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It was a pretty strong jobs report today. I'm not necessarily sure we can characterize this one as a blowout, but still an upside surprise on the non farm payrolls figure and on wages, and a downside surprise on unemployment, which held at three point seven percent. And of course, the low unemployment rate holding below four percent for a twenty third consecutive month is something that President Biden has
touted repeatedly and touted once again today. He actually put out a statement that said, quote, this report confirms that twenty twenty three was a great year for the American worker. But if it was a great year for the American worker and potentially a great report for the president, was it the same for the Federal Reserve or for markets that are betting that the Fed is going to be cutting rates in the not so distant future. Let's get to take on that now. And pleased to say, barat
Ramamurti is joining me. He is now Senior Advisor for Economic Strategy at the American Economic Liberties Project, but he's also former Deputy Director of the National Economic Council. Barat, thanks so much for being here. Do you still look at this labor market and see an economy in need of rate cuts?
Well, I think, as you described it, it was a solid, not spectacular jobs report. I think it's important always to look at the revisions in addition to what the report said for the last month, and if you look at the downward revisions over the past couple of months, I look at the three month trend what you have as solid but not spectacular numbers, and I think again that is broadly speaking, what you would expect to see at
this stage of the cycle. There's relatively little sign of weakness in the labor market, and while inflation is clearly trending downwards, it's not at target yet. And for those reasons, I am somewhat skeptical that the FED is going to cut starting in March. I know that that's what the expectations are. I'm a little bit more skeptical of that now. I think that they should because I think it's good to be proactive on this front. But I'm skeptical that they will.
Okay, I'm not sure that many market participants, at least today necessarily join you in that view. We have seen some pulling back of expectations really since the FED release minutes earlier this week that indicate maybe they aren't thinking hikes or cuts rather are coming imminently. And yet that does seem to be where the market is for the
American voter, for the American worker. Is it more optimal to have this continued strength in the labor market if it means interest rates stay high, or is it actually better to see some of that weakness coming through but that also brings lower borrowing costs with it.
Yeah, that's interesting question. I think that people underrate the importance of having a strong job market. People think of it as well. Maybe a couple million additional people are unemployed, but everybody else is basically the same. That's not really true when you have additional slack in the labor market that affects people up and down the income spectrum. When there's a tighter labor market, companies have to compete harder to make sure that they retain workers and that they
attract workers. That creates upward pressure on wages across the income spectrum, and so I think everyone benefits from a tighter labor market. Of course, reduction in interest rates would lead to improvements and things like housing affordability and the cost of credit. I think it really affects people different people in the income spectrum differently. I think for folks who are on the market for housing, for folks who are looking for credit, the lower rates could mean some
amount of increasing affordability. But I think really at the end of the day, we shouldn't be rooting for an increase in the unemployment rate. It really is extraordinarily valuable to have the kind of tight labor market that we've had for the last almost two years at this point.
Well, and something that has kept that labor market tight is participation that was lower. And I wonder what you make of the participation figures today fell to sixty two and a half percent. That's the lowest level we've seen in almost a year.
Is that concerning, Yeah, a little bit. I think that the participation figures can always be a little bit noisy. It's always good to look at longer term trends. When I was in the White House, we tend to look at three month and six month averages rather than month to month. I would say that it's a blinking yellow light at this point. I'm not ready to declare that there's some sort of clearly negative trend happening yet, but
you're right. Ultimately, what you want to see, and what we have seen over the course of this recovery is that the prospect of good jobs has attracted a lot of people off the sidelines and into the labor force, and that increase in labor supply has been a helpful element of bringing inflation down in a very healthy way. And so you don't want to see that trend reverse.
I'm not ready to declare that that trend is reversing yet, but it is something to keep an eye on as we go into future jobs reports.
Okay, so let's talk about the trend in inflation. How much do you think the Red Sea and what's happening there are the disruptions to transport, the elongating of these vessels journeys around the coast of Africa, higher freight costs as a result, maybe even higher fuel prices, depending on actually what happens in the Middle East. How great a risk is that to the inflation story.
It's certainly a risk. I mean, look during the pandemic and then the aftermath of the pandemic, we saw how exactly these types of supply side disruptions can contribute to rather sharp increases and inflation. Or during the pandemic we saw in some cases a ten x increase in the cost of ocean shipping, which then flowed through to the increases in the cost of all sorts of products that American companies and American consumers rely upon. I think you could see to a lesser degree that kind of upward
pressure on prices because of these disruptions. It's one of many reasons why it would be useful to try to resolve that as quickly as possible.
Yeah, and of course you speak of supply chains. Progress made on supply chains is something that this White House has frequently touted, just as they have frequently touted the low unemployment rate, all of the job growth that has happened under Biden's presidency, and yet it hasn't, as you well know, reflected necessarily in polling in his economic approval rating. Now that you're outside the White House looking in, what do they need to change to actually get that to resonate.
Honestly, I don't think that they need to change course very much. I think that what you are seeing in terms of the disconnect in economic data and economic sentiment is mostly explained by the fact that there's always going to be a lag. Look, we in the White House celebrated when wages started rising higher than inflation and real wages turn positive. But if you're an ordinary person out there, you're not going to switch on a dime the second
that real wages take over from negative to positive. You want to see a sustained set of time. When inflation is coming down, your take home pay is clearly allowing you to pay for the things that you need at the grocery store and at the pump. And I think what you're starting to see now, now that there's been several months of real wage gains inflation is starting to recede a bit, is that the sentiment data is ticking up.
You see it in the consumer board information, you see it in the Michigan sentiment data, you see it in some of the polling data about the presence economic approval. All of that stuff is starting to tick up. And I would be surprised if it doesn't continue to tick up over the next several months as the salience of inflation receipts.
Well.
The ticking up, though, of those confidence metrics, probably is reliant on the fact that we actually don't get a recession. That the landing is soft. Do you think that's fully assured at this point.
I'm hesitant to say that anything is fully assured. If there's one thing I learned from my time at the White House is that you have to expect the unexpected. But I would say that all of the data that we have available to us right now about the state of the labor market, about consumer spending, about business investment, all seems to suggest that we are going to have a soft landing.
Now.
There are things that can disrupt it, as you just noted, some of the disruptions on the shipping side could send inflation moving in the wrong direction. You could have other geopolitical events that could end up pushing us in the wrong direction. But based on the data that we have available to us right now, we're certainly on a path to a soft landing. I know that Secretary Yellen made a similar point just earlier today, so I would have
a lot of optimism on that front. And if in fact we can secure that soft landing, and what we have over the next several months is inflation at or near the target, continued steady job growth, I would be very, very surprised if you don't see a consumer sentiment and economic sentiment go up quite a bit in the months to come.
How much does fiscal risk factor though, into ultimately economic outcomes. Knowing Congress is getting ready to return to Washington next week, there's going to be a big fight over appropriations ahead, with the thread of not just to shut down, but potentially a one percent cut across the border, sequester come aprol If they really can't sort this out, how concerned should we be from an economic standpoint?
I think from a macroeconomic perspective, we shouldn't be overly concerned. If you look at analyzes of past shutdowns. For example, I was working on Capitol Hill back in twenty thirteen when there was a month long shutdown, the data tends to suggest that that has a pretty limited impact macroeconomically. Now, of course, there is a significant impact on people's lives, on millions of federal employees, on people who rely on certain forms of government services who are not going to
get those in a shutdown. And if you see some sort of prolonged locked in reduction in government spending over the long term, that would be a risk. I don't think we're at any risk of that happening. If we're going to have some sort of one week two week shutdown as people sort out these issues, I don't think that that's much of a risk for a macroeconomic perspective.
All right, but Rama Murti, thank you so much for joining the program on this job's day. He's a senior advisor for economic strategy at the American Economic Liberties Project and of course, former deputy director of the NEC. Reflecting on today's jobs Day, let's get the reflections now of our wonderful Bloomberg Politics contributors Rick Davis and Jeanie Shanzeno are with me, So Genie, I'll post the same question to you that I essentially asked brought a moment ago.
Is Biden actually able to use the jobs report like this to his advantage when he hasn't been able to tout the strength of the economy successfully much at all.
He's got to keep reminding people that the numbers look very good, and at the same time to acknowledge that, as you were just talking about, there is a lag and so they may not be feeling that yet due to the inflation pressure. So you know, it is a very hard line for the president to walk. But it is an astonishingly good report, you know, twenty three months Kaylee, you mentioned it's stunning numbers that are much better, I think than anybody could have expected.
And hearing j.
Yellen talk about the fact that this soft landing may be in the offing, that is all very good. It hasn't translated politically yet, unfortunately for the president, but the team feels fairly confident in the coming months as that we beat that lag, that they may be able to benefit from it politically. But it's a hard message to sell when people are still feeling inflation as they go to the store and elsewhere.
Well, and Rick, knowing that Biden has really struggled in terms of actually getting voters to recognize his economic accomplishments, is that why we're seeing such a big deal made Perhaps actually you could even call it a kicking off fully of his election year campaign efforts in Valley Forge, Pennsylvania to talk about Donald Trump being a threat to democracy? Is this really his best remaining strategy?
Yeah? Look, obviously that link to his announced you know, his speech today linked to January sixth, the anniversary that it draws you to that conclusion to talk about democracy under threat. But the reality is he can't give enough speeches about the economy. As Genie points out, he is not considered credible on this. He's got one of the lowest presidential rates on managing the economy. Trump beats him significantly, and he's got to fix that if he wants to get.
A second term.
The good news is, has pointed out in today's report, He's got plenty to talk about. But I've yet to see this administration really fan out around the country to promote what he likes to call bidnomics, and one speech a month is not going to get it done.
Well, Rick, how much would he be helped by FED cuts? Knowing how familiar you are with timing in campaigns and how it may work for you or against you, At what point will mine's already been made up enough on the economy that therefore even FED cuts aren't going to change the mind of a voter or I guess that's just my question. Does it matter when the cuts come or people will already have made decisions by the point that they do.
Yeah, it matters.
We're seeing right now is what we historically have seen in campaigns, which is a pretty significant lag between any kind of good news and an improvement in the ballot, improvement in the public image of the present around something like the economy. It seems voters are always negatively inclined. If there's something bad happens, they change your mind immediately, But when good things are happening, it takes a month, you know, three, four, five, six months to really internalize
the improvement. So the sooner the Fed could act, if they do on rate cuts, the better it would be for Biden. He has not got much credibility on inflation and fighting it. He you know, more voters will tell you in a focus group that they didn't take it seriously than the fact that you know they're they're doing what they need to do to tackle it. And so the same will apply. If the Fed starts to cut right soon, there'll be a lag, but that lag will actually I.
Think inord to the benefit of the Biden campaign.
All Right, Rick Davis and Genie Schanzena will be sticking with me. Just a note on how voters are feeling about the economy any producer. James points out the Suffolk USA poll earlier this week, thirty percent said they think we're in a recession. Only twenty nine percent said they think it's an economic recovery, twenty one percent stagnation, and sixteen percent depression. So not necessarily encouraging for the incumbent administration.
But coming up, we're not going to talk about the incumbent. We're going to talk about the Republicans trying to kick him out of the Oval office in this twenty twenty four cycle.
That's next. This is Bloomberg.
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.
Welcome back to the fastest show in politics and talk about things going fast. Iowa already is almost upon us. We are in the middle of now a ten day countdown. It is just ten more days until the all important Iowa caucuses, where yes, it is highly likely that former President Donald Trump is going to win. Polls show him ahead by a significant margin, pulling it north of fifty percent in a lot of polls. So I'm not sure
we can call it a real contest yet. The question is can Nicky Haley or Ronda Santis put up a strong enough showing in Iowa that it becomes more of a contest. They certainly are competing fiercely for the second place position here, and they were each making their cases last night in CNN town halls. Interestingly, though, they took more barbs at Donald Trump than each other, which is a bit of a reversal from what we've seen so far this cycle. Here's Ronda Santis last evening.
Do you think Donald Trump is not pro life?
Course not?
I mean, when you're saying that pro life protections are a terrible thing by definition, you are not pro life. When you say that you want to have a federal law at eighteen weeks or twenty weeks that would override a state like Iowa that has enacted pro life protections. That would mean more abortions not less abortions.
He went on to also criticize the former president for failing to keep his promises on the border wall as well as spending. Meanwhile, here's Nicki Haley on Trump.
For me, it's not about guilt or innocence. It's about what's in the best interest for the country. And I don't think our country will move forward with an eighty year old president sitting in jail. That allows our country to continue to be divided. We have to move on past that.
She also said chaos follows Trump and that the country can't take another four years of chaos. So on that note, let's bring back Rick Davis and Jeanie Shanzeno, our Bloomberg Politics contributors. So, Rick, what do you make of their hits at Trump last night? Were they strong enough?
Yeah? I mean this first time we've seen them both, as you point out, lean in against Trump and not lean into each other. So I think they've figured out who's actually winning the election so far.
So that's instructive too. I think that the attacks are nothing new.
They've kind of reprised these throughout their campaign, but the fact that they've ramped up many of them in the same event is indication that they're feeling a little bit of the pinch. I would say much more important for DeSantis to contrast with Nikki Haley, because if there's any chance that he gets a quote ticket out of Iowa,
it means he's got to come in second. I can't imagine a scenario where he comes in third and is currently pulling anemic figures in New Hampshire and the two of those things in combination are at deathblow to his campaign. Wouldn't surprise me that he has an election night in Iowa like Howard Dean did in two thousand and four, where there's a little bit of screaming occurs.
Okay, I want to get back to how the margin of second may matter here and what that ultimately means
for New Hampshire. But Genie, first, I want to ask you about something else Nikki Haley frankly had to talk about last night, which was her Civil War gaff, the idea that she did not attribute slavery as a cause of the Civil War previously, and part of her response, she said, and this is a quote, if you grow up in South Carolina, literally in second and third grade, you learn about slavery, You grow up and you have
you know, I had black friends growing up. Does that help her get out of the hole or dig it deeper?
Digsit deeper. You know, this was a huge misstep by Nikki Haley a few weeks ago. She keeps getting asked about it, and you know, I thought she actually performed pretty well last night. But as you wake up and you see the Twitter feeds and you see what's being reposted and shared from the night, that line that you just mentioned Kaylee about I have black friends, that's really what we're left with. And so that is a problem for us, for her, and so you know, is it
going to be a wound she can't recover from. Absolutely not. But I think in many people's minds it's indicative of what DeSantis and Christy and now Donald Trump as he's hitting her more forcefully as he sees her rising in the polls in New Hampshire have said is that she is trying to be all things to all people and that she is not authentic, not saying what she actually believes.
I think there was actually like a nine year old kid in New Hampshire who asked her the other day, you know something about her being a flip flopper like John carry I don't know how a nine year old remembers John Carrey, but that's what's in people's minds, and so I do think it's problematic for her. I thought, again, she did a good job on the night, but when you know, in this media eraror when everything is shared that's the clip we're seeing of her, it does become a bit of a problem for her.
So it raises the question of how strong a showing she might actually be able to put up in ten days time. So Rick, to return to you on the question of obviously Donald Trump is going to lead Iowa barring something completely unforeseen. It's about number two and how close number two is to Trump number one? Right, what kind of margin does Nicki Haley actually need to make New Hampshire actually in play.
Yeah, First of all, she's already got New Hampshire in play. Right, in all the most current polling, she's hovering around ten percent behind Trump. That is way up from just six months ago. So New Hampshire is a race today. And so what she's trying to do is figure out what she can do to add to that momentum, which is why she's placed a massive thirty.
Million dollar buy in Iowa.
And with all due respect to social media, when you've got thirty million dollars worth of commercials pounding away in three media markets in Iowa, you're controlling the message. And the message that she had is that she's electable, she can beat Biden, and that's what Republicans want to hear. They care a little bit less about the Santis and Nikki Haley than they do about Joe Biden. And so if you tell them that you can beat Biden and you show it in the polling data that's circulating, you've
got credibility. And so she's actually waging a pretty credible argument and it undermines Donald Trump's arguments of electability.
So it works both in New Hampshire and Iowa. So if she does.
Sort of surprise everybody and come in second in Iowa, she will get a boost going into the New Hampshire campaign, and then the question is what can she do with it? If DeSantis comes in second place. It's pretty much what he has said all along that he was going to do. In fact, he's actually said he was going to win Iowa, which was a mistake. But then the question is going to be where's he go from here? Because he has no campaign in New Hampshire, has no campaign in South Carolina.
There aren't a lot of.
Super Tuesday states that are good for DeSantis, and so he'll have to come up with a narrative on election night that says somehow he can go from here to you know, from Iowa in second place to a victory somewhere, and at least at least Nicky can point to the fact that she is closer to Trump than any candidate has been since Ron DeSantis got into the race in
New Hampshire. So all eyes will shift immediately from Iowa to New Hampshire and we'll see whether or not it's it's impact that Iowa election has anything to do with the New Hampshire outcome.
Well, we'll also see, Genie, if there are just fewer candidates in play come New Hampshire. It's not just a question of whether Ron DeSantis moved on past Iowa. But there are other players in this game as well. Chris Christy in the vaig Ramaswami, how likely is it in your mind that we see a consolidation of the field before we actually get up there to Manchester.
We really should. I mean, if you think about Chris Christie's campaign, it was predicated on ensuring that Donald Trump is not the nominee of the party. Well, if that's the case and he has zero paths, and really he has less than zero path to victory here, then you would think he would bow out and allow his supporters to go where they go. You know, maybe Nikki Haley, maybe they look elsewhere. But you know, I think we should see something like that if he was true to
what he said. And of course, Vivek Ramaswami, he's barely showing in the polls at this point. He really does seem to be playing for a vice presidential or cabinet spot at this point. I don't know if he's going to need to make a statement because he already seems
out of it. But you know, I do think that the really interesting question is going to be for Donald Trump, who keeps talking about his fifty sixty point forty point victory and lead in the polls, and what happens if either of these candidates in the Santas or Haley does better than expected. It's a dangerous game Donald Trump is playing by making that case. And you know, he's gonna have to eat that if one of them or both of them does far better than expected, which is possible
given to Santas' ground game in Iowa. And what Rick was thus talking about with Nicky Haley's money in Iowa, that she has to spend on the media.
Yeah, ninety nine counties visited for Ronda Santis. Donald Trump himself hasn't really spent much time in Iowa at all, though he will be there next week when he's counterprogrammed counterprogramming the Haley DeSantis debate with a Fox Town Hall. So obviously all of us are going to be tuned in. We got to talk about Congress returning to Washington next.
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 listening on demand wherever you get your podcasts.
Chip Roy, of course, Republican from Texas. I actually spoke with him on Balance of Power last night and asked him about this idea that it's either shut down the border or shut down the government.
And this is what he told me.
We need to pass HR two or we need to withhold funding until we get it. I mean, if you read federal's papers, if you look at the founding of our country, our job, Article one is to hold the funding and to use it to force an administration that is ignoring the law to do their job. Here's my question, what would people have us do? Just say whatever you want to do, allehandra maiorchis whatever you want to do,
Joe Biden blatantly ignore the law while people die. And to all my Republican colleagues who are going around going, oh, we might have a shutdown, what happens with the government, you go talk to the people of Texas or people in your community.
That was Congressman Chip Roy. Let's get another view now from another Republican member of the House, Congresswoman Nicole mally Takis of New York. I'm pleased to say is with us now? Congresswan, thank you so much for being here. Do you agree with this strategy shut down the government if you don't get what you want at the border?
Well, look, I think it's a lot more complicated than that. I mean, I believe in good faith negotiation. I think we have to try to use our leverage, right in this process to push the Senate to make real advances in border security, which means we have to revert to some of the policies of the previous administration.
But we need to have a negotiation.
I would say we passed HR two, right, that was the House Republicans' priorities, and basically it's what customs and border protection.
If you spoke with their union, that's what they're saying they want.
Okay, they want technology, they want tools and resources, manpower, but they also want policies that restore the order at the southern border, that undo President Biden's executive orders. It addresses some of the asylum issues, it addresses some of the issues with visas, and I think it would be really the It would be a tremendous, tremendous resolution to what we're seeing at the southern border. Now the Senate doesn't want to pass our bill, then the Senate should
pass its own bill. Let the Senate pass its own bill of what it sees as priorities relating to the border, and then let's negotiate and reconcile the differences.
We passed our bill in May, and.
Yet we have Senator Schumer refusing to not only allow our bill to the floor for a vote, which I strongly believe if Schumer brought Hr Two Order Security Act to the floor for a vote.
It would pass. He refuses to allow a vote. All we're asking for is an up and down vote if it doesn't pass, and we got to start from.
Scratch or pass your own bill, and then let's reconcile those differences. But what we're seeing happening is so unsustainable, it is so distructed to communities like ours. Here in New York City, the mayor is screaming saying that this is going to bankrup new York City. They're going to freeze hiring police officers across the board cuts, and yet Senator Schumer represents New York City, refuses to take any action.
So we have to use whatever leverage we have. I don't want to shut down the government.
But we need to. We need to demand that border security be part of this resolution.
We're not going to continue to give money to Homeland Security.
To simply process paperwork. They actually need to secure the border.
Okay, So, Congress, when you speak of negotiation and this idea that the Senate should come up with something of their own and pass it first. Yet there are many members of your conference who are saying HR two essentially or nothing, that HR two ultimately is all they settle for. So if you're Mike Johnson, the House Speaker, is that
all he can settle for? You think, actually, knowing what happened to the prior speaker, Kevin McCarthy, he's going to be able to pass something passed by Democrats in the Senate in this House of Representatives.
Well, look, HR two I think is an ideal piece of legislation. However, you know, I'm a Republican from New York. I'm in an overwhelming Democrats state, and I know that we have to negotiate with the Democrats, as much as I may not like it sometimes to get anything done. And so what I would say is HR two is
the Republican starting point. But that's why we need Senator Schumer to either allow a vote on our bill okay, which again I think it would pass if you brought up even though they control the Democrats control the Senate, or pass your own bill, and then we can reconcile the differences and we would have to give a little, Yes, we'd have to give a little but certainly as long as our main provisions right that would make sure people are not released in the interior of this country, making
sure that people have to wait in the next safe country as they apply for asylum and go through an orderly process, so our courts are not backlogged to the point where they are right now, which is a ten year wait, making sure that we add more judges to alleviate this backlog, making sure that we're not taking these individuals who are paying the drug cartels to cross our southern border before the people who have.
Come legally and have been waiting in the system for years.
Right now, the way the system Joe Biden has it set up is the border crossers are being heard first, and so the people who have been waiting patiently, doing everything right, following the rules, didn't pay the drug cartels to come here, They're getting pushed to the back and getting years long delays. And I know this because I've been working personally with many cases constituents, and I've had to cut through his bureaucracy and red tape for them.
And it's very unfair that the President's prioritizing the people pay the drug cartels to be smuggled here as opposed to the ones who have been waiting in the system. So I would simply say, is I understand that as a give and take here, but it's hard to negotiate with the Senate when they've passed nothing. We need to see what their priorities are, right, That's how it works.
We show you our cards, you show us yours, and then we try to reconcile the differences and get a piece of legislation passed.
So, Congresswoman, there's the Senate in the House obviously in play here as well as the White House, because Biden's ultimately going to have to sign this legislation, and knowing that Biden does need a win on border policy politically, do you think there is another actor here for House Republicans in the man who is very likely going to be running against him in the general election in twenty
twenty four. How much influence does Donald Trump have on the people in the House making these decisions right now?
Well?
I don't think he.
I think the House Republicans want border security. That is our number one priority. We want to see reasonable policy, and yes, we have legislation to add more visas for people that want to come and work and provide for their families in industries that we need workers right to address our labor shortage, and it should be strategic.
And we should be doing that.
But this idea that we're just going to allow ten million people to enter our country, two million of which.
We don't know who they are, where they are, or what their intention are.
That's the number that CBP estimated has entered our country is very dangerous.
When we know.
Fetanol is killing a record number of Americans, we know that there's sex trafficking, children, women being exploited, when we know that we've caught terrorists at the border that are on the FBI watch list, this is insane that we would have this type of open border policy to post.
Nine to eleven world.
So I think the House is working independently and this is their priority, regardless of any the national figures. I mean, we see this as a real issue, both economic issue, a public safety national security issue, and it just needs to be addressed. And if Joe Biden will not do something like we send the executive boarders that created this is executive orders that created this mess.
Now we need to take action.
We got to use every tool and leverage that we have so to get the set as hacked.
Well, Congressman, when you say the House is going to make these decisions independently of any actor, so is that essentially you saying, even if you do have the former president potentially making noise about a deal that Mike Johnson and House leadership, which pretty much everyone has endorsed him at this point, would pass it anyway.
Look, I think you'll have the votes if we actually if we actually get the Senate to work with us, and we can hash out an agreement that would reinstate some of the Trump era policies, address the issues of visas and asylum and work permits for people who are going to come legally and follow the proper path. Then you would see what you usually see in these types of scenarios, right like you did in the debt default
you did it with avoiding the shutdown. You'll see the far right vote against it, the far left vote against it, and then everyone else in the middle voting for it. Over over three hundred probably members voting for it. That's what usually happens.
At the end of the day when there is a negotiation.
The extremes sit it out, they vote no and complain about it, and then the middle who actually have to govern.
Right, we pass the legislation, do what we can with. People have to.
Understand that Republicans, we control one third of the government, right, the Democrats have the.
Said they have the White House. We need to negotiate.
We're not going to get everything we want, but if we can get some really good wins that actually address the crisis and stop this mass migration flow to New York City that's hurting cities like ours and we can't afford it and we're seeing citizen services being cut as a result, well then that's a win and we should do it, regardless of who, at the end of the day will take political credit for it. We need to do the right thing.
Okay, Well, you've mentioned New York a few times, so let's talk specifically about what's happening. They're obviously dealing with an influx of migrants, many of which have been bussed from Texas, and I'm sure you saw the news yesterday. New York is now suing seventeen Texas bus companies for seven hundred and eight million dollars to recoup costs incurred by providing shelter and services to these migrants.
Do you agree? Do you support that move?
Congressomone, Look, I support any tool that's going to stop this flow. I think a lot of the problem of these non government organizations, these NGOs that receive a lot of government funding, they are responsible for transporting the majority of the migrants. Yes, states like Texas are sending some, but that's about ten to fifteen percent of the individuals that we're seeing in New York City. So I support any measure that will stop it.
But truly, which.
Really going to stop it is if we secure the border. Right at the end of the day, it comes down to that, and so I really urge Mayor Adams to get Senator Schumer to act, and he he calls for more funding, he called which which would only exacerbate the problem. Right, It would just allow him to open up more shelters and more encampments in New York City, And it may it may help the city financially, but doesn't really solve
the problem. What's really going to solve the problem is having border security and a reasonable process for people, which we do by the way we have laws and for generations people have been coming, including my own parents through this country. We have a process in place. It needs to be followed, it needs to be enforced, and that's what we need. We need more resources to make sure that these cases are heard.
Quicker, Congressman.
Finally, I only have a minute left with you, but I do want to make sure to ask this question. How confident are you that a partial shutdown on January nineteenth can be averted?
You know, I think there's a lot of variables right now, so it's hard to say.
Look, they've said we were going.
To show, say more likely than not.
I would say at a partial shutdown would be more likely than a complete shutdown.
But I also.
Think that you know, people have said we were going to have shutdowns twice before in this Congress, and we did it. We averted it last minute, working in a bipartisan way. But at some point we need to see policy changes. We don't want to just continue the existing funding levels. We have a thirty four trillion dollar debt. We need to be serious about spending and we've got to find savings. And so that is why negotiating is so important right now.
All right, and on that note, we believe it. Congressman, thank you so much for your time safe travels back to Washington next week. That is Republican Congresswoman from New York, Nicole Maliotakis. We'll have much more coming up next on the second hour of sound On.
So stick with us. This is Bloomberg.
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 want to get more on the jobs figures now, because two hundred and sixteen thousand payrolls added in the month of December, economists thought it would be one hundred and seventy five thousand, and rather than a three point eight percent unemployment rate economists we're looking for. What we got was three point seven. Wages were a little hot as well. So what does all this mean and what
does it mean specifically for the Federal Reserve. Let's get more insight now with Bloomberg's International Economics and Policy correspondent Michael McKee, who is also in New York. So Mike, I guess my first question is is it as strong under the surface as meets the eye.
Not quite, and it's a little weird under the surface. There are a number of different oddities in this report, none of which you are really going to matter to the Federal Reserve. But the two hundred and sixteen thousand has to be weighed against the seventy one thousand that were subtracted from October and November, so you get a net of one hundred and forty five thousand. And we were running in the third quarter at about a two hundred and twenty five thousand average pace, So clearly there's
a deceleration here. And the fact that the unemployment rate did not go up was because a lot of people left the labor force. But most of those people didn't lose their jobs, they just were not in the labor force, so they're not counted as unemployed. So we don't know exactly why they went out, other than maybe it was the holidays and they didn't feel like looking for work
or something like that. And finally, and this gets into the political side of things, the unemployment rate for blacks and for Asians went down, while for whites it went up, and usually if you're going into a recession or something like that, it works the other way. So a lot of things to consider when looking at this report. But as I said, I don't think the FED is going to change its views one way or another based on this.
Well, Mike, I guess it's important to recognize here that the Fed's views on cutting maybe different than the view the market has adopted on cutting, because the market thinks the Fed's going to be cutting a lot more than was suggested in the dot platter, frankly was suggested in the minutes from the fed's December meeting that were released this week. They talked about how they wouldn't essentially rule
out another hike. There was no suggestion that rates aren't going to stay higher for a longer period of time. So I guess, is what changed here, or what could change more market interpretation than actual Fed interpretation, because the FED may have been thinking things all along that are supported by the data.
Yeah, I know what you're trying to say here, It is a weird situation.
I'm not sure I succeeded.
Soas helped me on television earlier today that the FED and the bond market are kind of married, but they're not sleeping in the same bed. They're not even sleeping in the same house. They're quite far apart, and that has to change. How it changes will depend on the data. We had a very weird day to day where inflation went up in Europe. It wasn't unexpected, but it went up in Europe, and all of a sudden, the market's priced out a number of ECB rate cuts. Same thing
happened in the United States with the jobs report. They price out rate cuts when the FED when the employment numbers came out, and then that ISM number came out, the ISM services, which showed a slowdown in the service industries, a big drop in prices and an even bigger drop in jobs. That wasn't confirmed by the payroll report, but it was enough that all these markets, futures markets did a u turn and now are back to pricing in
March moves. So if you can explain the bond market thinking, to me, you're doing better than most people, I think basically what you end up with is people are taking advantage of cheap options on the idea of maybe kind of hedging against the possibility that the FED might actually end up if inflation goes down cutting rates in March, those options may fall off if the data don't support what we're doing, and it's not like you're actually shorting treasuries or something like that.
All right, Bloomberg's Michael McKee answering a question that I'm not sure actually I even asked is a question. But well done, Mike, Thank you so much. As always, we really appreciate it. Of course, Mike the expert on all things monetary policy, but we want to talk to an expert now on fiscal policy, because, as we've talked about already on this program, it's going to be a battle over appropriations, and it's going to start in just a few days when Congress returns to Washington after a multi
week holiday break. The issue on the table figuring out these twelve appropriations bills by January nineteenth or February second, depending on what department of the government you are talking about, and depending on who you ask within the government, they may be feeling more or less confident about the ability for a shutdown to be averted. Shalanda Young, who's the White House's budget director, said this morning, I'm typically optimistic.
Don't mark me down as optimistic this morning. So how optimistic is our fiscal policy expert, Bill Hoagland.
He is the.
Senior vice president at the Bipartisan Policy Center. So Bill, how are you feeling?
Thank you, Kylie. I'm feeling cautiously optimistic.
How's that.
There's good news coming out literally in the last few hours as it relates to an agreement being reached on what we call the top line for appropriations. It is critical for the appropriation process to work the twelve bills to get them completed, that we have an agreement on the overall level of discretionary spending, both defense and non defense.
And there is very strong indications that we are very very close to getting to that agreement here in the next It may be even announced later today or early tomorrow. The importance of that is once you know the top line, which we haven't had an agreement since we thought we had the agreement way back with the Fiscal Responsibility Act back last June, but of course we went through a number of iterations since then. But now we're back to where we should have been back last year. We have
an agreement that's being reached. It appears to be very close to this Fiscal Responsibility Act agreement last spring, and that will allow then the appropriators to move forward by completing their bills. Quite frankly, I do believe it's very difficult, though,
let's be fair, Kayley. I think it's going to be very difficult in eight days, essentially eight days, to get the agreement as it relates to the first trunch, which is Department Energy, Agriculture, Housing, and Urban Development, and Transportation.
So bill, even if we do to your point about the difficulty of achieving all of this in such a short period of time, even if you have the top line figures now potentially knowing how hard it was to come to that in the first place, how much harder is it to figure out everything underneath, how that money is actually divvied up within these programs.
Well well, of course, the Senate committees have been working, staff have been working for some time. The House too, It'll take some time. I guess what I want to say is I think that for those that first round of four eight major agencies that has a deadline here of January the nineteenth, my guess is it's going to require them to extend that agreement maybe into the second tranch, which is February the second, and I think they can
get that all done within that timeframe. Yes, there's a lot of decisions being made, but I think a lot has been done behind the scenes. So I am, as I say, cautiously optimistic that will not have a shutdown for those four agencies, but it will require that they're an agreement to extend that first trunch the January nineteenth day two probably to February the second, with all the other eight bills.
Would that extension count though as a short term cr of some kind because Speaker Johnson said he wasn't going to do any more of those, But is that, frankly, his only way out of this pickle.
I think it's either that or a government shutdown for those four agencies. So I believe that once we get to or the billy up to the bar, so to speaking, you're going to be able to work out an agreement. Yes, we all, we make a lot of announcements, and I think we'll we'll find out here. Now, I want to make very clear there's one other issue here. This is just the funding for the fiscal year that we're currently in,
fiscal year twenty four. This has nothing to do with the supplemental request that's still pending one hundred and six billion dollars. This is what has to do with Ukraine Israel, the issues around the border. That's still a separate issue to be debated.
Well, I'm so glad you brought that up, because I'm not really sure the border issue is separate to the appropriations process anymore. The rhetoric we're hearing from Republican members of Congress is shut down the border, shut down the government. How much more complicated does this all become if the border security deal is now what is contingent upon keeping the government funded?
Well, then that's a new element here. As I say, I've heard this shut down government are shut down the border. I think that's a little bit overstating it once again, a little bit dramatic in their statements, because again we're talking about first of all, funding the basic government and
then the issues associated with that emergency supplemental. I think you can negotiate the emergency supplemental and the border issues separate apart from the basic funding of the Department of Agriculture, Energy, Transportation, and Housing. I think those are really separate issues, and I believe that the appropriators and the leadership at the end of the day will separate the two out.
Okay, So even if the issues are separated, though, how hard is it going to be to find bipartisan compromise on this issue? This is an issue that reforms have evaded Congress for literally decades. Bill, So what makes this time different? Is it really different?
You know?
No, I think you're absolutely correct, Kayley, that the issue associated with the emergency supplemental that's separate apart from the basic funding. I think that is going to still continue to be very contingious whether or not they can reach an agreement here. I think it's still very problematic on
that score. I do think that there is a real desire on the part of particularly the members in the Senate to find a solution here, and it will not Listen, let's be honest, even if we could find some improvements upon the border, whether it be through the parole issues or other issues down there, I do think that we're not going to solve all the problems of the border
in this one particular bill. But one thing it's important is to keep in mind that that Emergency supplemental was to provide additional funding to the border exactly for what is needed in terms of the border judges and things of that nature, and the border guards and all that which are necessary to strengthen the border and protect the border here. So again, I want to keep I want to keep trying to keep the two separate from the basic fundings of the of the federal government for fiscal
year twenty four. But you're absolute correct. I think it's going to be very difficult, and we're not there yet clearly, but at least the United States Senator and a bipartisan matter is trying to work overtime to find a solution. Now, whether even if the Senate could get an agreement, whether that would be acceptable, and the House is still very much up in the air, as the new Speaker has interjected himself and says that he wants to negotiate directly
with the White House. That will further delay any kind of agreement going forward on the border.
So, Bill, let's talk about the new speaker. Can Mike Johnson get through all of these different fights and still have the gavel in hand on the other.
End of him.
I have to believe it's gonna be tough for him. He's gonna have to he's jail, I say he's learning on the job. At the same time, I do think that he will retain his speakership. I don't think the United States House wants to go through the same exercise they went through last October in terms of finding a new speaker at this point, going into a political year, an election year, and where questions are being raised about whether the leadership in the House can whether Republicans can
retain the leadership in the House. I'm not a political pundit in that sense, but I do think the last thing you want is, first of all, to have a government shutdown or to have another fight over the speaker in the United States House of Representative, if Republicans want to retain the House in the next one hundred and nineteenth Congress.
And finally, Bill, Just in my final moment with you, I want to return to something you said at the top of our conversation. The idea that these negotiators over the deal are indeed close. Is that something you've heard directly from the White House or from the people in the room. And how close exactly is close? Are we there?
It's hard to say this. We're talking about an agreement of spending. That's about one point six trillion dollars. I am under the impression we're two billion dollars away from an agreement that's coming from within the halls of the Congress today.
All right, Bill Hoagland, it's always great to have you on the program. Thank you so much for providing this insight. He is, of course, the executive vice president of the Bipartisan Policy Center and spent a lot of time walking those halls of Congress. I'm sure he still does. Really great to have him.
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