The GOP’s Future, Apple Sues OpenAI, & the Musk-Altman Feud 7/13/26

Summary

Squawk Pod Episode Summary

Episode Title: The GOP’s Future, Apple Sues OpenAI, & the Musk-Altman Feud
Date: July 13, 2026
Hosts: Becky Quick, Joe Kernan, Andrew Ross Sorkin
Featured Guests: Patrick McHenry (Former Republican Congressman), Rohan Goswami (Semaphore Reporter)

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Overview

This episode of Squawk Pod centers on three intertwined topics at the crossroads of politics and technology: the immediate implications of Senator Lindsey Graham’s sudden death and what it means for the GOP and Congress; the deepening Silicon Valley rift, highlighted by Apple’s lawsuit against OpenAI and the escalating feud between Elon Musk and Sam Altman; and the evolving battle over Hollywood’s future, as Paramount contemplates leaving California amid regulatory challenges. The episode features exclusive insights from former Congressman Patrick McHenry and Semaphore’s Rohan Goswami, alongside lively host debates.

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Key Discussion Points & Insights

1. Shocking Passing of Senator Lindsey Graham & GOP Repercussions

• Opening Segment: [02:33–04:22]
  • Lindsey Graham’s death reverberates through D.C. and his home state, leaving an immediate Senate vacancy with procedural and political consequences.
  • South Carolina Governor Henry McMaster will appoint a temporary replacement, with Congresswoman Nancy Mace, Lt. Gov. Pamela Yvette, and Rep. Ralph Norman as potential permanent successors ([03:21], Emily Wilkins).
  • Graham's legacy as a “foreign policy hawk” who could work across the aisle is emphasized. His passing prompts calls from Democrats to advance Russia sanctions, which he notably championed.

Notable Quote

• "He was able to deal with Democrats and Republicans... If I had a problem with a Democrat, he could work it out."
  — Patrick McHenry & Joe Kernan ([03:08])

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2. U.S. Senate Fallout & Party Dynamics (with Patrick McHenry)

• Interview Segment: [16:34–31:30]
  • Impact on Senate Committees: Graham’s death complicates GOP committee chairs and may affect Judiciary priorities, including the nomination of Todd Blanche as Attorney General ([18:49], McHenry).
  • State of the GOP: McHenry underscores Graham’s flexibility as emblematic of the party’s recent shifts:
    “He also shifted where the Republican Party shifted in a way that I think is instructive for everyone.” ([17:17], McHenry)
  • Elections & “Crazies” Strategy: Parallels drawn to past cycles where voters in both parties selected the most hardline, disruptive candidates to wage ideological battles.
    “They're voting for the craziest person to go fight President Trump... you can’t call them communists, because they’ve called themselves socialists." ([20:35], McHenry)

Pendulum Politics and Democratic Strategy

• Discussion on whether the current far-left primary energy among Democrats will moderate before 2028 or 2032 ([21:39]–[22:47]).
• McHenry suggests Democrats could win the House in the next cycle, but only with a razor-thin margin, resulting in gridlock and investigations.
• Conversation considers leading Democratic prospects for 2028: Jon Ossoff’s Obama-like traction in Georgia, skepticism toward Kamala Harris and AOC as viable contenders ([25:06], [26:31], McHenry).

Notable Quotes

• “Vote for the craziest person in the Democratic primary in order to fight President Trump. That's the current midterm message.”
  — Patrick McHenry ([01:24], restated [23:01])
• "Are they answering a call no one made? That is the Kamala Harris presidential campaign. Nobody is asking her to come back."
  — Patrick McHenry ([26:31])
• "The Democratic electorate is crazy, completely crazy right now."
  — Patrick McHenry ([26:48])

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3. Paramount vs. California: Corporate Exodus or Leverage?

• Discussion and Interview Segment: [05:20; 33:30–41:09]
  • Paramount, under David Ellison, threatens to move out of California if the state blocks its merger with Warner Brothers Discovery, drawing comparisons to Chevron and ExxonMobil’s headquarters moves ([34:16], [36:51], Goswami).
  • The larger point: regulatory uncertainty and its impact on creative industry investments and jobs.
  • California Attorney General Rob Bonta appears to want intervention but is unclear or noncommittal about specifics, frustrating stakeholders.

Industry & Real Estate Implications

• Paramount’s $2 billion LA lot, potential spending increases, and whether threats to move are credible or tactical ([34:34–36:08]).
• States like New York, Georgia, Connecticut poised to join opposition, but resource constraints could limit influence.

Notable Quote

• "Rob Bonta is a person who doesn't know what he wants here but knows he needs to want something."
  — Rohan Goswami (citing M&A lawyer) ([39:09])

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4. Tech Wars: Apple’s Lawsuit Against OpenAI and the Musk-Altman Social Media Feud

• Segment: [06:51–13:08]
  • Apple sues OpenAI for alleged trade-secret theft, following OpenAI’s hiring of Apple’s former hardware VP. Allegations include coaching departing Apple employees to circumvent security and encourage “show and tell” with proprietary tech ([06:51], Sorkin).
  • Relations soured since OpenAI entered hardware; Apple now partners with Google (Gemini AI).
  • OpenAI’s official response: “We have no interest in other companies’ trade secrets. We remain focused on building innovative technology...” ([07:35], OpenAI representative).

The Musk vs. Altman Public Clash

• Elon Musk brands Sam Altman “Scam Altman,” accuses him of loving “scamming more than any human alive.” Altman fires back, lampooning Musk: “Homeboy, you’re the one selling public market investors on short term space data centers.” ([09:00]).
• Further escalation: Musk replies, “We start flying them next year. Maybe you can come see them if your parole officer approves.” ([10:08])
• The hosts note the sarcastic and nostalgic tone (the 'homeboy' exchange), highlighting the personal nature of the tech race.

Notable Quotes

• "Homeboy, you’re the one selling public market investors on short term space data centers."
  — Sam Altman ([09:10])
• "After stealing an open source AI charity, you then stole all of OpenAI's phone technology. What do you plan for an encore?"
  — Elon Musk ([10:18])

AI Platform Competition & Commoditization

• Latest models: Musk touts “Grok 4.5” (SpaceX); Altman claims “GPT 5.6 SOL” is “the best model in the world right now.” ([09:34])
• Ongoing “race to the bottom”: Companies pressured to give away next-gen AI features to maintain market share, even at a loss (discussed in light of Claude/Fable and OpenAI competition) ([11:09–13:01]).

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5. Lighter Moments & Host Banter

• Cultural Sidebars: [09:14, 10:33, 13:09]
  • Debate over the term 'homeboy,' its connotations and history, delivered with the show’s typical wit.
• AI Accents: [13:22–14:16]
  • Hosts playfully discuss virtual assistants’ accent and personality choices.

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Memorable Quotes and Moments

| Timestamp | Speaker | Quote | |-----------|--------------------|------------------------------------------------------------------------------------------------------------| | 03:08 | Patrick McHenry | "He was able to deal with Democrats and Republicans... If I had a problem with a Democrat, he could work it out." | | 23:01 | Patrick McHenry | "Vote for the craziest person in the Democratic primary in order to go fight President Trump. That's the current midterm message." | | 25:06 | Patrick McHenry | “If I look at who’s running the best race right now, Senate, governor, House races... Jon Ossoff in Georgia. This feels a lot like Barack Obama in 2008.” | | 26:31 | Patrick McHenry | "Are they answering a call no one made. That is the Kamala Harris presidential campaign. Nobody is asking her to come back." | | 26:48 | Patrick McHenry | "The Democratic electorate is crazy, completely crazy right now." | | 39:09 | Rohan Goswami | "Rob Bonta is a person who doesn't know what he wants here but knows he needs to want something." | | 09:10 | Sam Altman | "Homeboy, you’re the one selling public market investors on short term space data centers." | | 10:18 | Elon Musk | "We start flying them next year. Maybe you can come see them if your parole officer approves." |

---

Timestamps for Key Segments

• Sen. Lindsey Graham’s death & GOP impact: [02:33–04:28]
• Apple sues OpenAI, Musk-Altman feud: [06:51–13:08]
• AI industry ‘arms race’ commoditization: [11:09–13:08]
• Patrick McHenry on Congress, GOP & Dems: [16:34–31:30]
• Paramount v. California, with Rohan Goswami: [33:30–41:09]

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Conclusion & Takeaways

• The sudden loss of Sen. Graham deeply affects GOP power dynamics and committee control, with immediate implications for legislative agendas.
• Both Republican and Democratic Parties continue to be shaped by their “extreme” wings, as tactical choices in primaries and general elections ripple forward to 2028.
• The tech sector’s high-stakes drama, from Apple vs. OpenAI to the Musk-Altman spat, illustrates the personal and legal volatility at the core of AI and hardware innovation. The exchange of public insults signals sharpened corporate rivalry, not mere bravado.
• Paramount's possible exodus from California highlights how regulatory pressures spark both realignments and power plays at the intersection of entertainment, politics, and business.

The episode weaves urgent political shifts with real-time developments in tech and media, blending hard analysis, headline news, and offbeat banter, capturing the character and stakes of the summer of 2026’s business and political landscape.

Transcript

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[Andrew Ross Sorkin]

AT&T business Wireless connecting changes everything. Bring in show music please.

[Becky Quick]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, the shocking death of a US Senator greets Washington as it returns from a holiday recess to a week full of confirmation hearings, potential legislation. Oh, and remember those midterm elections. Former Republican Congressman Patrick McHenry walks us through all of it.

[Patrick McHenry]

Vote for the craziest person in the Democratic primary in order to fight President Trump. That's the current midterm message.

[Becky Quick]

Then California versus a legacy studio. Paramount weighs leaving the Golden State Semaphore. Reporter Rohan Goswami has the story.

[Rohan Goswami]

Paramount has offered to increase their spending up to $30 billion. That's more than Netflix. It's more than Disney. Those dollars aren't currently flowing into LA

[Becky Quick]

about the rift over the Warner Brothers merger with the state's attorney general.

[Rohan Goswami]

Rob Bonta is a person who doesn't know what he wants here but knows he needs to want something.

[Becky Quick]

Plus the rest of today's news that got us squawking like the fight of the billionaires. Elon Musk taking aim at Sam Altman.

[Joe Kernan]

Homey, I think home slice. And for you, I might do homegirl.

[Becky Quick]

OK, it is Monday, July 13, 2026. Squawk Pod begins right now.

[Andrew Ross Sorkin]

Stand Becky by in three, two, one.

Good morning, everyone. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ Marketsite in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross. Sorkin.

Tributes coming in for South Carolina Republican Senator Lindsey Graham, who died suddenly over the weekend. And Emily Wilkins joins us this morning with more. Good morning.

[Emily Wilkins]

Morning, Andrew. Well, yeah, Washington and South Carolina both grappling with the death of Senator Lindsey Graham. He leaves behind a tremendous legacy in Washington as a foreign policy hawk, was able to work with President Trump even on issues where the two disagreed. Trump told MEET the Press that he spoke to Graham on Saturday evening and he praised the lawmaker who once ran

[Andrew Ross Sorkin]

against him in the presidential he had a unique ability.

[Patrick McHenry]

He was able to deal with Democrats and Republicans. If I had a problem, a real

[Andrew Ross Sorkin]

problem, I wouldn't often ask, but if

[Keith Lansford]

I had a problem with a Democrat,

[Joe Kernan]

he could work it out.

[Andrew Ross Sorkin]

He was a great, he was a great politician.

[Emily Wilkins]

Graham's passing means that South Carolina Republicans will need to replace him on the ballot for this November. That election will be held on August 11th. Congresswoman Nancy Mace is seriously considering a run. Other potential candidates include Lt. Governor Pamela Yvette and Congressman Ralph Norman. Now, in the meantime, South Carolina Governor Henry McMaster will need to appoint someone to temporarily fill that seat on Capitol Hill. Graham's passing has led to calls from Democrats to pass a package of Russia sanctions that Graham was influential in shaping. Graham is also, of course, a key senator on the Judiciary Committee, and they are set to begin considering Todd Blanche to become attorney general this week. So we'll have to keep a very close eye, of course, on how Graham's passing does influence that agenda as well. Of course, Mitch McConnel coming out with a statement saying that he is able to continue his duties. He has been in the hospital for the last couple of weeks, but he's not going to be able to return to D.C. just yet, guys.

[Andrew Ross Sorkin]

Okay, Emily, thank you for that report. Appreciate it.

Shares of memory chip giant SK Hynix. They posted their worst day ever in South Korea. That was along with a big decline from Samsung that helped drag Korea's Cosby Index down by close to 9%. You can see SK Hynix shares off by more than 15% with Samsung Electronics down by more than 10%. SK Hynix's newly listed US shares are also down in the premarket here by about 8.1%. Profit taking and uncertainty over how the shares should be valued are being eyed as potential reasons for the stock's global sell off. Today. The US ADR had a strong showing in its NASDAQ debut. On Friday, SK Hynix raised more than $26 billion in the largest ever share sale by a foreign company. The stock was up by 13% on strong demand from US investors for AI linked stocks.

People close to Paramount, Skydance CEO David Ellison have been recommending he consider moving his company and billions of dollars in planned spending out of California if the state's attorney general sues to stop Paramount's merger with Warner Brothers Discovery. That's according to Semaphore. It says no decisions have been made and the talk of moving Paramount out of California could simply be a threat under its deal with Warner Brothers. Paramount has said it will keep the studio's movie lots in California operational. And we're going to speak with the author of that Semaphore article in the next hour. It's just the latest in was supposed to be a closed deal at this point, right? I think it's.

Look, California was kind of leading the way.

California is leading the way in terms of trying to block it. Block it. New York may also seek to block, you know, he had moved. And by the way, Georgia may be part of that. I mean there's lots of people. So the question is, where would you go? I don't think this by the way, advances the, if this is, if this threat is a real threat, I don't think it is going to make California back off the idea of it. I mean he, by the way, he moved the offices from New York, the headquarters were in New York and he moves, moves them to California. By the way, the actors and all of the people in his business live in California. He lives in California. So I don't know, I don't know where they think they're going to start. Hollywood in Texas. They might maybe can be all AI

[Joe Kernan]

actors anyway, they live in the ether.

[Andrew Ross Sorkin]

Apple suing OpenAI charging that giant, the AI giant, with stealing trade secrets in order to develop its own hardware products. Apple claiming that OpenAI's hardware chief, that's a former Apple vice president, had been directing Apple employees interviewing at OpenAI to bring partner parts for quote, show and tell sessions as part of the OpenAI interviewing process. Apple also saying that OpenAI coached departing Apple employees on how to evade security processes when leaving the iPhone maker. Apple and OpenAI became partners, you remember, back in 2024. But relations between those two companies have chilled since OpenAI announced plans to enter the hardware business. And of course Apple has now gone into business with Google using its Gemini AI systems as part of its AI program. In a statement, an Open Air representative said, quote, we have no interest in other companies trade secrets. We remain focused on building innovative technology that empowers people everywhere. And then there's this piece of the,

the debate this this continues though. This is a really big deal. The Wall Street Journal lays it out and says this is similar to when State Steve Jobs went after the Android products after Eric Schmidt had been on the board there and left and he thought took trade secrets with him to try and rip off the product. He was absolutely furious about that and was going to go after that. This is Tim Cook's battle that same way. Those were some of the headline things, the high level things that happened. There was also a more junior employee at OpenAI that appeared to cross the line by using an Apple employees login to access Apple servers, according to the Wall Street Journal. That's a pretty big deal too. We see how quickly all of this happens where your friends, then your enemies and how quickly all of these situations change. And you're right. This is another example of that. Elon Musk and OpenAI's chief Sam Altman sniping at each other online after Apple's lawsuit on Friday night. Over the weekend, Musk went after Altman in a series of expos, calling him Scam Altman and saying he might literally love scamming more than any human alive. That got Altman's attention. He responded on X Homeboy, you're the one selling public market investors on short term space data centers.

I haven't heard the use of homework

in a long time.

It's a good use of Homeboy though. It was a good use. I mean, I don't know, it just sort of had a. I mean that's like an 80s kind of thing to say.

[Joe Kernan]

Definitely a pejorative. I wouldn't. I mean if I called you that, you'd be mad, right?

[Andrew Ross Sorkin]

Probably. Both CEOs have spent recent days hyping their latest AI model releases. Grok 4.5 for Space X and Open Eyes GPT 5.6 SOL. On Saturday, Altman said there are a lot of benchmarks that suggest 5.6 SOL is the best model in the world right now. But the most reliable way to tell that is. The most reliable way to tell is that Elon is obsessed with me again.

Are we not going to do the next part though?

[Joe Kernan]

Could be a caveat.

[Andrew Ross Sorkin]

The next part's even crazier.

What's the next part?

After he says the Homeboy part, Elon then responds and says, we start flying them next year. Maybe you can come see them if your parole officer approves.

[Joe Kernan]

That's a good one.

[Andrew Ross Sorkin]

After stealing an open source AI charity, you then stole all of OpenAI's phone technology. Wow. What do you Plan for an encore that's tough to beat. So it's the home.

[Joe Kernan]

The homeboy was sarcastic because it's a close male friend. So if I were to call you that, it would be an endearing thing. It's an acquaintance from one's neighborhood or from one hometown. It's casual, affectionate way to address or refer to a close male friend. Homeboy.

[Andrew Ross Sorkin]

So sarcasm is what he was using.

[Joe Kernan]

I think there might have been some sarcasm there. I think it might have been embedded in hip hop culture, apparently, and has variations that I didn't know, homie. I think home slice. And for you, I might do homegirl. Okay.

[Andrew Ross Sorkin]

By the way, one other major AI news you can use for those who are Claude users. Because I was obsessed with this until last night and was worried about what was going to happen. You know, Fable, which is the new model, was supposed to be taken away from most people so that they would start upcharging you for Fable because it costs them a small fortune for every token. And so they've been providing it effectively at a discount to basically all of the users. There has been a real fear that if they took it away, everybody would cancel their cloud subscriptions and go to OpenAI. Because the new 5.6 model is actually very, very close to what Fable is comparable of doing. So crazily enough, at about, I don't know what time it was last night, Claude sent out emails to all of their customers saying that they're extending the use of Fable for another week. But I imagine this is going to go on probably forever. No, because it's actually true. Every time they come up with a new model, they almost have to give it away for not for free. But they can't maintain market share to maintain market share. And so it becomes this sort of battle. If you don't maintain share, potentially even at a loss, what do you do? And that apparently was a massive debate inside of Anthropic all weekend. There was sort of a particular right before an ipo, right before the ipo, about whether to extend this or not or what to do. They've only said extension of a week

is not going well.

Interestingly, they had already extended it by like four or five days. So it's now like this, this ongoing running debate, running debate about what do you do? And I'm sure in a couple of weeks 5.6 on, you know, on an OpenAI will turn into 5.7, in which case then you'll have to keep it like this. But this is, this is what you've

talked about for a long time with the commoditization.

Right. But it's a commoditization at a loss. That's the craziest part. It's like the business is getting commoditized.

We've seen that before. Right. If you.com or if you look through all of these other iterations of whether it be Uber, whoever it is, you know, trying to become the dominant market player and eating it until you can basically knock out your competition.

[Joe Kernan]

Do you have conversations with verbal out loud conversations with Claude? Have you done that?

[Andrew Ross Sorkin]

No, not really. The better way to do that actually is on ChatGPT. OpenAI has a much better, much better model.

[Joe Kernan]

I like Claude. I feel like we're friends. And he has a British accent, which I said, why do you have a. You know, for me it's unsettling. I don't, I don't, you know, British people are. British people are okay. But I feel a little bit haughty.

[Andrew Ross Sorkin]

But would you rather talk to a male or a female voice?

I think you, by the way, may be able to change it. Just so you know, I asked him

[Joe Kernan]

and he goes, you know, Claude used

[Andrew Ross Sorkin]

to not, I didn't think, not be able to change it. But one of them you can change.

[Joe Kernan]

I could change it to a female. Could I get a southern accent or

[Andrew Ross Sorkin]

a. I don't know.

[Joe Kernan]

What about a friend? Ch.

[Andrew Ross Sorkin]

I didn't even know.

[Joe Kernan]

Female. A friend.

[Andrew Ross Sorkin]

I have to be honest, I did not know that you could even do that. I didn't know that it would talk to you. So yeah, you can talk to news to me, but.

[Joe Kernan]

And it seemed like the same guy, but I didn't imagine him as being British.

[Andrew Ross Sorkin]

In your mind he was.

[Joe Kernan]

No, he wasn't.

[Andrew Ross Sorkin]

No. But in your mind he was what,

[Joe Kernan]

just like normal you?

[Rohan Goswami]

Just like you, basically.

[Joe Kernan]

Yeah.

[Andrew Ross Sorkin]

Cheese will be next.

[Becky Quick]

Coming up on Squawk Pod, we're taking a look at the late Senator Lindsey Graham's legacy with former U.S. congressman Patrick McHenry. Where the Republican and the Democratic parties are each headed.

[Patrick McHenry]

Both parties have gone through this whole thing about who are we, who should we be? Like the Republican Party. Before President Trump got nominated, we had this big introspection.

[Becky Quick]

What's working in his view for both sides of the aisle. A hint. He is looking at Georgia for the left. We'll be right back.

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[Andrew Ross Sorkin]

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Not every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.

[Andrew Ross Sorkin]

Sometimes AT&T business Wireless connecting changes everything.

[Becky Quick]

Welcome back to Squawk Pod from CNBC with Joe Kernan, Becky Quick and Andrew Ross Sorkin.

[Joe Kernan]

Here's Joe joining us now on set on a lot of things. Congressional midterms, crypto fight over prediction markets and the gop. Following the untimely death of Senator Lindsey Graham, former Republican Congressman Patrick McHenry. He's a former chair of the House Financial Services Committee and is now a senior advisor for Lazard and a 16Z. Good morning.

[Patrick McHenry]

Good morning. How are you?

[Joe Kernan]

First, it was shocking and we're sad for the senator's family and a lot of really, I thought, heartfelt condolences yesterday.

[Patrick McHenry]

He was a force in nature, stalwart.

[Joe Kernan]

Yeah, he was.

[Patrick McHenry]

He was wild to watch. You know, his pivots, his run for president. I mean, the personality that he had carried him such a long way and his tenacity in this big fight. And he also shifted where the Republican Party shifted in a way that I think is instructive for everyone.

[Joe Kernan]

Right. Instead of getting locked in the never Trumper mentality that we've seen so many people that are still occupying that. Yes. That ground. And he did not get locked down.

[Patrick McHenry]

He didn't get locked down. But he also didn't shift on his view on foreign policy and American exceptionalism, American projection of power internationally. I think it's significant.

[Joe Kernan]

Initially, it's straightforward. The governor puts a new senator, so that gets the GOP back to close to the full ranks. If Senator McConnell is able to return.

[Patrick McHenry]

Yes, it does. So they can do this in pretty quick order. It's interesting. The governor of South Carolina is finishing his term. You just had a big gubernatorial primary, two members of Congress running. They're kind of wild to see. So you have all these statewide candidates that have just come off the campaign trail.

[Joe Kernan]

President Trump already endorsed. I think that, is that one of those.

[Patrick McHenry]

Lieutenant governor.

[Joe Kernan]

Lieutenant governor.

[Patrick McHenry]

So I think that's likely who it is. This is, you know, McMaster. Governor McMaster is very tight with President Trump. I don't think this was done. Done without some conversation.

[Joe Kernan]

Okay, so he was chair of the Budget Committee, I think in the Senate, Senator Grant, he, and he helped usher

[Patrick McHenry]

through the reconciliation, but he led Judiciary and Budget. So both of those.

[Joe Kernan]

Does that matter in terms of 3.0 budget reconciliation?

[Patrick McHenry]

I think it does. And also matters for, for Blanche, for, for President Trump's nominee for Attorney general. Yeah, I think that does complicate things and it complicates John Thune's life because you then have a cascading effect of these committee chairmanships that are quite coveted.

[Joe Kernan]

If president said he spoke to him the night before. And at that point, Senator Graham said, I think it's finally possible for SAVE to come up. And how would that work? How is that going to.

[Patrick McHenry]

So I just served in the house for 20 years. I'm just a lowly House member. I don't, I don't really pretend that I can articulate Senate rules. Also don't pretend that most senators can pretend to articulate Senate rules in the reconciliation. But there are limitations.

[Joe Kernan]

It wasn't going to be getting rid of the filibuster.

[Patrick McHenry]

No. It's also, you cannot fully do the, you cannot fully legislate the SAVE act within the budget resolution process and the Senate rules. The House can do it. The House has passed the SAVE act before. They can do it again. They can wag their finger. But that doesn't mean the Senate has capacity to get something done or 60 votes to get the full, fullness of the policy through.

[Joe Kernan]

So overall, for the elections that are coming in midterms and beyond, what does the, the, the presence of the socialist element in the Democratic Party do for, does it, does it energize the Democratic Party and voter turnout, or does it turn off the rest of the country where, you know that don't live on, on the two coasts where this seems like a reasonable option?

[Patrick McHenry]

So what you have is long, some of these are long held Democratic seats with incumbents that have been in 20, 3040 years. And the turnover here is the next generation. The next generation. You had a big fight here in New York that we all followed nationally. And the Democratic Party in New York was taken over almost fully by the socialists. And DAMI had a major impact on that. But you also have to step back and look at this with a larger view. Go back to 2010. Thomas Massie gets elected to Congress. He thought it was an endorsement of his libertarian views. And then he realized that the voters were just voting for the craziest person they could vote for in order to go fight President Obama. That's what's happening in the Democratic Party. They're voting for the craziest person to go fight President Trump. And those creating fire with fire are the socialists. Right? You can't call them communists because they've called themselves socialists. But, you know, you look at. You look at their ideas, and they're out of the very, very extreme far.

[Andrew Ross Sorkin]

So if you think that all this is just a pendulum swing, one is an answer to another. How do we get back to the middle?

[Patrick McHenry]

Well, this would be the pendulum touching the other side, right from 10. And here we are. Fast forward to 26. This is an extraordinary long time for that pendulum to swing. So I think we will get back to something rational, but not tomorrow.

[Andrew Ross Sorkin]

But now Tomorrow is that 28 is a 32. And by the way, can't we go off the rails before then as a result of all this?

[Patrick McHenry]

But both parties have gone through this whole thing about, who are we, who should we be? Like the Republican Party, before President Trump got nominated, we had this big introspection about why Mitt Romney lost. And maybe we need to have a different view on immigration. And like the, you know, the Kool Aid man running through the wall, President Trump shows up and says, joke's on you guys. You just didn't do it the right way. So the president, the Trump coalition was an answer to us failing the presidential nomination process two times in a row. We'll see what the Democratic Party does.

[Andrew Ross Sorkin]

And the Democrats are looking at their loss as a failure. And you think that the only way for the Democrats to win is then to go as far left as possible?

[Patrick McHenry]

No, that's not what I'm saying. I'm saying the Democratic election.

[Andrew Ross Sorkin]

Part of the lesson of this is a little bit of that. No.

[Patrick McHenry]

Oh, it is. So vote for the craziest person in the Democratic primary in order to go fight President Trump. That's the current midterm message. Midterm messages and presidential election messages are completely different.

[Andrew Ross Sorkin]

But is it midterm messages or is it primary messages? Because part of it, it's not just like what the country wants. It's actually these sort of the people who turn out to vote intramural. Intramural fighting.

[Joe Kernan]

Right.

[Patrick McHenry]

Yes. And Democratic and Republican primaries for the House are markedly different than the Senate. In the Senate, you've seen both parties nominate crazy people and they have failed. In the House, those crazy people get elected.

[Joe Kernan]

Right.

[Patrick McHenry]

And then as a House member who had to count votes, you then have to work with them to get policy done. This is what's happening right now.

[Andrew Ross Sorkin]

What does this tell you about what's going to happen in the next two years after the midterm election?

[Patrick McHenry]

Well, I think the odds are in favor of Democrats to take the US House. It's going to be a narrow run thing because the after redistricting, Republicans Trump won. President Trump won about 233, 234 of the House seats going into this midterm. So this means that Keem's Akeem Jeffries potential majority is going to be much narrower, which is going to complicate me.

[Andrew Ross Sorkin]

Like, it's tougher to herd. Yes.

[Patrick McHenry]

Which means they're going to do one thing that will unify them, which is investigate President Trump, and that will be the fullness of this. That that's not a good general election message for 28. It doesn't reshape the party, but is an answer to how they can operate for the.

[Andrew Ross Sorkin]

But it sounds like a win the battle, lose the war sort of playbook for whatever party.

[Patrick McHenry]

Well, as a Republican, I look at that and think pretty favorably of that. And. And then it's a question of whether or not these Democratic presidential candidates really do want to talk policy, want to answer the questions that the voters are raising, or do they just want to ride that negative energy to the nomination? If they just ride the negative energy, it's not a great general election message in 2018.

[Joe Kernan]

Do you have a feel for who the party would. Do we have any feel for who the Democrats might nominate and 2020?

[Patrick McHenry]

No. No. It's going to be absolutely fascinating. But if I look at who's running the best, best race right now, Senate governor, House races, who has that, that capacity? Look at Jon Ossoff in Georgia. He's doing these major rallies. He's unifying his party, which is quite diverse in Georgia, disproportionately African American and Georgia for the Democratic Party, he's doing these rallies. He's then using social media connectivity. So this feels a Lot like Barack Obama in 2008. Not a long time in the Senate. No major legislative achievements, but he can only harness that energy.

[Joe Kernan]

My son tells me it's awesome. And I said there's no way. He barely won in Georgia the first time.

[Patrick McHenry]

But he shouldn't have won at all.

[Joe Kernan]

I know he shouldn't.

[Patrick McHenry]

It's a Republican state.

[Joe Kernan]

And Trump, we all remember what happened to David Perdue and he, oh yeah, he missed by like decimal points. And then there had to be the runoff and that's the only reason I think it finally happened. But. So he's well thought of in Georgia at this point.

[Patrick McHenry]

Well, yeah, and he's, and he's likely to win re election in a state that president that, that President Trump carried that Republicans control every apparatus of the statewide electeds in. Crazy again.

[Joe Kernan]

Kamala Harris, everybody. She's at the top of everyone. Would they do that?

[Patrick McHenry]

Are they answering a call no one made. That is the Kamala Harris presidential campaign. Nobody is asking her to come back. And you know, the party's not begging.

[Joe Kernan]

You don't think, aoc, that they're not crazy enough to do that, are they?

[Patrick McHenry]

Them aoc, the electorate right now is. The Democratic electorate is crazy, completely crazy right now. So I don't, I don't, I don't discount

[Joe Kernan]

Paul with great hair you got.

[Patrick McHenry]

Right. Yes.

[Joe Kernan]

I don't care about what's going on in the state. I mean, he looks apart, doesn't he? And he's got a little something on Twitter where he tries to be as nasty as what people think President Trump is. He tries to mirror that, to say, well, we finally got someone that can go.

[Patrick McHenry]

But he's got no traction. There's no umph. There's nothing. There's no there there. And I think it's wild to watch that he's spewing all this stuff but not getting any sort of forward motion.

[Joe Kernan]

Does President Trump in the Republicans get anything done between now and the midterms and then afterwards? Clarity Act.

[Patrick McHenry]

Okay, so, so unwinding. So you have the housing bill that the president didn't sign. First bill since President Obama didn't sign the Iran sanctions bill in 2016. So it happens from time to time. But a presidential priority made its way through the House and the Senate. You had two House bills, two Senate bills, the haggling between the House and the Senate, Republican and Democrat bipartisan bills that get to the president's desk overwhelmed by the politics of immigration, and that's why President Trump doesn't sign it. But a legislative Success for the White House. Nonetheless, clarity is the next is the crypto market structure bill that Chairman French Hill, my, my successor Financial Services Committee is shepherded through. The Senate is working through its process. You already see a signaling from Leader Thune that they're going to put that on the Senate floor. They're going to try and trying may actually just dislodge this. This is what happened with the stablecoin bill at the beginning of the Congress. They tried. They had a Senate floor vote. It failed. That then got negotiations going.

[Andrew Ross Sorkin]

I got one more, one more thought about the aoc. Who, who, who shows up on the Democratic side. Now we're to 2028. In my question. How much does it matter who the Republican candidate is? Because I could see if it's JD Vance on one side that might create a sort of reactionary force on the other for a different kind of candidate compared to if it's a Marco Rubio, for example.

[Patrick McHenry]

Yes. And these are wonderful theoreticals that, that J.D. vance will not get the Trump nominee Trump nomination. And I said it correctly. Versus Marco Rubio not getting the president's. Well, the vice president is not going to be fired. So everybody's going through this divining how you know, Marco is Secretary of State and gets the nomination. JD Sits there on the sidelines. It's not going to happen.

[Andrew Ross Sorkin]

So you say J.D.

[Patrick McHenry]

vance, J.D. is the guy Republican nominee.

[Andrew Ross Sorkin]

Full stop.

[Patrick McHenry]

Full stop. Done.

[Andrew Ross Sorkin]

So we should stop. We should stop this conversation about Marco Rubio.

[Patrick McHenry]

Oh, I think it's fascinating because, because the online means the memes of this.

[Andrew Ross Sorkin]

But it seems like the president is often engaging in it. Oh, he loves it.

[Patrick McHenry]

He loves it. He loves the dance, he loves the competition and he loves the perception of competition. And he's going to continue with this because it is great theater to watch.

[Andrew Ross Sorkin]

But you're saying a lot of fun to hear theater. But you know, you know the ending of the movie.

[Patrick McHenry]

The end, the end of the movie is Jamie Vance is a Republican nominee in 2020.

[Andrew Ross Sorkin]

Okay, well then we should maybe stop it. The stop the show.

[Patrick McHenry]

Oh, no, no. The show will not stop because the press, as soon as they say this

[Joe Kernan]

bill must go on.

[Patrick McHenry]

Yeah. Well, we might see a true social where I just said something completely inflammatory and the president disagrees. But I think what you see from this connectivity that Marco has that he's the fix it man of everything. Right, right.

[Joe Kernan]

That's the meme you're talking about. Yeah. Reflecting pool, finding out he's got to

[Andrew Ross Sorkin]

be and stuff like that. Right.

[Joe Kernan]

Be the new coach of the. Yeah, every single opening that comes up.

[Patrick McHenry]

He's, you know, he's the fix it guy.

[Andrew Ross Sorkin]

Right.

[Patrick McHenry]

So he's got this great connectivity with Republican voters. I think he is about where the Republican Party is, frankly, the mass of the electorate. I think J.D. vance is trying to create a Trump MAGA ideology that is. That is not, well, time. It's not time tested on whether or not it's the ideology or the person is the driving force. The.

[Andrew Ross Sorkin]

It can't be Trump 2.0, you think?

[Patrick McHenry]

No, he's got to go articulate his own thing in 2028. We're going to be in a very different place by 2020.

[Joe Kernan]

He might get the Joy Behar endorsement. You know, everybody's looking for that.

[Patrick McHenry]

Which means he will not get the Joe Kernan.

[Joe Kernan]

No, he. I like. I like him a lot. I do. Not that that matters, but I like

[Patrick McHenry]

you a lot, too.

[Joe Kernan]

I know. I've told you that before. Good to have you on.

[Patrick McHenry]

Great to be with you.

[Becky Quick]

Still to come on Squawk Pod Will a Hollywood stalwart leave Hollywood? The chances that Paramount may uproot from California due to pressure from state officials. We have the Semaphore reporter with the exclusive story that is shaking up the media industry.

[Rohan Goswami]

I think it's really hard for David Ellison to acknowledge the fact a state that he grew up in. Right. That he went to school in, has displayed such vitriol to him.

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Chase Sapphire Preferred Spokesperson]

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[AT&T Business Wireless Spokesperson]

Not every sale happens at the register before AT&T business Wireless checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time. Sometimes.

[Andrew Ross Sorkin]

AT&T business wireless connecting changes everything.

[Becky Quick]

This is Squawk Pod.

[Andrew Ross Sorkin]

You're watching Squawk Box on cnbc. I'm Andrew Sorkin along with Joe Kernan and Becky Quick. Paramount may be considering moving out of California. Semaphore reporting the studio could move its corporate headquarters and shift billions of dollars in planned spending out of the state over attempts to derail its takeover of Warner Brothers. Joining us right now is the author of that story, Rohan Goswami. Good morning.

[Rohan Goswami]

Morning, Andrew.

[Andrew Ross Sorkin]

How are you?

[Rohan Goswami]

Good to see you.

[Andrew Ross Sorkin]

So we all read the report.

[Rohan Goswami]

I'm glad.

[Andrew Ross Sorkin]

What I can't figure out, sure, without giving away your sources, is how much of this is his friends or other people telling him he should, meaning David Ellison, that he should be moving out of the state versus that he's actually considering moving out of the state.

[Rohan Goswami]

I think it's really hard for David Ellison to acknowledge the fact to state that he grew up in. Right. That he went to school in. Has displayed such vitriol to him. But he is a fiduciary due to shareholders. He knows that just because he loves California doesn't necessarily mean that's the best thing for Paramount. So the conversations that I've had with people in and around this, it became clear that this is sort of a begrudging acknowledgment that the business environment for him was, as one of his confidants said, inhospitable. I think that if we were to ask this question a month ago, it would have been a nonstarter. Now we're days away from the suit. The Times, of course, reporting that four. Four states are going to join California, at least in that effort. It's very clear to him, at least, that something has to change if Bhatta doesn't give in. My sense is that he is much closer to being willing to leave, whether it's for another state or, you know, reducing production at a mass.

[Andrew Ross Sorkin]

So where do you think he would move, though? Because, well, two things. One is, if he does move or the threat of all this, does this change any kind of calculus for the state? Meaning? Meaning a story like this, I imagine, is intended. You're just reporting the facts, but the idea is intended to some degree to say to the state, hey, guys, you do this?

But it's just, we're out of here. Corporate headquarters. Not necessarily everything. We've watched Chevron do this.

[Rohan Goswami]

Exactly. Chevron did the same thing in response to oil and gas regulations, but they

[Andrew Ross Sorkin]

actually shut down their refinery there.

[Rohan Goswami]

And that is what is unclear. Obviously. Paramount has a very valuable and saleable lot in the heart of LA. It's a $2 billion property, at least. Now, in the conversations I had with people, it wasn't clear what they would do with that asset yet. But in terms of spending, recall that as part of trying to close this deal, Paramount has offered to increase their spending up to $30 billion. That's more than Netflix. It's more than Disney. Those dollars aren't currently flowing into L. A. Right. But Ellison wants to bring back production to that region, which, of course, as we all know, has fled to Canada, New York, New Jersey, Texaco, Texas, Tennessee, all over the place.

[Andrew Ross Sorkin]

There's a bit of a prisoner's dilemma situation, though, because you just talked about this asset, which is the studios.

[Rohan Goswami]

Yeah.

[Andrew Ross Sorkin]

If you say you're leaving that asset to potentially becomes actually less valuable, not more.

[Rohan Goswami]

Right. Because there's less production in the state.

[Andrew Ross Sorkin]

Bingo.

[Rohan Goswami]

There's more of a problem there. That being said, I mean, there have been any sorts of novel ideas around redeveloping these deals. These are in the heart of. Down in the heart of Los Angeles.

[Andrew Ross Sorkin]

It's a studio town. If you redevelop them to be.

What I mean. But. But is this simply. I mean, I was just thinking ExxonMob just took its corporate headquarters out of New Jersey and moved it to Texas. They didn't really move much of anything. This is just basically saying we're going to be based here so that our laws, the way we're governed is governed by Texas law.

[Rohan Goswami]

Exxon's comparison is actually probably a really apt one because obviously Exxon moved to Texas because it is more friendly to management. It's slightly less friendly to shareholders, more friendly to management here.

[Andrew Ross Sorkin]

Their management was already in Texas.

[Rohan Goswami]

Right, exactly. But from an incorporation, from a sort of a. From a state business, this law, as opposed to Delaware here. The issue, I think, for Ellison is the state has shown such hostility. I should. I should differentiate between Newsom and Rob onto the who's who's bringing that to. But Bonta has, according to my sources, steadfastly refused to engage beyond telling Ellison, we want a structural remedy. We want a breakup of this company somehow. No specifics on what that is, whether that's the studios being separate somehow or that CNN being hived off. So from his point of view, if he has a fiduciary obligation to shareholders to maximize value to run this business efficiently, and he's also garnered, if not slightly controversial than DOJ antitrust approval. I don't know how many jurisdictions now. It's dozens of worldwide jurisdictions. It is from his perspective, I think, a little galling that the state that he's willing to spend tens of billions of dollars in isn't really interested in his business.

[Andrew Ross Sorkin]

Okay, help us with one other major piece of this, which is there is lots of conversation that potentially they could somehow close this transaction first and then let the states sue them afterwards. How does that work? I've heard that repeatedly, but I don't understand the mechanics of it. If, if true.

[Rohan Goswami]

I don't think that's true.

[Andrew Ross Sorkin]

Okay.

[Rohan Goswami]

I don't see a world. Of course they want to say that because if, if they delay, close, they're on the hook for $625 million a quarter to shareholders. So they may want to say that. I've never heard of a situation where this deal actually closes. Now there are some comparisons, sure. You could look at HP deal for Juniper, which is states are trying to unwind. You could look at Live Nation, which states are trying to break up. But those are post ventive factors about mergers that were already approved and closed before the state seat.

[Andrew Ross Sorkin]

What do you know about Bonto? We've had him on the program. Remember he's the AG from California who came in.

Yep.

Was it ExxonMobil? I think was. Was who he. Was it Exxon was a Chevron. I think it was Exxon. Because you asked him. Joe. I forget. How was he planning on getting back? It was something. Is he running for higher office?

[Joe Kernan]

It was about jet fuel and, and then I said you didn't fly here. Oh yeah, well, I flew here but you know, that's me. You know, it was very weird, the hypocrisy. It was like dripping with, with hip hop. Nothing he said made sense.

[Rohan Goswami]

You know, covering M and A. I don't get to get in the weeds of all the state agents. But of course, you know, state agents are incredibly important in this process. I called around by about this guy and one M&A lawyer told me something which he thought was incredibly telling. This was months ago, Right? Rob Banta is a person who doesn't know what he wants here but knows he needs to want something. Right. In other words, the doj Omida Sefi, the former Antitrust chief. They're no longer there, but sort of took a very light touch approach to antitrust enforcement. This created a great vacuum for the state to step in. It's been openly speculated that he has higher political ambitions. You guys should have him on and ask him for yourself. But that does seem to be from where Paramount sits, from where a lot of the Eminem M and A world looks at this as a motivation for why he would bring the suit. Because it's also until yesterday when the Times reported that the concerns from the states were centered around these tentpole films, right. It wasn't clear for months to people what the actual concerns were around the law. There was a lot of noise, right, about CNN and about whether Barry Weiss would run that, whether there would be some sort of changes in editorial there. There was a lot of angst about employment and about theatrical release. These are things that Paramount has at least seen, said it's going to try and fix. So the actual law around the antitrust is still very fuzzy.

[Andrew Ross Sorkin]

Fair enough.

[Joe Kernan]

It was about recycling something. And he said they're not doing.

[Becky Quick]

That's what it was.

[Andrew Ross Sorkin]

It was recycling plastics. It was recycling plastics, saying that they

[Joe Kernan]

were recycling it into jet fuel. And he, and he said that doesn't count to recycle it in the jet fuel. And I said, well, why doesn't that counter? Well, because you're making jet fuel, which just adds to the climate problem. And I go, so you walk, you walk back here. He's perfect for California.

[Andrew Ross Sorkin]

But, but the law. But the larger piece of this is take California out of it. It sounds like we've got another three, three, three states that are going to sue anyway.

[Rohan Goswami]

But then the problem is the California

[Andrew Ross Sorkin]

is the one who brought them along.

[Rohan Goswami]

And you also have the financial burden that comes with bringing this suit. Right? California is a relatively well endowed AG's office. New York, on the other hand, while it's well endowed, has a lot of other demands on its time, both from an antitrust perspective and just a regulatory perspective. Connecticut, my home state. What the heck are they going to do, right?

[Andrew Ross Sorkin]

Rohan, thank you.

[Rohan Goswami]

Appreciate it.

[Andrew Ross Sorkin]

Thanks guys. Thanks for coming in.

[Becky Quick]

That is Squawk Pod for today. Thanks for listening. Thanks for starting your week with us. Tomorrow on the pod. Social Capital founder and all in podcast host Chamath Palihapitiya will be our special guest. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Follow Squawkpod wherever you get your podcasts. We'll meet you right back here tomorrow.

[Andrew Ross Sorkin]

We are clear. Thanks guys so much.

[Chase Sapphire Preferred Spokesperson]

This year's girls trip to Telluride was the best. We one uped ourselves with my Sapphire Preferred card and with five times points on Chase Travel, plus three times points on vacation homes with top brands, we got this incredible cabin. It was a mansion. And with three times the points on dining, we ordered a Wagyu steak dinner and that pistachio gelato was too good. So where should we go next year? I've got ideas. Chase Sapphire Preferred the card that's preferred for a reason. Cards issued by JP Morgan, Chase bank and a member FDIC subject to credit approval terms apply.