for what is likely to be a political downer come November for those of us who are Republicans. But I think that there's. The House strategy is to break the Save up act and basically move it as part of a reconciliation 3.0 and to tie funding to states to actually implement the SAVE act at a state by state basis. Again, I think the prospects of a reconciliation 3.0 getting passed through both chambers at this point is pretty slim.
- [34:07]
Joe
Does it become more difficult without Lindsey Graham at the helm of the Budget Committee? He seemed to be helping to steer this at least for the, the upper chamber. We can talk about a lot of the other implications of his passing, but that seems to be an immediate one.
- [34:21]
Mark Short
I think that losing Lindsey Graham is, is a big loss for, for Washington, for our national politics. I think he was uniquely talented in ways that he had friendships with John McCain, Joe Lieberman, Donald Trump. That's a unique trifecta and I think it shows his flexibility and his nimbleness in this, in this town. But honestly Joe, I don't really know at this point. Again, SAVE act in others would need 60 votes in the Senate. So it's not like, it's not like Lindsey Graham's vote was making a difference. And, and as talenting was it basically be an emissary between the Senate and the White House. I don't think it was it's having that dramatic an impact on actual legislation between now then and people forget between now election Day. I think we're down to 21 legislative days.
- [35:04]
Joe
Wow.
- [35:05]
Mark Short
That. That's it. And so there's really not a lot of time to get NDAA reconciliation 3.0 or as you just mentioned, funding for the government that's due September 30th.
- [35:14]
Kayleigh
What about funding for the Defense Department in particular? Because of course Lindsey Graham was a defense hawk.
- [35:19]
Mark Short
Sure.
- [35:19]
Kayleigh
He was a vocal advocate for things like a one and a half trillion dollar defense.
- [35:24]
Mark Short
He was a great advocate for the defense, but also for Ukraine against Russian aggression and for Israel. But again, I think as long as the war is going on, it's going to be hard to earn Democrat votes on supplemental funding for Department of Defense. And so I think that those prospects are pretty bleak as well.
- [35:40]
Joe
Well, even more extreme, I guess. The analysis from our chief policy analyst at Bloomberg Intelligence, Nathan Dean, says from here on it's nothing but cars. In fact, that could be the case for the next two plus years, Mark.
- [35:53]
Mark Short
I think that it is likely to be cars for quite some time. But I think even the September 30th could be more of a shutdown CR because despite now where they, where they are is in very different spots. And, and I don't think there was a put consequence of Democrats shutting down the government last time. And as they, I think for most American voters the assumption is, look, you have the White House now in the Senate. They don't, they don't know that 60 vote threshold in the center whatnot. So they're going to blame one party if you're shut down and say your party's in control. And I think there's a Democrat viewpoint that says we're not at a loss here if there's a shutdown come September 30th.
- [36:27]
Kayleigh
So that just reinforces the midterm momentum being not on the side of the Republicans in your mind. Essentially.
- [36:35]
Mark Short
I think that the challenge for Republicans is always going to be a difficult cycle when your party is in power in the White House. It's even more difficult if your party's controlled the White House, House and Senate. Americans want divided government. It's what they prefer. And so it doesn't mean it's impossible. It just means that the, the, the hurdle is really high. I think you add to that the President's trade agenda and the fact that we've not basically really lowered prices significantly. I mean, we talk about inflation going down from 9% to 4%. Yeah, the rate of increase is less, but prices are less. It's still a 4% inflation rate. And I think for a lot of farmers in America, they're feeling that, they're feeling the higher fertilizer prices and they don't have markets to export to because in retaliation to the President's war on trade, other countries have closed those markets. And so I think there's a lot of consternation in the heartland of America about the current trade policy. And that has been a reliable, reliably read Republican part of the country. And I think that you could see losses there that Republicans have not seen in many years.
- [37:32]
Joe
Really something now that we're back to what appears to be a shooting war with Iran. Not that it ever really stopped, but after a third night of pounding attacks that, that we saw last evening, from the United States, the conversation about war powers is going to come back around. Does that gain more traction the further we get into primary season, with lawmakers starting to feel a level of probably
- [37:55]
Mark Short
gains more traction on the campaign trail. It probably gains a bigger, bigger campaign issue. I don't think it's, I still don't think there's a jeopardy of them getting the necessary votes in both chambers to get that. And I, I still think it has not been challenged at the Supreme Court as to whether or not this is really what our founders designed was for the legislative branch to have that authority.
- [38:15]
Kayleigh
Well, when we consider, though, the prospect of the war continuing, the president to this point, or at least until recently, expressed very little appetite for an outright resumption in hostilities. And then at the NATO summit, he suggests there's no point in negotiating with the Russians. He declared the MoU dead. He effectively said the cease fire is over. And today he says we're reinforcing the blockade. It feels like this is only going one direction and it's not the direction of resolution, Mark, or you'll correct me if I'm wrong.
- [38:42]
Mark Short
No, I don't think you're wrong. I mean, I think that the JD Vance wing certainly wanted to try to strike some sort of appeasement toward Iran, but it doesn't appear that's had any progress. And I think for a lot of people, they look and say for 47 years, Iran has continued to break deals. And so why are you surprised? But there's also an enormous amount of mixed messaging that's come from the White House throughout this conflagration. And, you know, it was only, not just a couple weeks ago, the president said it's a great deal and we're going to get it done. But he actually even said, you know, he was, he was allowing them the ability to repurchase weapons to defend themselves, you know, and so, and so there's
- [39:14]
Kayleigh
been, there's been a lot of ballistic missiles were problematic.
- [39:17]
Mark Short
Goodness. There's been a lot of different messaging that's come out from what the White House position is on the mou, much less that the larger wars. But I think you're right. I think that as Iran has continued to poke the bear, the president's probably gotten at this point, pretty tired of it.
- [39:32]
Joe
Love your thoughts. Mark. Short on South Carolina and what comes next. We've had a number of names on a, on a pretty short list at this point. Lieutenant Governor Pamela Yvette seems to be at the top of it. Not as a caretaker. That appears to be something that'll be reserved for Lindsey Graham's sister Darlene. But Nancy Mace on Twitter with the the Godfather tweet, they keep pulling me back in. Ralph Norman, both fresh off primary runs and losses. Will this be a familiar name or maybe one of these three?
- [40:05]
Mark Short
I mean, neither of them made the runoff.
- [40:07]
Eric Watson
Yeah.
- [40:08]
Mark Short
So it's hard for me to see that that changes that much in the last couple months. I think the president's going to continue to be invested in what happens in South Carolina. And I think it's pretty well known his opposition to both of those two, one for supporting Nikki Haley, one because it's just because who Nancy Mel said. And so, and so I don't, I don't see that the president's going to get behind either one of them. So I think that it's probably going to be a different candidate.
- [40:33]
Kayleigh
Well, and we'll see what kind of candidate does come forward and how much they reflect the kind of hawkish nature of Lindsey Graham, as we've already discussed. I just wonder with his exit with Mitch McConnell, who of course says that he is going to be returning to the Senate, although it's not clear when his hotel hospitalization will end. They represent a kind of wing of the Republican Party that J.D. vance, who you just mentioned, for example, does not represent. And I wonder with their, their departures, if you see the party is going to be shifting much more, much more in the direction of the isolationist wing rather than the kind of interventionist talk.
- [41:08]
Mark Short
I think it's a great question, Kayleigh, and I think it's something that is yet to be seen. I think there's no doubt that, that the isolationist wing has been ascendant in the Republican Party. And as you say, the more hawkish wing, losing both McConnell and Lindsey Graham will have significant losses there. As far as what the national debate is, as far as Lindsey's successor may not be as articulate as Lindsay, but certainly with all the military presence that South Carolina has, you would imagine that successor will more or less support the same viewpoint. But as far as the rhetorical debate about where the party goes, I think it's pretty much up for grabs.
- [41:43]
Joe
We've only got a minute left, even less than that. Can you imagine an Indy car race downtown Washington, D.C. the guys, the drivers are about to get out there with the president. You go into this, I look, I
- [41:53]
Mark Short
think it's pretty fun, but at the same time, you guys know what August weather is in D.C. yeah, right. How hot and muggy that's going to
- [42:00]
Joe
be after we survive 4th of July
- [42:02]
Mark Short
after 4th of July was pretty hot and muggy on the Mall too.
- [42:04]
Kayleigh
And the UFC fight. Also hot.
- [42:06]
Joe
Yes, there's a pattern during this thing. They're going to be on Pennsylvania Avenue. I don't get it.
- [42:10]
Kayleigh
Yeah, we might just have to be calling in from home. Not here in our very nice air conditioned studio where we've been joined today by Mark Short, of course, the former Director of Legislative affairs and the first Trump White House former Chief of Staff to Vice President Mike Pence, now Chair of Advancing American Freedom. Mark, thank you.
- [42:29]
Joe
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at noontime eastern@bloomberg.com
- [42:43]
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