Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Here in Washington, a lot of attention is fixed on what's taking place in the Senate today, or more specifically the Dirks and Senate Office Building, where the Senate Armed Services Committee is currently and still underway, holding the confirmation hearing for the Defense Secretary designate Pete Hegseth, who, of course has been tapped by President elect Donald Trump to lead the Pentagon, an organization with more than three million people reporting up and through it, and it's been a
little contentious at times, perhaps no surprise. He's faced very difficult questions from Democrats in regard to a number of issues. But he also began the hearing by pleading his own case. Here's part of his opening statement.
Now, it is true and has been acknowledged, that I don't have a similar biography to defense secretaries of the last thirty years. But as President Trump also told me, we've repeatedly placed people atop the pentagon with supposedly the right credentials, whether they are retire generals, academics, or defense contractor executives. And where has it gotten us, he believes, and I humbly agree that it's time to give someone with dust on.
His boots the helm.
A change agent, someone with no vested interest in certain companies or specific programs or approved narratives. My only special interest is the warfighter, deterring wars and if called upon, winning wars. By ensuring our warriors never enter a fair fight, we let them win and we bring them home. Like many of my generation, I've been there. I've led troops
in combat. I've been on patrol for days. I've pulled a trigger down range, heard bullets whiz by, flexcuffed insurgents, called in close air support, led metavacsed dodged IEDs, pulled out dead bodies, and knelt before a battlefield cross. This is not academic for me. This is my life. I led then and I will lead now.
Pete Hegseth, speaking before the Senate Armed Services Committee in prepared remarks, That's how it started, not only trying to make the case for his nomination and confirmation, of course, but also trying to get ahead of some of the more difficult questions that he might be asked. And he's been asked all of them, and we've got more to go.
Here joining us a voice of experience who spent a lot of time with this committee and in rooms like these, Retired Marine Corps Major General Arnold Prenar, a former staff director the Senate Armed Services Committee, the author of IF Confirmed, an insider's view of the Senate comfort process with a perfect voice for today. General to spend some time, and we welcome you back to Bloomberg TV and Radio. As I mentioned, you've been in this room before. How's he doing.
Well?
I think he's doing extremely well. I was very impressed with his opening statement. As you mentioned, I've been involved in the confirmation process for over twelve Secretary of Defense, going all the way back to the Ford administration, both when I was on the committee the staff director of the committee and then helping various nominees since leaving government on a pro bono basis, and so most of our Secretaries of Defense get face tough questionings. But he certainly
had a very strong opening statement. I've reviewed all of his advanced policy questions. I've listened very carefully to the hearing, and he's doing exceedingly well.
In my judgment.
Well and for many of the questions he is facing, at least the ones posed by Democrats, he's kind of doing so for the first time. As multiple Democratic senators have pointed out, Sir that Hegsath declined to meet with them in advance of this hearing, even though he was taking meetings with essentially all of the Republicans on this committee. Do you think that that was a mistake or was it unnecessary in this case when he wasn't likely to be able to rely on Democratic votes anyway.
Well, typically the tradition is that nominees, and not just for the Secretary of Defense, all our defense nominees, of which they're sixty five in the Department of the Fence. So he's going to have a very strong team with him if he's confirmed, and I believe he will be confirmed, And typically they try to meet with everybody, but everybody's sidentials. I don't have any inside information other than what I just heard into hearing today.
I know nominees try to meet with everybody.
I know for a fact, that a number of the other nominees, the Secretary of the Navy, the Secretary of the Army nominee. They're meeting with both sides of the isle. So I don't know what really happened here. It's unfortunate if he didn't have a chance to meet with some of them. But on the other hand, it's not unusual. Its schedules don't match up.
Yeah, they do.
You all seem to be going out of their way to say the same thing on that front. But general, we'd love for you to bring us behind the scenes a bit and into the process. We hear a lot about mock hearings and murder boards. What goes into preparing someone like Pete Hegseth for a moment like this?
How much time do you spend with them?
How ugly does it get when you start looking at their record and try to give them a sense of the tough questions they're.
Going to get.
Well, you know, I go back and most of the sectips that I've been involved with, going all the way back to Harold Brown in the card administration, cat Weinberger, Don Rumsfeld Les Aspin all got tough questions. So there's nothing unusual about that number two. It does take a
tremendous amount of preparation. Some of the previous secretaries of the fits that didn't prepare well did not do well in their confirmation hearing, and frankly they suffered from that when they became even though they got confirmed, you know, they did not have a good impression in the confirmation HEREA So I would assume, and I can tell from just the way he's answering the questions. I can tell from all the material supporting material that's been provided to
the committee. I can tell by reading his extensive advanced policy questions. They have done a tremendous amount of preparation to get him ready for this hearing. But that's appropriate. You need to do that. As some people have said that the FITICS departments the largest most complex organization in the world, and it's all about war fighting, and so I would think that obviously they spend a tremendous amount of time with him getting him ready, and it shows he's doing a good job.
So you think general that he's doing a good job and arguing that he is in fact qualified to do this job even though he, as has been raised in the hearing, he hasn't managed an organization bigger than hundreds of people, let alone millions, that he actually hasn't led an organizational audit, let alone one that could number in the hundreds of billions of dollars. I mean, is your takeaway from this hearing that Pete Hegseth is firmly qualified for this position.
He's qualified in terms of the things that the secondary defense is involved in, and they are in Title ten. Somebody brought up one of the requirements, their requirements in Title ten, the US Code that creates the Department of Defense and the Secretary of Defense, and he's.
He brought out the three things that I think are most important.
He's focused on improving deterres because those of us that have been in combat like him, like myself and others I've been wounded in combat and been to more than one more, you wanted deter wards. You don't want to have to engage your wars, and you want to focus on war fighting and lethality. That's the role of the Secretary of Defense. He's going to have their sixty five confirmed people. They've already named a very strong team to
be in there with him. John Faling to be Secretary of the Navy, Dan Driscol to be Secretary of the Army, Brince Kobe a real expert on policy, Mike Duffy a very tremendous expert in the acquisition area, and the deputy fin Berg a very very successful businessman. And the number two person is the chief operating officer. So the notion that somehow the Secretary of Defense is got to run
the Pentagon all by themselves. And you've got the service chiefs, you got the Joint chiefs, you got the war fighting Combatant commander.
So in my judgment, it takes that kind of a team.
And the names that I've seen so far, because I know most of them have worked with them over the years, very experienced, It is going to be a very strong team.
General. We all remember John Tower in nineteen eighty nine.
I don't know if you have any personal anecdotes from that experience or any first hand stories, but can you speak to our audience about how rare it would be for a nominee like this to go down in a vote and committee or.
On the floor.
Well, in history, the only one that has not been approved was John Tower, and that was a.
Very sad day. He was a great chairman of the Senate Armed Services Committee.
The full expectation was that he would be confirmed, but there were issues that came up during the confirmation process, particularly as it relates to the FBI report that.
Him not being approved.
But the committee and the Congress turned around in the Senate very quickly and put Dick Cheney in very quickly after John Towers nomination was not approved. And so I think, frankly, the Senate deserves to give Pete headsp an upper down vote on day one. He's the only other civilian in the war fighting chain to come in from the Commander in chief to the combatant commands. We need a Secretary of Defense on there on day one, and he should get an upper down vote, which has been the president
for secretaries of the Defense. And people that want to vote for him can vote for him. People that want to vote a gist him vote against him. And you know, a majority vote rules, and if he gets a majority vote, then he will be eligible to be sworn in and appointed day one.
But he deserves an upper down vote on January twentieth.
That's been the plan in the president going all the way back to Democrat and Republican presidents that on a new president that has a new Secretary of Defense gets an upper down.
Vote on day one, and I hope that will be the case.
Well, and assuming he is confirmed ultimately to lead this position, talk, if you will, general about what exactly he's going to if we've heard in this hearing a lot of kind of bureaucratical challenges, if you will, about the acquisition process, about an audit for the DoD. But then there's also the very real challenges in multiple theaters around the world where there are live conflicts or the threat of conflicts.
How is he going to be able to navigate both those internal and external questions.
Look, he's inheriting the same challenges that's the last two or three presidents have had. We live in a world that's more dangerous and unstable than the peak of the Cold War. We don't have the right strategy for dealing with the threats that we face from Russia, China, Iran, North Korea in global terrorism. We need to get back to basically being able to deter and if deterred spails to fight and win two major theater awards on a
near simultaneous basis. We're not getting the bang for the buck we should for the dollars we spend in the Pentagon in constant dollars, and we're spending more than the peak of the Reagan build up, and the forces fifty percent smaller. One of the things he brought out today is we need to get people, you.
Know, into the combat arms, and we have over.
Three hundred thousand active duty military serving in inherently non governmental jobs are serving in the rear with the gear. The overhead in the Pentagon is massive. The requirements process needs performed, the acquisition process needs performed. We spend over four hundred and twenty billion dollars a year in the Pentagon on goods and services, supplies and equipment, and about the only thing you can say about that output it's been more, take longer, get less. And these problems are
well known. He's gonna with his team going to have to tackle every single one of these. If you want to improve the Turrens, the Turrens is really important. You need to have the military capability. It has to be credible and your adversaries have to believe that you're going to use it. So he's going to inherit some significant challenges in all of these areas.
We're spending some time on Bloomberg TV and Radio with retired Marine Corps General Arnold Pernaro, who literally wrote the book on Senate confirmations. General, I want to ask you about some criticism that we've heard from Democratic members of the committee about the FBI background check into Pete Hegseth. There are multiple words here that the FBI did not interview Hegseth's ex wives or the woman who actually accused him of sexual assaults in twenty seventeen.
How unusual is that?
Would that have been writing on a request from a committee leadership to look into that and interview those women, or is this a problem for the FBI to have not been as comprehensive as it should be.
First of all, I want to applaud the new leadership in the Senate, the Leader Thun and others. It says, look, we're going to require the same kind of FBI fulfill investigations for the Trump nominees that has been required in every single previous president Democratic, Republican. And so that request doesn't come from the committees, it doesn't come from the Senate,
it comes from the White House. Council's office, in this case, the Transition Council, because their White House Council for Trump has not been set up till January twentifth, and so they had the FBI go out and do what's called a full field investigation of potential nominees, and then that material is provided to the chairman and ranking member on the Center of Armed Services Committee, and it's at the chairman's discretion, as it was when my boss was chairman
for eight years, as to who else might get access to that. One of the things you have to understand, it's not like an Inspector General report. It's not like a Article thirty two in the military, where there's an investigation their findings and their recommendations and they come to a conclusion and they say, well, this person is right and this person is wrong.
It's just raw.
Investigatory files and they can be very misleading, and so the FBI reports have to be treated with great deference in terms of what they can then used for. One of the things that I felt and people know that was very unfair in the Power thing is that there were a lot of things that got leaked out of the FBI report that weren't corroborated, and it was very damaging. And so I think the approach that Chairman Wicctor is taking in terms of restricting the FBI report is appropriate.
In terms of what's in it, none of us are ever going to know because it's not going to be made available publicly, and certainly you have to rely on the investigatory skills of the FBI that they did a thorough investigation.
And so typically what.
Happens is if the Council believes there's disqualifying information in an FBI full fill investigation, they'll notify the President and the President will have to decide whether he still wants to go forward or not. The fact that the report was provided to the Chairman and ranking member, the fact that things are going forward, I just I don't have firsthand knowledge. I certainly don't have access to it. I
don't have any leaked information. My work and assumption would be there's nothing in that report that's disqualifying because the proceedings are going forward.
All right, General, thank you so much for joining us on Balance of Power today. That's retired Marine Corps General Ernold Panaro, who is Joe mentioned is also the author of if confirmed. An insider's view of the Senate confirmation process.
You're listening to the Blue Work Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple Cockley and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven.
Thirty confirmation hearing for Pete Haggseth get underway here. Actually, it's soon to draw to a close. It started at nine pint thirty this morning the Dirks and Senate Office Building. Twenty seven senators have an opportunity to ask Pete Hegseth.
In some cases very difficult questions, Kaylee. We've heard about his history with alcohol, allegations of sexual assault, to which he maintains his innocence, some emotional testimony from the likes of Tammy Duckworth, some very difficult questions from Elizabeth Warren. Lockstep support though from Republicans in the room, and many expect him to be confirmed.
Well, and interestingly as well, the one Republican many were keeping an eye on, as Senator Joni ERNs from Iowa, who's a combat veteran and sexual assault survivor herself, and even their report seemed friendlier than maybe you would have anticipated. She noted that they have met multiple times in private and had what she described as very frank conversations, and she just reiterated on some of the points that I guess they had discussed in private that she wanted to
raise again today in the hearing. But she was going to be potentially the lynchpin vote on knowing only three Republican votes can be afford to be lost for handy.
One lot of time, she was the one to watch.
But after their meeting she seemed to back off, and by the way, a deliberate pressure campaign from the Magaworld against Joni Ernst that seemed to change her narrative, as did her meeting with Pete Hagseeth behind closed doors. To your point, Kaylee, she actually left time on the clock, which says a lot about the point she was trying to make.
Yeah, so let's get into all of this now and turn to our political panel today. Genie Shanzino is with us, who, of course is a senior Democracy Fellow at the Center for the Study of the Presidency in Congress and a democratic strategist alongside Republican strategist Ashley Davis. Welcome to you both, Genie. Just to begin with you, obviously Democrats had coordinated their questioning here, much of it was incredibly intense. Is that they went after heg Seth on both character and qualifications
for this job. But is anyone's mind really changing because of this Q and A.
I don't think we see that yet.
Could it happen, sure, but I don't think that there has been a misstep of the degree or sort of a surprise that would elicit changes on the Republican side. And you know, part of that, I think is the pressure campaign that you were both just talking about. There has been an organized pressure campaign from the right to support heg Seth and also to take on any Republicans who would stray offline. So I think so far no mind's changed. But I do think Democrats are doing what
they need to do and wanted to do. They are getting their points out. And you know, I would just add two things surprise me. One that he didn't meet with them in advance or even try to set up a meeting if you believe what the senators are saying. And number two that We're only going to go one round on this. It is typical to go more than one round. I think we need as the American public to hear more from him, but we're only going to get one round seven inch eat, which is pretty short.
Yeah, one round indeed, And I just want to go back to the moment between Pete Hegseth and Joni Ernst that Kaylee mentioned here the senator from Iowa with questions specifically about women serving in combat, will.
You support women continuing to have the opportunity to serve in combat roles?
Senator, First of all, thank you for your service.
As we discussed extensively as well my privilege, and my answer is yes, exactly the way that you caveated it. Yes, women will have access to ground combat roles combat rows, given the standards remain high, and we'll have a review to ensure the standards have not been eroded in any one of these cases. That'll be part of one of the first things we do with the Pentagon is reviewing that in a gender neutral way. The standards ensuring readiness
and meritocracy is front and center. But absolutely, it would be the privilege of a lifetime to if confirmed to be the Secretary of Defense for all men and women in uniform who fight so heroic, they have so many other options, they decide to put their right hand up for our country, and it would be an honor to have a chance to lead them.
All.
Right, let's bring Republican strategist Ashley Davis back into the conversation. If that's as tough as it gets from a Republican on the panel.
Are we all done here?
Pretty much?
But I still want to As I was talking about earlier, I do think we need to watch John Curtis, especially who came out just a few hours ago saying that he needs to take another look at him, as well as Tulsa Gabbert. So I do think that there's that plus the three that we've always talked about in regards to Susan Collins, Lisa Murkowski, and also Mitch McConnell.
Is why Mitch McConnell, just because Mitch.
Has always had a little bit of a thorn in President Trump's side, And I also think that he takes the stance of the United States in the world, especially in regards to the military, very very seriously. He is not up for re election anymore, he's not running and he's not the majority leader, so he has the ability to vote against someone if he needs to. I'm not saying he will, he just has those those chains have.
Been broken and so to speak.
But John Curtis, I think is something early watch.
I agree.
I don't think that anyone's mind has been changed today. Nothing new came out. Obviously, I thought Tammy Duckberts was probably the strongest on the Democrat side in regards to her personal history. But I just don't think And obviously Senator earned Questions teed him up to answer the question that was very important, which was about obviously women in the military.
As you make the point that Senator Curtis has expressed concerns not just about Hexeth but Toulci Gabbard as well. Do you see a relationship here where the better this process goes for him, the greater threat that it doesn't go so well for her, because that could potentially open the door for if Republicans are exercising one pass I'm shooting down nominee, it might become her instead of him.
It could be and you know, will there'll be a sacrificial lamb so to speak. I mean Obviously RFK is still a concern. I mean the question here and obviously cash Bettel as well, But the main questionnaire is some
of those FBI background checks that are still happening. So there's obviously a lot of different conversations out there about Tulsa Gabbert from what I understand, with her ability to get her clearances continue to be extended and confirmed that I don't know what is there that's not classified that us as the general public don't know. So I think that she probably is someone that could be a sacrificial lamb as well as I still think that RFK has an uproad pill battle.
Yeah, he has to still have a lot of meetings for us to get a better sense of that. Genny, I know where we are on Pete Hegseth not meeting with Democrats here. I wonder where you are on the background check. We talked to General Punaro about this earlier in the hour that many Democrats on the panel have complained that the FBI did not interviews ex wives or the woman who accused him of sexual assaults in California
in twenty seventeen. Those apparently would have needed to be requested by White House counsel either way, do they have a full picture of the man?
Well, from what they're saying, they don't.
You know.
They are also complaining about the late timing in which, you know, these reports are being given to the Senate, and they don't feel like they're getting a full rundown. There was also reporting that his previous wife, one of his ex wives breached out to the FBI and didn't get a call back. You know, I think that that
is worth thinking about. But I think the reality here is that not only do we need more time with Pete Hegseth, I think as a American public, I think there's also an awful lot of conversation hasn't been had. I mean, we've heard an awful lot about audits, internal challenges, and the DoD about his issues involving women and other things. But how about issues involving the security of the United States.
How about the fact we're losing the race with China, in particular when it comes to how we're going to be a twenty first century fighting machine. All of these things have sort of gone by the wayside when you give senators seven minutes each, So to me, I think Republicans could do better in terms of giving their members more time to have more robust conversations with all of
these nominees. I understand they want to do this fast, but this is the last time we get to hear this kind of back and forth, and I think we deserve more, so that you abandoning that practice, to me is really problematic, Ashley.
There's two things that I just want to addressed. So the FBI background checks after a huge slate of kinins secretaries like this, they always, at least under my experience on the Bush administration, they do come up last minute. Obviously, the same thing I know happened under the Biden administration. The thing that I really want to get into here quickly is going through numerous FBI checks and at various levels.
The point is not to call the ex wife. The point is to call, you know, the ex roommate or the neighbor that you had when you were twenty five years old. The FBI's role is to get to the third layer, the fourth layer, not the public information. So it doesn't bother me as much that he didn't talk to the ex wife. They didn't talk to the ex wife. It's more and by the way, it's not common that FBI backgrounds are given to every single person on the committee, So that is not something that in.
This case, it was the chair and ranking member, right, correct, which is very normous.
Yes, But so I just I remember f when I went through my own personal background checks. I remember like a random person in college that I barely knew was but not like my college roommate, you know. So it's like that's what they do. Yeah, so it doesn't bother me as much.
Well important knowing that this has been a point of controversy, and I suspect we'll be for all of these confirmation hearings, Kaylee, Donald Trump didn't want any of them to have FBI background checks at one.
Point, well, yeah, they weren't signing those typical transition documents in order to speed this process along just quickly. Here though, on the President elect Genie, it was pointed out by Senator Gary Peters during the course of his questioning that there were five either confirmed or acting secretaries of Defense
in the first Trump administration. Even if Pete Hegseith is able to get the votes and be confirmed, should we have more confidence this time around that he'll be able to stick in that job?
Oh, I don't know. You know, Donald Trump likes to fire people. We've seen that he's done it on TV, so you know, I'm not sure they'll stick. But that's the president's prerogative.
So we could.
Pete hegg Seth, if he's confirmed, could be the first of few.
Boy, well, I guess we'll see about that. Genie, Thank you so much.
Genie Shanzano Ashley Davis with us here at the table in Washington.
Uh.
I can't imagine going through the process, the full FBI background check.
When she said random people from college, I write, yeah, Shook. That proposition is terry.
It's why you don't lie.
You do say you have.
To warn all your family and friends though right hey, you might be getting a phone call.
That's what I did, and none of them got the phone calls. It was the third layer that got the phone calls.
One people.
Yes, at every stage. What a great panel.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Alma Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Watch you Wall Street.
As we cover politics, they frequently cross over. It's a little bit different today or though they're has been a conversation about defense contracting, the dB and of course, reforming procurement at the Pentagon as part of Pete Hegseth's wide ranging conversation before the Senate Armed Services Committee. That hearing is still underway but just about to conclude, with twenty seven senators each taking their time to ask questions of
Donald Trump's nominee to run the Defense Department, Kaylee. At times it has been about cultural issues some of the allegations that have surrounded Hegseth, including his personal behavior when it comes to women, when it comes to alcohol DEI, women in combat, but also just the hard brass tax of managing a massive bureaucracy, the massive budget that you'd be in control of managing people, which has experienced that he does not have, though he seems to convince a
lot of Republicans that he can do the job.
Yeah, it's interesting. We've heard a lot of numbers throughout the course of this hearing, the idea that the Pentagon, the Department of Defense, does have three million people, that has a budget of eight hundred and fifty billion dollar. These are really big figures that we're working with. We've also heard over the course of this hearing, including from Senator Jony Earts, for example, and from Headseth himself, about a desire to get some of those figures down, specifically
on the dollar figure side. As we talk about the auditing process at the Pentagon, or perhaps the lack thereof. It's those kind of internal substantive issues that we want to get into now with our next guest, doctor Anya Manuel is joining us. She's co founder of the strategic consulting firm Rice Hadley Gates and Manual also executive director of the Aspen Strategy Group. Welcome to balance a power Anya, Good to have you here on Bloomberg TV and Radio.
And we consider the kind of size and scale of that internal DoD challenge that peak Headseth is making the case he is able to take on here if he is indeed confirmed to be the next Secretary of Defense, Just how hard is it going to be to actually execute and then the period of just four years.
Yeah, happy to be with you, Kaylee, Thanks for having me on. You stated all the numbers. This is an enormous department to run the biggest department that the US government has, so real experience running large bureaucracies is important. Let me give you two points. One the outside challenges that the United States faces. This is really a more dangerous period we haven't faced since frankly, between the two World Wars. Great powers are acting badly. You're dealing with
a rising China that needs to be managed. You're dealing with a Russia that is continuing to pommel Ukraine unjustly. You have Iran, which is currently on its back foot but can always cause trouble. So there are enormous geopolitical challenges that the next Secretary of Defense will have to face without getting US substantially involved in any of these wars as we currently are not on the internal side. You said a lot in a It's come up in
the hearing. This is an enormous budget. One of the big things that will have to happen is the procurement of the Pentagon will need to be reformed. We are not currently buying the weapons that we need for the wars of the twenty first century. That alone is one hundred and forty two billion dollar budget. Very very important, and in my experience working with a Pentagon and with others.
You need to bring the people of an organization along if you're going to make real change inside an organization. If you just do it by fiat from above, they'll fight you every step of the way.
Let's put a finer point on reforming procurement here, because Joe Biden just named the next two aircraft carriers for Bill Clinton and for George W.
Bush.
Is that in itself part of the reform that needs to happen. We keep hearing from Elon Musk. It should be all unmanned, it should be drones from now on. But we have massive and very expensive weapons programs that are set to continue on for years.
So where does the reform begin?
Yeah, we do. There's lots of opinions on how you reform. It's been tried multiple times. I think the Biden administration deserves some credit for doing things like the Replicator program, which is getting drones and unmanned vehicles much faster into our system. But these are still small things. You can't just scrap the large weapon systems wholeheartedly, but you can start trimming some of them, cutting the ones that are
likely to be sitting ducks. There's going to be a huge I don't want to get into the details of this, because they're going to be huge debates on what do you cut, what do you not cut. Every time you try to cut any big procurement weapon system, people crawl out of the woodwork because those are good jobs in America in certain districts, and so you need to have a good relationship with the US Congress to do some
of those things. I would say one of the most effective secretaries of Defense we have had is my own current business partner, Bob Gates. He cut billions in over ten years from the Pentagon budget, and he did it without ruffling too many of the feathers.
Well.
Obviously, as we consider the budget and what exactly it pays for, a lot of that is heading into the defense industrial base, which you were just speaking to. Obviously, a lot of this is made in the US, and this has come to the four of conversation in regard to the supply of ammunition and other weapons systems for Ukraine. It was argued that really is an investment in the defense industrial base here at home, even though we're sending
it elsewhere. How much progress really has been made when it comes though to the dib Anya versus what actually needs to be done to fortify the US's ability to continue providing for its own defense and the defense of its allies.
Yeah, very good question. Hard to quantify it. Boy, if we started at zero, we're now maybe thirty forty percent of the way there. But more has to happen. What's always very difficult is to tell companies to ramp up production without having very clear contracts going far into the future about how that will be used. And that's going to continue to be a problem, and the next administration
will have to continue to wrestle with it. I would say the Biden administration has made a really pretty good start.
Here are senators asking any of the right questions today.
I have only watched part of the hearings. I do hear a lot of substance, a lot of what you said in your preview. This is a large organization, three million people. It needs to be run well. You can't just break the system in order to rebuild it. You have to really manage it from within. And by the way, the Department is doing a lot of really important tasks right now, and you can't take your eye off that ball.
So I do think some of the questions that have been asked about Indo Pacific security, how we continue our work with our allies in the Indo Pacific, which I think is one of the great strength of what the Biden administration did, really rebuilding those alliances with Japan, with Korea, with the Philippines, with Australia, with India. Those are all very important and I do hope the next Secretary of Defense keeps those going.
Well.
Of course, Pete Hegseth would like it to be him. We are looking here on Bloomberg TV and on YouTube at a live shot of the hearing room which has just of course concluded the hearing itself, and Pete Hegseth, along with his wife by his side, are now sharing
hubs with a few members inside the room. Anya. Some of what we heard from Pete Hegseth today in regard to the operations of the Pentagon, and especially when he was under questioned from senators on his views around things like DEI or women in combat, was this notion that some of these initiatives that we have seen in recent years, whether it is allowing more equal gender opportunity or keeping diversity equity and inclusion in mind that it was slowing
down the Pentagon or somehow making the Department of Defense less able to be the most lethal fighting force in the world. Is there any real truth in that statement that these other initiatives that were described in this hearing as being politically oriented issues are actually affecting the defense capability of the United States.
I don't have the in depth knowledge to evaluate whether that's been harmful or helpful or neither. When I interact with as an outsider, with our troops around the world, with our military leaders around the world, I find them engaged and strong and smart and practical, and I think our military leaders are doing an extraordinary job managing a really complex to geopolitical environment. And I just want to get back to that because if you look at the
challenges we're facing now. We talk briefly about the Indo Pacific the Ukraine War. Even if President Trump would like it to end on day one of his presidency, that's unlikely. You need to bring that conflict to a managed conclusion, and that involves working well with our allies. I know that the Supreme Allied Commander we currently have in Europe has done a great job with that, so that continues. What's going on in the Middle East is ending, but
very slowly. You need to continue to manage Hezbollah, you need to manage the conflict in Gaza with Israel. So supporting our military to the best of our ability is going to be a very important thing, both for the Congress and for the new civilians in the administration.
There's been a lot of talk about same day confirmations or day one confirmations. I should say, will Pete Hegseth be among them, assuming that Democrats play along or Republicans have the vote on January twentieth confirmed to be the next secretary.
I can't speculate to that. You'll have to continue to hear the hearings well.
When we consider though the urgency senators may feel, or that the President may feel in making sure that these and him and other nominees are confirmed quickly, it does speak to some of the very things that you were just discussing with us, this notion that we are at a very tense time geopolitically in many parts of the world.
There has been a lot of conversation, including just yesterday here at Bloomberg when the outgoing US National Security Advisor Jake Sullivan joined our colleague about this notion that the Biden administration initially came in wanting to be able to focus on the Indo Pacific, on the threat from China, and got instead sidelined by the events in the Middle East.
How do you see the kind of balance between these different theaters heading into this next administration over the course of the next four years, especially if there is some kind of at least temporary resolution between Israel and Hamas that all sides are fighting for right now.
Yeah, the Middle East just draws people back in over and over again, and as much as repeated US administrations have wanted to wash their hands of it and walk away, unfortunately, we need to be engaged. That doesn't mean directly involve in war, but we need to be engaged in the world to prevent wars, to keep us from having to be directly involved, because the international geopolitical system hates a vacuum, and every time there's a vacuum, it's filled, frankly by
the bad guys. Like you saw Russia filling in in Syria. You've seen Russia invade Ukraine, You've seen an increasingly belligerent China. That we need to be watching. So we don't have the leisure as leaders in the United States to turn away from any of these very important conflicts. We need to be engaged in all of them. And if you talk to our friends and partners around the world, they want us to continue to be engaged.
All right, Doctor anyat Manuel Co Federal, the strategic consulting firm Rice Headley Gates Manual, we thank you so much, thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already an Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, d C. At noontime Eastern at Bloomberg dot com.