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We've spent the better part of the week talking about a potential deal on the border funding for Israel Ukraine, maybe a breakthrough in the Senate, the Senate, the House. We're out today. We only have a couple legislative days left here. They've got through the end of next week essentially to get something done, and we're going to talk to Congressman Don Bayer about that in just a moment. The headline, though on jobs is stronger than expected, pretty
much across the board. As we connect with our friend Michael McKee in New York, Bloomberg Economics Editor, one hundred and ninety nine thousand jobs. Michael, it's great to see you. I heard you live at eight thirty, and I know you've been talking about this ever since. I can tick through the data. If you're listening to Bloomberg, if you have a terminal, you don't need me to tell you. Monthly wage growth rising more than expected, workforce participation up.
It's hard to find bad news in here, I guess, depending on how you look at things. Michael McKee, what does it mean for the Fed next week?
Well, it's good news for the FED basically tells them that we are still seeing strength in the economy. It has slowed, hiring is lower than it was, but we're seeing wage gains and the rate of wage gains is slowing, so less inflation pressure. But overall it fits Goldilocks soft
landing scenario quite well. I joked earlier today that I wish I had been at the Council of Economic Advisors this morning when they opened the champagne bottles, because this is certainly a good news for the Biden administration.
Sure is. I mean, look, I guess it's good to see wage growth in an era of inflation. But doesn't this become the definition of inflation area at some point, Michael, or am I reading it wrong?
Well, it would if it were continuing to go up. But what we're seeing is wage growth coming down. The FED thinks that average hourly earnings of between three and three and a half percent are what's sustainable with two percent inflation. It still leaves you a little ahead of inflation, and so we're down to four percent now, so we're getting into that range, and as long as it continues
in that direction, the Fed will feel justified. Then the question becomes if we get down to the three and a half percent range and inflation continues to fall, when do they start cutting interest rates? That'll be a key question that'll be asked if Jay poll next week.
So this is sweet music for the White House, obviously, Michael, it would be an orchestra though if we actually did see a soft landing at some point in what's going to be a reelection year, potentially for Joe Biden, certainly a campaign year. But Bloomberg Economics is telling us that a recession probably already started in October. How do we rationalize that call.
Well, nobody's been able to predict recessions with any accuracy. We find out later that we were in a recession because the numbers get revised, and they get revised lower to show that things were actually contracting. Right now, it doesn't seem like that's the case. That we're seeing still still growth in just about every category, and certainly the hiring levels and the unemployment rate of three point seven
percent suggests that we're not in recession. It could always be changed, and we could find out in the new year that we are.
But at this.
Point it looks like a soft landing. The issue is how do you define it in terms of time. You could come out if you were Jay Powell or Joe Biden right now and say, well, we had a soft landing. Do you wait until you get to two percent inflation sometime next year? Because the economy is always evolving, so you're always at risk of while we had it. And then it left.
Good to see you, Michael, have a great weekend. Thanks for the good news. Michael McKee, Bloomberg Economics Editor, with us from world headquarters in New York. As we turned to the Congressman from Virginia, Don Byer, the Democrat from the Commonwealth, is with us. At least you're still here, Congressman. By the nature of your district, of course, I know a lot of lawmakers have headed home for the weekend, and I love to start with you. Welcome back on
the news on jobs here. Aren't you itching to see that Michigan accomplished banner? Go up here see Joe Biden take victory for beating inflation. For accomplishing the soft landing. Is this it right now?
Well, Jay, I wish it were that simple. But there's a lot of really good news. I loved your interview. You just had the fact that it's the fourteen million new jobs in the Biden administration. This is the twenty second straight month we've been below four percent unemployment rate. That's never happened in our lives. And now we see inflations down to about a third of what it was
a year ago. I was fascinating to see the Michigan Consumer Sentiment at Index this morning that Americans are beginning to see feel and project much lower interest expectations, including an eight year range of two point eight percent. So we're moving in the right direction. The problem we have, and I think most people have comment on this, is that we have not gotten used to the nine ten percent of higher prices that hit us last year when the inflation was so high. So food still costs more
than we think it should. Gasoline's getting in the right place, which is great. But you know, unless we expect massive deflation, which would be terrible for the economy, we're not going to go back to the prices the way they were and that's going to make us pretty unhappy for the middle run.
And that's why Joe Biden looks at that historically low approval rating. He's in the upper thirties, low forties, depending on the poll that you're watching. Congressman, Can that change in the next year?
I think so. And you know, if the Fed starts to move those rates down, that will be a wonderful thing. I mean, the markets are going to love it, and I think the people will feel much better about it. Here right now, it's pretty hard to buy a new home when you know thirty year interest rates or six seven eight percent. So I'm hoping that Jay Powell and his team look at these numbers and say, Okay, we've done enough. Let's start to move this loos in this economy a little bit more.
Well, that would be a good thing. There's a thought, though, that what's happening on Capitol Hill is an economic risk in itself. Congressman, and I wonder your thoughts on this. As a member of the minority party, you're a bystander in some cases when it comes to the dysfunction that we've seen. But is it likely we're going to go into this recess next week without anything being accomplished on funding for Israel, for Ukraine on the border, or for overall government funding.
Joe, there's three big things hanging over us in the next six seven days. One are the FAISA seven h two law, which is basically came after nine to eleven, which gives our Intelligence Committee the ability to listen in on foreign conversations. That expires twelve thirty one, and we really dare not have it be out of not the law for even a day, so we've got to get that done. The FAA is about to expire again, so we need the Federal Aviation Administration to be authorized this week.
But the big thing is Ukraine's out of money and they're out of weapons. They desperately need the new investment from the USA, and that's you know, sixty billion dollars is what the President's asked for. Israel is really looking forward to its investment, and the people in Palestine need that humanitarian assistance. All three of them right now are hinging on whether or not we can get agreement on
border control. Basically, the Center Republicans have said, without significant change in the border laws, you know, it's just toughening up the border. They won't move forward. They've turned down all the Biden us for more money for Bord regards for judges to process assilent applications. I'm hoping that Senator Chris Murphy, a Democrat from Connecticut, who's leading the charge on our side, will be able to come up with a good compromise and we can get that done this coming week.
Well, I'm by the boys.
Now.
That would be a piece.
It is a dangerous thing in terms of handing Ukraine back to Putin.
I get it. If you accomplished that next week, though, this would be this would be a screamer of a headline. As we say in the business, it's been twenty thirty years in the making to actually get Republicans and Democrats together here and pass legislation, not just an agreement, but
make it law. Congressman, there's a report from Reuters today the Biden administration is considering supporting new restrictions on who can seek asylum, defining asylum more narrowly, as well as an expanded deportation process, maybe open to designating additional safe third countries. Is that what you're hearing from the White House. Would you support those measures?
Yes? I would, and I think, you know, Joe, we're looking at eleven twelve thousand people a day crossing the border. And these aren't folks swimming across the Rio Grande. They're walking across the bridge from Warez to l Passo and turning themselves in and claiming asylum. And we have a
very generous asylum system. Because we can't process them it's two, three, four years to get a hearing, we release them into the countryside the so called you know, humanitarian parole, and then we end up with ever more people without papers in the US who can't work in the normal economy. We've got to do something. Even when democratic city is like New York and Chicago are pushing back hard, we know that there has to be a bipartisan solution.
That's an important statement for a Democrat to say to your colleagues you're talking with when reporters like me are not around feel the same way, or is this going to be something that Democrats need to do some soul searching on before voting next week If it really came to that.
Yes, some soul searching. And certainly not everyone on the Democratic side agrees with me. You know, we have a there's a natural conflict between our compassion, our desire to help every human being and take care of people who are fleeing your murder and sexual assault and deep poverty at the same time, recognizing, as Barack Obama said that we're not a country if we don't have a border, and I think there are ways we can work together.
One of the pushbacks from my Republican pals is they don't want to give citizenship access to the Dreamers or to the people that have been here on temporary protective status sometimes for decades. And one of the things we want to see, as Democrats in fact seen reright House officials said, you know, I'll trade all kinds of border security for the right of our dreamers to have a path to citizenship.
Well, all right, so let's stop right there, because I haven't heard that word from a Democrat on the program, Congressmen, since this debate began about border security, the throws of debate that we're in right now, the idea is, instead of asking for help with Dreamers, Democrats will trade border reform for Ukraine funding. What about dreamers? My goodness, they're old enough to have kids themselves now.
Oh, I thank you a lot of them now. There are many in my district in northern Virginia, and you know, they're the heart of our economy. They're all valedictorians of their high school classes, and they're doing really well in our Virginia colleges and universities. But you're right, some of them are getting to be into their thirties with families of their own and still don't feel like they can be American citizens, no green cards. It's really unfair.
But they're not going to be part of this deal, though, are they?
Well?
I wish they were. I'm not a senator, so I'm not part of those conversations. I'm certainly hoping that people like Christoph Murphy are asking that as our part of the deal.
Spending time with Congressman Don Byer on Bloomberg's sound on Congressman, I'd love to ask you about the rub when it comes to Israel as well, because a number of progressive Democrats, and in this case, many Senators, are asking for humanitarian strings attached to the money, if you will, it's not just Israel technically as Ukraine as well, but Chris van Holland about a dozen progressive Democratic senators have put up this amendment to the supplemental that would require exported offensive
weapons be used quote in accordance with US law, international humanitarian law, and the law of armed conflict. Would also require a report to Congress on each country's use of US supplied weapons. Isn't that already implied in an arms sharing agreement? Congressman, do we need that?
Well?
I think all that Senator Van Hollo is trying to do is emphasize it because it already is the law. We certainly inspect Israel and Ukraine and Russia and well comas not to obey international law and Geneva Convention and all that. Yeah, so I have no objection to the amendment, but it should be being being done already.
You know one thing we started on the jobs report last thing we talked about when you were here. As someone who has worked a career in the auto business, Congressman, that of course would be you. We saw the impact of the UAW strike coming to an end. It's partly why this Job's report was so strong. Are you happy with the terms of that contractor that they get too much from the Big Three?
No? I am happy for the terms with it and Sadly, the incomes of the top executives were so out of skew with what the average worker was making. They had a really strong case to make. And those auto workers they've sucked it up, sucked it up and took a big hit in two thousand and eight, two thousand and nine at the Great Recession when the Carter Governor stepped into say at the car manufacturers. Now they're just trying to begin to catch up from all those years of
the left behind. I think it was a good deal.
Glad you could join us, Congressman. I hope you have a great weekend. If I don't see you again, have a great holiday season. And thanks for the insights from the great state of Virginia. Congressman Don Byer, the Democrat with the setting us up for our panel, Rick and Junie or on the way in next.
You're listening to the Bloomberg Sound on podcast. Catch the program live weekdays at one Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
We should hear from the RNC on whether it's going to allow Republican presidential candidates to take part in unsanctioned debates. The funny part is they're already scheduling them, and I'm not sure what that says about the role of the RNC is playing here. As we reassembled our panel, we've got a couple of pretty important headlines on the campaign trail. Reminding we told you about this yesterday. There are debates coming together in Iowa about five days before the caucuses
and two days before New Hampshire. In Manchester, there might even be competing debates. We'll see who shows up. I'm assuming Ronda Santis will still be there as we bring you the story here, great reporting from Nancy Cook. It's an exclusive at Bloomberg Ronda Santa's super pack canceling a donor event before the debate the other night that would have included a ticket to the event, citing a lack of interest among donors. That's tough. Rick Davis and Genie
Shanzo back with us. Rick, this Republican is having trouble resonating. You've suggested he might not make it to New Hampshire. Where's your head today?
Yeah, I think that's still the case. You have to have a rationale to how to win, and and if if you predicate all of that on saying you're going to win Iowa, and Ron DeSantis, for instance, said I'm going to win Iowa. Now, anything short of winning Iowa is going to be looking like a big defeat for him. I don't know why he would have put that marker out, it was a relatively recent thing, and maybe just feeling
defensive about his flagging campaign. But the bottom line is he sets expectations, the media will follow those expectations to where he is, and then if he doesn't win, even if he has a great showing, they're going to say, oh, but he said he was going to win and now he didn't.
So and there's no expectation that.
Anybody has of him being competitive until maybe when they get back down to Florida.
But that's way too long.
The last the lesson we learned from Rudy Giuliani is he can't lose, lose, lose, and then expect to win.
You can't start your campaign in Florida. I don't know if we're reading into this a little bit here, Genie. But the Never Back Down a pack had planned this luncheon. They invited three thousand people and it wasn't cheap. Ten thousand dollars contribution would give you access to this luncheon. This, by the way, was in Tuscaloosa. This is Rick Davis Country here as well as a ticket to the debate itself and an invite to a post debate celebration if
you want to hang out with the governor. Just before the debate, Never back Down decided to cancel the lunch, Genie, What does that mean?
Never back Down has backed down Joe, And you.
Know, yes, that's right.
I'm seldom empathetic to run DeSantis, but as you go through that in such detail, it makes me feel badly for him. You know, his campaign has been in a bit of chaos. Never back Down losing leadership, been in chaos. His poll numbers have been going in exactly the wrong direction.
You know.
I think we have to keep in mind we don't get a lot of public polls from Iowa of late. But I think this is, you know, another in a continuing assign that his campaign is faltering. I agree, he may not be there. Maybe he shouldn't be there in
New Hampshire depending on what happens in Iowa. But keep in mind, even if he was able to squeak out Iowa after his ninety nine county tour, Iowa is seldom a predictor of the winner of the primary, and his numbers simply don't look good in the remaining states as of now, So he is not in a good position. I think we're gonna see Sununu in New Hampshire make an endorsement fairly soon, and I suspect he is not looking as kindly at Disantis as he would have been maybe six or eight months ago.
Similar events in Miami around the debate there in November raised roughly a million dollars for Never Back Down pack Rick. You've put events like that together. Is this just the nature of the business. Sometimes they don't pan out. You go to Tuscaloosa, maybe you don't have the network there you thought you had, or is this actually a signed that we should be looking at.
It's hard to get people to go to Tee Town other than on Saturdays of home games, and so I think that if Alabama was playing Auburn, you wouldn't have you'd have a crowd but the bottom line is his pack is in trouble. Most of their senior leadership have left. They've actually, you know, tried to start a new super pack to support the DeSantis campaign. What do you need a new one for if the one you currently have that you gave, you know, eighty million dollars to is
working fine. So there's just something that smells bad under the cover. None of this stuff adds up. And as you say, if you're having trouble raising money at an event where arguably he did a pretty good job at the debate, so they clearly had a lot running on that, I think it's just it's an indication that there's a
level of dysfunction that could be problematic. And and if they're running out of money, that's even a bigger problem because different from most Superpa super packs, never backed out is actually running the campaign. I mean, it's almost like the Santas campaign is a guest of never back down in this election, and they're doing all the organizational work
in Iowa. They're doing all the get out to vote, they're doing all the caucus organizing, they're doing the ID This is all things that campaigns generally take responsibily for because they know if anything goes wrong, you're completely out of the race. And that seems to be what's happening here.
Wow, we'll get ready for the ads. Axios had some fascinating numbers this morning, Genie on political advertising group m forecasting that ad spend could reach fifteen point nine billion dollars in twenty twenty four, seventeen billion when you include direct mail, while ad Impact tells this more than one hundred million dollars was spent September through September on Republican primary rate. That's more than we've seen in any other cycle.
We're about to get delu'sed, Genie, when does Joe Biden start spending some money on ads?
Already spending he has spent more than most of his predecessors to this point. But to your point, he is going to be investing more. But you know, gosh, who wants to live in one of these swing states now? Because you know those of us saying we're not going to be getting these But if you are in Michigan or you're in Pennsylvania, your life is pretty much going
to be these ads. And that's true whether you're watching TV or whether you're online I mean it is going to be insanity in those five or six or seven if you will state so you know, get ready, you got to buckle in. They're prepared for it. But it's bad.
It's a lot of money here, Rick, one hundred million dollars, so it really will come down to a battle of dollars at some point. I find it fascinating. Now streaming TV is the new frontier for political advertising. Is it worth the money?
Yeah?
Look I love streaming TV. You get all kinds of feedback mechanisms.
You know whether or not somebody who's actually watching when your commercial ran, You know the demographics of the people, you know the exact location.
The targeting is amazing. Rick Davis, Genie Shanzano insiders with us every day on sound On. I'm Joe Matthew in Washington. I'm glad you're with us. This is Bloomberg.
You're listening to the Bloomberg Sound on podcast. Catch us live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
We're just coming off that week long pause. They never used that word because it has implications. Secretary General who Terra has talked about this yesterday.
There is a high risk of the total collapse of the humanitarian support system in Gaza, which would have devastating consequences.
Devastating consequences. That vote could come as little as an hour's time. And we're joined right now by Nick Wadams, who runs our national security team here at Bloomberg in Washington. It's good to see you.
Next.
The significance of this vote, knowing that Tel Aviv will not respond to it.
Is what, Well, that's a great question. And when we ask a lot at the UN when there is just so much talk and so often so little action, this one does feel a little bit different, though, because what you're seeing here is whether the US is going to veto this resolution and really just stay in lockstep with Israel and give Israel the cover it needs to press ahead, or whether this US is going to signal it's sort of growing alarm and dissatisfaction with the way Israel has
conducted this campaign. So it might not vote yes, but it might not vote no. It might abstain, allow the vote to pass, put more scrutiny on Israel and say Listen, you guys, if you want our support, you need to get your act together. The calls for something, you know, protection of civilians is getting louder, and you got to do something because what we're seeing so far is not up to snuff.
Has the Security Council done the same thing for the war in Ukraine knowing that Russia is a member.
Well, I mean they can't do anything on Ukraine because Russia just paralyzes absolutely everything. And you're seeing that play out a little bit here as well, where you know, the US and Russia are so at odds over absolutely everything, including this one, and so it's just absolutely freezes things. So if they the US did abstain from a resolution last month where they called for humanitarian pauses different from a ceasefires, but you know, so they did allow some
action to get through. But you know, it's looking pretty bad on this one.
I have to say.
The IDF is driving into southern Gaza. We've been talking about this for a couple of days now. There are great concerns about civilian casualties that we've been hearing about that as well. As a matter of fact, Anthony Blincoln spoke about this in an unrelated news conference earlier today. Listen to the Secretary of State.
It is imperative, it remains imperative that Israel put a premium on civilian protection. And there does remain a gap between exactly what I said when I was there, the intent to protect civilians, and the actual results that were seeing on the ground.
What do you make of that line, a gap between intent and results? What does the White House want to see?
Well, the days he's referring to something very specific there, which is that when he went to Israel last week, he came out and said he got very specific assurances from Israeli leaders that they would create safe zones, they would warn people about when they were going to strike certain areas, all with the intent of not doing what they had done in northern Gaza to the south. He had been very clear listening, you cannot cause the almost
total destruction of northern Gaza in the south. And he came out and said, you know, listen, my trip was successful because Israeli leaders assured me that they would put these protections in place. That was the whole reason he went to Israel on that trip. He's now saying, well, I'm back in the US, they're prosecuting that campaign and reality is not living up to the promises that they made. To me, question is what is he going to do about that? And so far the US has not really done much.
Well.
He did balance that statement with some of the things you just mentioned. He said they're doing a better job. They're evacuating neighborhoods instead of cities, they're establishing the safe zones you mentioned, they're focusing on a more narrow area. What else did Israel.
Promise, Well, that's we don't exactly know what they promised, but I think what he's referring there also is a couple of instances where you have had these mass casualty events striking buildings, where you've had dozens of people killed at once. I mean, it's a very difficult balance for the US because on the one hand, they're calling for Israel to protect civilians. On the other hand, the US is sending Israel these bunker buster bombs artillery shells that
are not cannot be narrowly targeted. So, you know, you can make the argument that in some ways the US is talking out of both sides of his amouth, saying hey, you got to do this, But at the same time, we're going to send you these two thousand pound bunker buster bombs whose whole point is to not be terribly discriminate in their actions, so I think, but what he's
saying there really is like you made those promises. We are seeing some things on the ground, but you're not doing enough, and we can't keep having these attacks where dozens of people are killed all at once, you know, innocent civilians.
It's really helpful, Nicki're reporting has been indispensable since this all started, much like it has been the last two years in Ukraine, and we thank you for shank you with us. As always, he runs our national security team here at Bloomberg and Washington, Nick Watdams as we add the voice of General Ben Hodges back with us here on Bloomberg's sound on former Commanding General US Army Europe. It's good to see you. General. Thank you for coming
to Nick's point. I know you were listening to our conversation. Is the US showing a double standard here sending the munitions, the bunker busting bombs one hundred and fifty five millimeters shells that Nick is referring to, but then also demanding restraints and the preservation of civilian life. Are we asking too much?
Well, I have to say I was very impressed with Nick's reporting there. I mean that really was a good description of the situation and the challenge, and also the efforts by Irish Secretary of State to press Israel. It's not that we're setting a double standard. It's that Israel has failed to have a political outcome as part of the overall strategic in state that they want for this war.
It's all kinetic. And if I put myself in the shoes of an Israeli battalion commander or a company commander, and my mission is to destroy Hamas without having a political in state, that should be something like a two state solution where we're going to have to live with
Arabs after this is over. It makes it extremely difficult for soldiers to do their job, and so you end up with people looking over your shoulder, whether it's the media or lawyers telling you, well, you can't hit that building, but you can hit that building, or you can't use this,
but you can use this. And I think the fatal error that the nen Yahoo government is making here is that they have not come up with a strategic instate with a political component that will inform how the military does its job.
General, you served in both the Afghanistan and Iraq wars. We spent a lot of talk about urban warfare, about what the IDF is facing and why in some cases they don't find it appropriate to send boots into these neighborhoods, striking from a distance or from above. In terms of the air war, here is Gaza another Fallujah. How do you look at it?
Well, this is much worse than Felujah for sure, partly because, yes, because of the density of civilians that are packed in there, and the Hamas unwillingness to let them or to continue using them as shields, because they can see that the objective given to the IDF by Prime Minster Nan Yahoo, it's it's guaranteed that they're going to continue using force against civilian targets. I'm sure that whatever Secretary of Lincoln was told they were sincere. But the Prime Minister ultimately
is responsible, and soldiers are responsible. Even if Hamas uses innocent people as shields, the burden of responsibility for protecting this villion still falls, according to the law of armed conflict in this case Israeli soldiers. So of course there should be enormous global pressure on Hamas to stop doing this, but don't. I don't sense any of that is coming. And of course this creates a massive not only a massive political problem for our president, but frankly worse, the
Kremlin is the biggest beneficiary of all of this. I mean, Hamas accomplished in one day what Putin could not do in two years, and that was to make the West forget about Ukraine and so and the way. This thing is such a mess, and it's it's so devastating for innocent people, and you've got people focused on Israel and not own helping Ukraine defeat Russia. So it's not just about resources being diverted, but it's about institutional and emotional
energy that's being diverted. Iran is Russia's closest and only real ally. Russia is Iran's closest and only real ally. This is not a coincidence that Hamas has attacked Israel right now when Russia needed it the most.
That's remarkable because it's certainly turned our tension here in Washington as well. General. I don't have to tell you, I'm sure this is partly why lawmakers don't feel as motivated to fund the war in Ukraine. There seems to be a much greater appetite to help Israel, which I think you could argue needs the money less. What do you think?
Yeah, I think you're exactly right in that. This is where the President has got to lay out to the Commress and to the American people why Ukraine matters to us. Why our economy, our prosperity is tied to European security, instability and prosperity. Russia's attack on Ukraine has disrupted energy and food supplies. Inflation is driven in large part by what Russia is doing now. So this is about us
our interests, not just Ukraine. And of course if Russia has not stopped in Ukraine, they've made it very clear they will continue, So you could end up with them going against a NATO and then you've got US forces are going to have to be involved, and of course the Chinese are watching to see does the US, with all of our allies, do we have the political will, the industrial capacity, and the military capability to help Ukraine defeat Russia, help Israel defeat Hamas, while still pushing Israel
to accept a two state solution deter Iran from expanding or escalating this conflict, and then for China to see that we still have enough leftover to deter them from making a terrible miscalculation. So we've got to get organized in the West. We've got all these allies, but we're not addressing these challenges as a whole, and I think that's what we've got to do.
General, more than one hundred and thirty hostages are still being held by Hamas. Presumably they are still alive that according to Israel, at what point do we see special forces begin extracting them or do they simply not know where they are?
Excellent question. I'm sure that the Israeli Defense force and intelligence have more information on what's out there and who's still alive and where they might be, then we will know publicly. But it's still got to be very difficult Hamas. I mean, Hamas doesn't even control all of the bad guys in there, so it will be difficult to get one hundred percent confidence that we know where everybody is
and that we can get them out. And of course, you know, if it was my daughter or a friend or somebody that was a hostage, I would be in total agony wanting to do anything to get them out. But if you can step back from it and put yourself in the shoes of national leaders, hostages, even if you rescued every one of them, hamask could go get more. So at some point somebody is going to have to make a really, really hard decision about do you continue with the attack, how much risk do you take to
go in and try and extract hostages. I think the Israelis will do everything in their power to get every hostage, just like the United States would. But we have to find that balance because terrorist organizations will stop in nothing to continue getting hostages when they see the incredible leverage that they get from having them.
I have to ask you, General about what appears to be progress here and an effort to block military promotions from being confirmed in the Senate. I'm referring to Tommy Tubberville's blockade, the senator from Alabama that was a protest against the Pentagon's abortion travel policy. He's decided, General to a lot of them all go through except the four stars.
You know a little bit about this, and Tommy Tuberville has suggested that four star generals don't have a heck of a lot to do anyway, they've got big staffs to get paid too much money. What does it mean to hold up these eleven four stars in the meantime?
Such an abuse of his power there as a senator, and it creates a cynicism about the Congress, which is really unfortunate. I served three times in Army Congressional Liaison as I was coming up, and of course members will use their ability to block promotions, whether it's ambassadors, judges, or flag officers for individual reasons. But I've never seen it in many years, such a blanket abuse of this.
And of course every time I listened to the senator from Alabama, it was clear he had no clue about the impact of what he was doing or else he absolutely didn't care, which is unfortunate for a senator on the Senate Armed Services Committee and from a state that
has a significant military presence. So of course it damages not only the families of all the people involved, but it sends a statement that you okay having a senior officer, whether it's an admiral or general in these positions, well, it doesn't matter, and that undermines confidence that people have in the whole system.
Well, general. I want to thank you for coming on today. Ben Hodges, a voice of experience and authority when we need it most. I'm Joe Matthew. This is Bloomberg.
You're listening to the Bloomberg Sound on podcast. Catch us live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
Hackers have breached computers at less than ten water facilities in different parts of the country. There's one specifically in Pennsylvania that made news and led to a series of reports on the extent of this threat. And it's where we begin our conversation with and Newburger. I'm glad to say we're going to go to the White House for this because it's important to the administration, it's important to us.
The Deputy National Security Advisor for Cyber and Emerging Technology and Newburger with us from a sunny North lawn and it's great to see you and welcome back to Bloomberg. How concerned are you and what should we know about these apparent attacks on water facilities?
Thanks Joe. So companies critical services in this country face persistent, significant cyber attacks. It's a top priority for the administration. We're pushing out actionable information. We're pushing out guidelines on how to secure against it. Some companies and state and local governments have acted. We need everyone to take this as a call to action to follow that cybersecurity advice and really lock their digital doors against the threat.
Are you able to trace the source of these attacks? What's prompting them?
Great question. So two particular sets of attacks we're concerned about at this moment time. One is criminal cyber attacks against the hospital chain. It had real impact rural clinics, closed some hospitals in three states, turning away ambulances, and canceling elective services. That's done by criminals, and the White House has pushed out guidelines on how to tackle that. Second set of attacks we're tracking is an increased by Iran in cyber attacks against ten water systems in this country.
And in a similar way, there are basic cybersecurity practices like changing defall passwords and limiting administrator account access that could prevent those attacks being successful.
So that is officially, though the line from the White House that Iran was behind these ten attacks against water treatment facilities here in the United States, it.
Is, But I want to be clear, each and every day American companies critical services are facing persistent cyber attacks, and we absolutely need to do more to lock our digital doors to defend against them. Yes, sometimes in periods of crises we'll see an increase in a particular type of attack, but every single day we have too many unlocked doors and open windows in our digital cyberspace.
Yeah.
That specifically the plant in Pennsylvania that I mentioned outside Pittsburgh, the Municipal Water Authority of all Equippa serves about fifteen thousand people. We have no reason to believe that anyone is at risk. Are they just trying to let us know what they can do?
In absolutely no one is at risk. That attack had minimal impact. The water system is operating the water system manually.
What's the response then, is there an answer from the administration to an attack like this?
So there's an US and a them, and the first response needs to be to absolutely lock our digital doors against these attacks. So, for example, in the case of the water system, just last year, EPA issued a rule putting in place minimum cybersecurity practices, things like changing defall passwords things like removing or limiting the accounts administrator access. Have that rule face litigation and had to be pulled back, but there is absolutely nothing preventing every water system in
this country. Doesn't cost any money to change defall passwords, to put in place those basic cybersecurity practice. So that's the first part. There's the US part of this, which is to say we have to lock our digital doors.
And then of course there's the them piece. And from a US government perspective, there are actions we're taking every day, you know, taking down digital infrastructure, ensuring that we're making we're following the trail of who is responsible for that and handling it appropriately.
How about just remove the door. I know you want to close the door, but should these facilities be online at all? How about we take all this equipment off the internet.
And you know, it's a great question. There are real reasons to automate operations across critical services, whether it's water systems, whether it's systems. We believe that can be done securely and safely, and that's why the White House and the US government, FBI, SISA have been pushing out practical cybersecurity guidelines so we can get the benefit of new technology improve the services. Critical services are available to American citizens, but do so in a safe and secure way.
We're spending time talking with Anne Neuberger, who works inside the National Security Apparatus in the White House with a specific focus on cyber which many would say is the new frontier here. And this is the question you probably don't want to answer or cannot answer. Does the United States have offensive capabilities to go after bad actors in a place like Iran? When it comes to cyber.
Every capable nation in cyberspace is using every tool possible. The first and most important tool is defense. Absolutely, the US government also has capabilities when necessary to go on offense. But I can't emphasize enough how much the most important thing to do is to close our doors and lock our windows. I think you know in some parts of the country people feel safe leaving their car keys in their car. In cyberspace, we face persistent criminal attacks each
and every day. We don't need to wait for sophisticated countries because there is the basic cyber attacks that we can defend against and be better protected against by following the cybersecurity guidelines which US government is pushing out actively. The resources we're making available. Were absolutely committed to ensuring
every American and every critical service is safe online. But we need the partnership of those owners and operators to work with us to put in place these practices to ensure we're safe online.
So I need to change my one two three ABC password. I guess is what you're going to tell me? And Newburger, I'm on it. I just I wonder in your role, because this is relatively new for a lot of our viewers and listeners, what it is that you actually do at the White House here in the balance of distributing policy to actually pushing guidelines when it comes to managing utilities like these or other public facilities that could be targets.
Absolutely, the President has made securing digital infrastructure and absolute priority, and there's a few parts to that, right. One part of that is tracking the threat understanding who are the countries who are capable, what are the roles criminals are playing, what's financially driven crime, who are the countries harboring those individuals. That's one piece of it, so we really understand the threats we face as a country. The second piece of it is saying what do we need to do to
be most effective. There's the policy level, for example, the minimum cybersecurity practices that the Administration is put in place for pipelines, for aviation, for rail so that those sectors are doing the basics they need to do so that
they can be confident their operations are safe online. And then there's the resources, the guide books, the fiscal resources that the Administration is made available as well to help small and medium companies, state on local governments make the most of the resources they have to be safe as well.
And then there's the international partnership. So last month, for example, the end of October, actually we brought together fifty partners forty eight countries, INTERPOL, the International Police Force, and the European Union to talk about how we tackle the transnational cybercrime threat together things like how do we trace crypto the payments, the ransom payments that are fueling criminal activity around the world, how do we identify the infrastructure and
take it down, and how do we ensure that countries around the world who may be less capable know how to do forensics, know the best and the most effective cybersecurity practices. And finally, the role of tech companies in building more secure tech to make it easier to use that tech safely. So not only are we focused in understanding the threat, doing what we need to do at home with our partners, but also working around the world because it's such a transnational threat.
Yeah, and from your perch at the White House, you look down Pennsylvania Avenue and that big old building in the US Capitol where they have a lot of work to do, a lot of unresolved issues to manage before a year end. And this could be anything from funding our allies to the government certain renewals at the end of the year. I wonder to what extent the actions or a lack of action by this Congress impacts the national security of our country.
The Hill is a key partner in so many initiatives, So for example, in the area of artificial intelligence, an emerging technology area that has real promise in helping US build more secure code, in helping us find militia cyberactivity, and also real risk in terms of potentially accelerating criminals and countries finding and exploiting vulnerabilities. You see the work that Leader Schumer is doing to convene to understand to
think about the regulation needed in that space. Building upon the President's historic executive order, building upon the voluntary commitments the White has negotiated with companies. So I think that's an area where we're seeing and in cyber more broadly, really by PARTI is in partnership to take on the threats that Congress can uniquely take on and address well.
And I want you to know your area of expertise is awfully important to us and our audience here at Bloomberg. We'd love to stay in touch with you as these threats continue to emerge. I'm Joe Matthew. This is Bloomberg. Thanks for listening to the Sound On podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, and anywhere else you get your podcasts. And you can find us live every weekday from Washington, DC at one pm Eastern Time at Bloomberg dot com.