Bloomberg Audio Studios, podcasts, radio news.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon Eastern on Apple car Play and then Broun Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
A one and forty seven page piece of legislation. It's the continuing resolution, the stop DAP measure that will keep the government open past the deadline of midnight Friday. There's a lot of stuff in this thing, from laws around pharmacy, benefit managers, what happens with RFK stadium disaster relief, which perhaps is the most palatable item in this for a
lot of lawmakers. And it even gives lawmakers a pay raise through a cost of living adjustment that was first noted and noticed by Bloomberg Government's Jack Fitzpatrick, who of course covers Congress for BIGOV and he's joining me now here in Balance of Power on Bloomberg TV and radio. So, Jack, this is a monster piece of legislation. How did it get so big?
It gets so big because you need to get people to vote for it, and you already know a lot of the hardline conservatives and maybe swing district members aren't going to vote for it. So when they complain about the fact that this is not the right way to legislate, it's not a good idea to just drop fifteen hundred
pages in their lap right before a deadline. When they complained that they didn't ask for a pay raise, you say, well, you know, if you weren't going to vote for a major piece of legislation anyway because you don't see it as good governance, then.
You've played yourself out.
This is going to the members who represent rural America and wanted agricultural economic relief for farmers. It's going it's for the members who had hurricanes or wildfires or tornadoes or floods and want disaster aid, and a bunch of other members who had a bill that they wanted to see enacted. Whether it's a measure to try to crack down on hidden fees by hotels that's in there. There's a wide variety of measures in here, because when you get pushback from a number of members, you need to
say this is going to be bipartisan. We need a large base of support. What can we put in this bill to get your support, and so there's a lot of input, and they're banking on Republicans and Democrats having something to vote yes for, even if they complain about the broader nature of a fifteen hundred page measure coming to them two days before a shutdown.
Well, so then the next question is going to be when they'll have the chance to vote yes or no to this. Jack Speaker Johnson just yesterday was saying, I want to stick to the usual process. I want this to go through the Rules Committee, give everyone seventy two hours to read this massive, massive bill. How is this actually going to go down?
This seventy two hour rule seems unlikely now there's not an official plan of action in the House. I spoke to Mark Amiday, who's a senior member of the Appropriations Committee, yesterday, who said, in his opinion, the obvious route is you skip the Rules Committee. You don't give people seventy two hours. Maybe they can get two days. You know, it came out last night. We'll see exactly when they hold the vote.
But you do this under what's called suspension of the rules, which means you skip the Rule Committee and you need a two thirds supermajority to get it through rather than the simple majority in the House. There is a lot of bipartisan interest, so it seems like something that could get two thirds in the House and that would speed things up. Then though, you have to get it through the Senate, and that will require unanimous consent on some procedural step. So if anybody really wants to slow this
down and cause a shutdown, they can. It's a question of who that member is and what the mood is in the Senate, And I will say members usually want to get out of here and go be with their families ahead of Christmas. So we'll continue to see if anybody wants to play the grinch in the Senate.
Those jet fumes very powerful thing.
So even assuming that all of this gets done this time around, the government does not shut down right before the holidays, we get our Christmas miracle. In that regard Jack, then it becomes a question of March, because that's how far the can is getting kicked down the road until March fourteenth. Given how difficult this seems to have been, how much harder is it going to be in March? When Johnson, assuming he's stay speaker, is working with an even smaller.
Majority that's a great question. It could be harder because of the smaller majority, but it could be easier because one, Republicans, when they're in the majority and they have the trifecta, have a very clear leader. What the then president now President elect Donald Trump says.
Is the rule for Republicans.
So if they're trying to wrangle votes and trying to get members who are tough to get on board to vote for a piece of legislation, if Trump gets involved and says, absolutely, you need to support this, or we're going to send people after you run against you in your primary, that's a better motivator than they have right now when they're just asking them to kick the can
down the road. If you can get Donald Trump and Elon Muskin, Vivik Ramaswami, who are not being helpful to Mike Johnson right now, to all work in the same direction, then they can have a better organization in March potentially than they do right now.
Well, one thing we do know for sure, Jack, is that Matt Gates will not be taking part in the next Congress. He already resigned from this one. And we did get a piece of reporting today around Matt Gates and the ethics investigation into him. Apparently the committee did secretly vote to release that report even though he is no longer a member. What do we know in that regard and what precedent would it said if they do release the Gates report after he has left the chamber.
There is an ongoing debate about the degree to which this would set a new precedent. Representative Sean cast In, a Democrat, who had been pushed for this report to come out, has said that there are cases in which a member has resigned while under investigation, in which they've put the report out and they don't want to set the precedent in his argument that you can avoid accountability and scrutiny by stepping down right before a report comes out. Ultimately,
this is up to a vote. It takes a majority vote on the committee. We don't know yet who which Republican voted in favor of putting this out. I think more information will come out about exactly where people stand, but you can see that Gates is preparing for it. He went on x and was posting about working hard and playing hard in his thirties, saying he did not do anything illegal. He did say that that can be embarrassing.
So this is not ideal for him, but obviously his course of defending himself and saying that he did not do anything legal will continue, and at least there's a little bit of convenience to him that if you want to bury this news, doing it right before the holidays is probably the time.
All right, Jeff Fitzpatrick Bloomberg, Government Congress Reporter or live from Capitol Hill for us today. Jack, thank you very much, and we do have a little bit of news coming from Congress right now. The other must pass piece of legislation that needed to get done before your end, The National Defense Authorization Act has just passed the Senate after passing the House last week. The Senate voting eighty five to fourteen to send that eight hundred and eighty four
billion dollar package to President Biden's desk. It's assumed Biden will sign it. The question is going to be when Biden gets a chance to sign this continuing resolution. I want to stick on this Matt Gates thing, though, as I reassemble or assemble our political panel, our signature one at that Rick Davis Stone Court Capital Partner and Republican Strategists alongside Jeanie Shanzano, Senior Democracy Fellow at the Center for the Study of the Presidency in Congress and Democratic strategist.
So when we contend with the prospect of this Gates report, which I know all three of us have been dying to get our eyes on for a long time, now being released in the coming days, Rick, I do have to wonder, considering he is no longer a member of the House and has withdrawn his name for consideration for Attorney General, what will the ultimate impact of this actually be.
Well, there is a current underneath a lot of this in Capitol Hill where people think he's going to show up next year and get sworn in, because he did get elected to another term. So even though he resigned his former term, he is still eligible to take his seat. And it wouldn't surprise me that part of the motivation of the Ethics Committee is to release his report to ensure that he doesn't change his mind and show up and get sworn in as a member of the one
hundred and nineteenth Congress. And so when those possibilities exist, people try to take some risks in order to stop these kinds of things from happening.
As if he could hear us.
I just got a fundraising email from Matt Gates that hit my inbox talking about how help is needed. He's in the fight for his life, defending his name and honor. He says, instead of spending a wonderful Christmas holiday with my family, I'm forced to fight, fight, fight to defend myself. If he's still friend raising, that does lead me believe he does have future political ambitions that he's thinking about
deploying cash for. And maybe it's ultimately that, say Gubinatorial Canvasy in Florida, that this ethics report will matter most.
For Yeah, that's right. I mean, this is somebody who has spent his entire life in politics, his adult life, and you know, it's hard to believe he would be removed from that of his own accord, and so we certainly think he wants to get back into it, even though he had to withdraw his name or he decided to withdraw his name. And his response on X about this report that is coming out is long and it
is very very telling. Like Taylor Swift, he talks about this as you know, activities that were in a different era of his life in his thirties when he was working hard and playing hard. He admits two things, although not certainly not anything criminal, but that are very unbecoming of somebody as a member of the House and a
member of Congress. And so I think the release of this report is going to underscore for many people that this is somebody who, if he chooses to run again or tries, to Rick's point, to come back to Congress, which I really doubt, they're going to have to raise serious questions about that this is somebody who admits two things, again not criminal, but that are very very telling about who he is.
And of course all of these concerns percolating around past conduct and character around Matt Gates or why he is no longer an active nominee for the second Trump administration never even got to a hearing. And Rick, we've been wondering if any other nominees might meet the same feet in pulling the Gates, if you will, of withdrawing themselves
from nomination before they can risk being voted down. One of the nominees we've had greatest concern about, perhaps earlier this month, if less so now, is Pete Hegseth, who's been tapped to be the next Secretary of Defense, and according to CNN, Senator Roger Ricker, who of course will lead the committee hearing, says that hearing is set for January fourteenth, almost a full week before Trump takes office.
How much drama could that bring just six days before Donald Trump takes his oath at the Capitol.
Yeah, I think it's going to end at an element of scrutiny on Washington that this time of year, during a inaugural period is usually just happy, happy, joy joy. That hearing will not be happy, happy, joy joy. The biggest hurdle that Hegsath has is he's made representations to the senators he's meeting with that the stories about him are lives and that he has reformed his drinking, but that the relationships discussed in the public domain aren't true.
If in his FBI report those things become more factual, he's going to have a hard time explaining why he said things were untrue when they came back in an FBI background check is becoming fact and so that is his vulnerability in that hearing, is members bringing those things up and asking him those questions directly.
So, Genie, what do you make of the timing this January fourteenth date. I fully understand trying to get as much of the cabinet in there as possible so they can be ready on day one when the President moves into the White House. But Pete Hegseth one of the first to go at least at this point.
Yeah, I mean, you know, it does make sense. I mean, we do need a secretary of Defense in place, so you know, the world is fraught with a lot of
challenges for the incoming administration. They should be ready. But you know, to add another element to what these hearings on the fourteenth can bring about, we heard Lindsey Graham over the weekend saying, you know, the reason he's supporting hag set at this point is because those allegations against him were anonymous, and you know, to Rick's point, do they come about in an FBI check, He's four answer to.
But also imagine now he has apparently released this woman who made these allegations against him from her privacy of their privacy agreement, and imagine if she decides to come
forward or doesn't decide is called up. We could have really really difficult hearings for Pete Hegseth and his family at that time, So you know, these would be Kavanaugh Lake, these would be Clarence Thomas Lake, if indeed you see a witness like that come forward, which is very very possible since he has said or as lawyer has said, she is now released from their agreement to maintain privacy.
We just have a minute left here, Rick, but we've discussed the continuing resolution that was released last night, that fact that Elon Musk and Viviak Ramaswami you are not happy with it. Elon Musk just putting out a new post on X that says, the more I learn, the more obvious it becomes that this spending bill is a crime. He's not being shy here, Rick, Do you think anyone will be heeding his voice.
Yeah, Typically in Washington, when you stick your neck out that far, it gets chopped off. And he's way too new to this game in the sense of, you know, having this sort of public posture is the head of Doge and the Trump whisperer for all intensive purposes for the last month to really get that far out in front of this Now, I get it, it's his brand, But does he back Donald Trump in a position of calling up Johnson and saying, you know, we're not going
to pass this bill. I mean, like there are real serious consequences to this kind of behavior, and I would have said absolutely no chance that this bill could be interrupted at this stage. But if if Ramaswami and Elon Musk launch a campaign against this bill, they might be able to get Donald Trump to throw it under the bus and we could have a serious government shutdown right before Christmas.
All right, Rick Davis and Jeanie Shanze no our signature political panel. Thank you both so much.
You're listening to the Bloomberg Balance of Power podcast Ken just live weekdays at noon Eastern on Applecarplay and then ron Oto with 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.
On the nineteenth of January, we could see TikTok bands in the US, unless, of course, they can successfully get that blocked, as they've asked the Supreme Court to step in here after, of course, the appeals court District Court here in DC.
The federal court.
Did not agree with the company's contention that the law passed by Congress that would see it banned if it's not divested here in the US violates the right to free speech in the First Amendment. The Supreme Court says today they will hear TikTok's arguments, and they're scheduled for January tenth, which leaves just nine days of wiggle room here if the ban is indeed to be halted by the deadline. So joining me now for more is Bloomberg's Greg Store, who covers the Supreme Court for US. He's
here in the Washington, d C. Studio. So, Greg, it's one thing for the Court to hear arguments on the tenth How quickly could they rule?
Could they do so before the nineteenth?
They certainly could, just as one example, Bush Vigor back in two thousand was a case that they turned around in just a day or maybe a day and a half. So they certainly have the ability to do that. There is the issue of, you know, whatever happens with this law, folks are going to need little time to plan their actions accordingly. You know, the companies that are involved with TikTok, like Oracle, which hosted on its servers.
So one would imagine the court will be sensitive.
To that well, it then raises the question on what the Court's view of this entire case, maybe when it is TikTok intends a First Amendment issue. The District Court of Appeals basically said, no, it's not. Congress was well within its authority, including on national security grounds, to put this law into place. It was a three to zero decision. Is there any indication the Supreme Court, which yes, as a conservative majority, would view it differently.
Yeah, this is one where I'm not going to do much predicting. Yet.
It was, as you said, a three to nothing decision from the Federal Appeals Court here in Washington, including two Republican appointed judges in the majority there, and they basically said national security Trump's free speech in this case, that Congress had legitimate concerns that the Chinese government was getting access to Americans data and would be manipulating was manipulating content what people see on TikTok, And the court said we're going to defer to Congress's judgment on that, and
that Trump's the free speech cluse.
So if the Supreme Court were to view things differently, which again obviously we can't predict for certain, but what would that do to congressional authority if they were to say, actually, no, the lawmakers in the legislative branch did not have this authority, and the judicial branch knocks it down.
Yeah, that's a really good question.
You know, this is a court and the court has, you know, over the century, has always been very deferential on national security grounds. That's not its area of expertise. So it would certainly be a very big deal where the court to say that, But we'd want to look at what the decision actually says. You know, they could try to write it in a way that sort of says, you know, maybe Congress went a little farther than it
needed to. It's got legitimate concern So there are ways the court could at least try to narrow that ruling. But unquestionably it would be a major.
Decision, So the outcome wouldn't necessarily be binary, like TikTok is banned starting the nineteenth or not. Could there be some nuance here, like a lengthening of the window for TikTok to divest or asking Congress to rewrite the law to address certain concerns.
Yeah, that so a couple of things there.
One they would certainly they could certainly leave open the possibility of Congress rewriting the law. They wouldn't, you know, ask them to, but they would suggest that it could be fixed.
The second thing that they could do is TikTok has asked for.
What they originally were asking for, was a temporary block of the law, as you said, scheduled to go into effect on January the nineteenth, and they said, you know, block it for now and let the new administration come in. Donald Trump this week said he has a warm spot for TikTok because he thinks that it helped him in the election. Yeah, you know, the Trump administration would be in charge of enforcing the law. So TikTok, you know, is at least hoping to kind of extend the window
into the Trump administration. So the Supreme Court could say, as part of its ruling, we're upholding the law, but we're going to temporarily block it for a longer period of time to let everybody kind of, you know, figure out how they're going to deal with stuff. The Court does have some tools at its disposal.
All right, Well, well, look forward to seeing the developments with this one. January tenth, again the date to write on your calendars, Bloomberg's Greg store covering the court for us.
Thank you.
You're listening to the Bloomberg Balance of Power podcast kens just Live weekdays at noon Eastern on Applecarplay, and then broud Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
So we want to get more into the expectations here and what exactly economically twenty twenty five could bring and turn to Joe Livornia. He is chief economist with smb Necosecurities SMBC rathern Eco Securities America. He also was the chief economist at the National Economic Council during the first Trump administration. Joe, welcome back to Bloomberg. Happy Fed day
to you, Thanks for being here. So you think the booming equity market is more to do with expectations around monetary policy than say, expectations of Donald Trump taking office in January and everything that that will bring.
No, I don't believe that to be the case. I think the Fed has to be much more careful the money supply and credit creation. We've seen M two growth accelerate in the last three months to almost a six percent rate. The small caps and the financials and certain sectors are very enthusiastic about President elect Trump coming back. We see that in a small business survey where you've just seen massive, basically vertical jumps and things like good
time to expand and expectations the economy improves. No, I just think this is a part of a bigger narrative where the FED just has not done a very good job signaling its intentions and has been wrongfooted many times on inflation. And I'm just worried in the short term by the FED easing more and potentially getting more money and credit creation, they make a potentially sticky inflation problem worse.
Well, Joe, you and I have had several conversations about the future of inflation and the role, if anything, tariffs could play in that. I know you see higher tariffs as effectively bringing a one time price increase. They should be viewed holistically with everything else economically the President elect would like to pursue. But I guess my question for you is how do you think the FED views it? If it is a price increase, they ultimately see what is the reaction function for monetary policy.
That's I'm happy you raise that question because I think the I'm very bullish on growth next year, think inflation will moderate because I see President President elect Trump's policies as expanding the supply side of the economy. It's potential productivity, basically its ability to produce the things that we want. However, I think the FED has taking a much more demand
side Canesian approach. They view the inflation process as not really a money and credit phenomenon, but rather where the unemployment is relative to NEHRU or where the output gap is. So that my fear is that they're going to look at a tariff increase as being inflationary when it's not, and when they should maybe be easing next year because productive output increases. Instead they hold pat and that would obviously set in motion a negative a reaction in markets in the broader economy well, and.
When we consider the global economy, there's also the consideration on not just what tariffs mean for higher prices in the US potentially, but also if we are seeing higher tariffs and it results in a if not outright decoupling, a lessening of the trade relationship between the US and China, the world's two largest economies, what the wider economic ramifications of that could be not just here at home.
Yeah, I'm not worried about that because I think you've already seen when President elect Trump talked about twenty five percent tariffs on Canada and Mexico. There were quickly talks where both respective leaders either went to see President Trump in person or had conversations shortly thereafter, as reported in the news. So I think again this is a negotiation. Tariffs will be a very powerful, important tool that will
be used. I just think it's incorrect to look at them as being inflationary, which I think some on the FED will look at, and I think that would be a monetary policy error, especially if we're cutting regulations and
oil prices and energy more broadly speaking, falls. That's where you can get some real improvement on the pricing side, because you get these second and third order effects when energy prices fall, the inverse of what we had when inflation surged back in twenty one and twenty two, when oil prices were higher, you'll get the opposite.
Joe. Finally, I want to ask you about something else in the news today, which is that we got the text last night of a mammoth government funding continuing resolution that there's been a lot of pushback from Elon Musk.
The vik Ramaswami don't like this. Now.
The President of the Elect's soun Donald Trump Junior says, the American people didn't vote for this, They voted for the opposite. They voted for transparency. This cannot pass just quickly.
Joe.
If we were to somehow stumble into a shutdown here before the holidays, do you expect it would have a real economic impact.
No. I love the fact that we're trying to get rid of this pork barrel legislation and we're actually trying to do something productive that's a bypar is an issue. I don't look for the government to shut down. I think ultimately the government will be open around the holidays, and I'm hopeful that whatever we get on the budget resolution, it'll be basically pushed.
To next year.
We're a more comprehensive, better form bill than probably what's out there right now. You know what it comes out at. In other words, I like what's happening. I think it's important we have to have this discussion.
And we still have a minute left here, Joe, So if you could ask the FED share Jerome Powell one question in the press conference today, Assuming that what they do deliver is a twenty five basis point rate cut.
What would it be Well, I would like to get some more information on where the Fed thinks that's neutral is and how they compare that to where financial conditions are. Because monetary policy has not tightened effectively for most of the economy. We've seen basically the cost of capital fall quite dramatically because of the rise and equity prices, and in very tight credit conditions. So why are you easing
policy when you could just wait? And why are we so worried about what investors who are betting on FED fund in the FED Fund's futures market? Why are we so worried about disappointing those expectations. Wouldn't it be better if policy was perhaps a little bit more two way on the risk. Why is it that investors can't lose money sometimes or why can't they be disappointed on where
monetary policy wants to go. I don't understand that. I think the FED has done a really terrible job of setting policy in a way that's led to major misallocations of capital because they believe that they can't let wall straight down I think that's ultimately very unproductive, and I worry that if the FED does cut today, as they likely will, you actually might get a more negative reaction ultimately in the bond market than they just not cut and let the market kind of evolve as I think
it will in a positive fashion. But I first want to see inflation go lower, and the FEDS you do that, all.
Right, Joe Lavornia, thanks for joining us here on Bloomberg.
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already.
An Apple spot of