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Here in Washington, where we find a number of Cabinet nominee spending time today. The visits continue in the Senate on Capitol Hill for a number of designates for secretary positions, including as we mentioned, Scott Bessant holding his first round of talks today, but more controversial nominees as well, including
Pete Hegseth, the nominee for Secretary of Defense. He had an interesting and arguably important meeting today Joe with the Senator from Maine, Susan Collins, who is well understood to be one of the most moderate Republicans in the Chamber given the state that she represents, And after that meeting, Seth said he hopes to earn Collins's support, So trying to speak positively about this, but this one's still a question mark.
Well, yeah, positive to a point, that's far from an endorsement.
You know, you compare that to what we've heard from Jony Ernst, Susan Collins today, Lisa Murkowski yesterday, the Republican from Alaska also to your point, having some issues with some of the allegations that have been levied against Pete Hegseth, all of which he denies, of course, sexual assault allegations, questions about his alcohol use seem to be fading the more he meets with senators here, and a lot of it has to do with, based on our reporting at Bloomberg,
a pressure campaign, Susan Collins, Lisa Murkowski getting a real earful from Republicans who want to see Donald Trump's nominees be confirmed.
Yeah, the question is really going to be for the senators who have reelection fights coming up just two years from now. Twenty twenty six is not all that far away politically. Do you want to risk getting a challenge from the right and your entire political future, arguably over a no vote on one of the presidental ecnomics.
Let's get into it with our panel. Genie Schanzeno is with US Democratic analyst, Bloomberg Politics contributor and political science professor at Ioni University alongside Republican strategist Lester Munson from the International practice at BGR Group. Great to see you both. Lester, your thoughts on the pressure campaign. We've been hearing more about it than really any confirmation process we've seen in recent memory. Are these phone calls and meetings par for the course in a Trump world?
I suppose these are? You know, some of these groups that are that are active making calls and kind of generating some constituent interest have been in this role before, putting pressure inside the Republican Party on kind of from the right towards the middle. So this is this is not unusual. This at the end of the day, are these senators. Are these sitting senators going to read that
threat as credible or not? You wisely pointed out, They're thinking about their re election chances and how this will play. That's how the system works. Can they get through the primary to a general? You know, the constituency in the primary maybe very different than the general election, so they have to worry about both of those, which means they could be threading a pretty tight needle here on this vote. And the delay we're seeing is as important as anything.
So the longer Hegseth can stay as the nominee without having to withdraw, I think probably the better it is for him as these some of the allegations maybe get put in perspective or toned down or just not seen as serious. Perhaps. Nevertheless, it does highlight the thing we talked about a couple segments ago that Republicans may have
a little bit of a woman problem here. There's no women in the leadership in committee leadership on the House side, and now we're dealing with some tough personal behavior with a nominee here. So there's some bigger issues to think about as well.
So as we consider this question around a primary challenge for some of these individuals, Genie, I do wonder what Senator Tim Scott must think about this as the incoming chair of the NRSC, who is essentially his job is to make sure Republicans either stay in the Senate or
get elected to it. And on the flip side of that, is it the best news possible for Democrats if some of these people decide to vote no on a Trump nominee and potentially not only keep that nominee from getting confirmed, but potentially open up opportunity if there is a far right challenge for a pickup in states like North Carolina or Maine in the midterms.
Yeah.
Absolutely, It's one of the benefits of being in the minority. You could sort of sit back and watch this play itself out. You know. I think we also, though, have to consider the facts. I looked up today the incumbency reelection rate in the Senate. Now, these are real threats, but the reality is in twenty twenty four, the incumbency reelection rate was ninety one percent. In twenty twenty t it was a whopping one hundred percent. So absolutely, there
can be primary challenges. But if there's one thing our incumbent senators do well, it is get re elected. So this is a real threat, but one that they are perfectly situated to combat. And the other side of that is, you know, you look at somebody like Susan Collins, and you know, I couldn't agree more with Lester about the
issue of women in the Republican Party. But you look at Susan Collins, the reality is she's a little bit like a Joe Manchin on the other side Republicans to your point, Kaylee, you know, you look at Scott they have to be very, very careful because they don't want to lose this seat to a Democrat, and in fact, her voting against one or more of these Republican Trump nominees may actually help her in a state like Maine. So there's a lot of nuances as you look at
this on a state by state basis. So these threats are real, but they may not be impactful in two years.
We were talking earlier this about a piece in the Washington Post today, Lester pointing out some of the tough rhetoric that we've heard from these nominees, specifically Tulsey Gabbard and Kaylee RFK Junior was part of this conversation. Comments about Donald Trump that have been made in fairly recent history,
some of these I can't read on the air. Gabbard has accused Donald Trump of turning the US into Saudi Arabia's a word that rhymes with rich twice, compared him to a pimp, called him a self serving politician, unfit to serve as president, and commander in chief, said he has the blood of Kurds on his hands. I can keep going here. I mean, it's quite the gallery of language. Again, some of it I can't repeat. Does any of it matter?
She's talking about senators here as well, calling Roger Wicker insane, a sociopath or a sadist. How does that play in a hearing?
Well, probably not well. She's a terrific subplot to this larger narrative. I think the question is going to be does she get canceled after a couple of episodes or she going to make it all the way through the season. There's a lot of personality here, a lot of a lot of drama. Her nomination maybe end up being the one that's most most like a roller coaster. We'll see
how long it lasts. I think if in all seriousness, she's got some constituencies out there that are very concerned about her nomination, constituencies that matter, if she can go make peace with them, she might survive this process. If she's not willing to do that, if she continues to have some of these frankly very outside the mainstream views on foreign policy issues, I think she's not going to make it all the way through.
Well, as we consider this notion that Donald Trump is by and large picking people who are loyal to him now, even if they weren't always, Genie, I do want to get your take on what we learned yesterday his nomination for ambassador to Greece Kimberly Gilfoyle, who least was engaged
to his son Don Junior. There's a lot of reporting that suggests perhaps that engagement is off now, but it's just another example of someone who is actually, at least potentially by marriage or intended to by marriage, be part of the President of X family serving in his administration.
Yeah. Absolutely. You know, it's not unusual, as we all know, for presidents to appoint ambassadors for various reasons. You know, I'm a big New York Posts Page six fan Kayley, so I read it a lot, so I'm all up to date on what they're saying about the what was I guess an engagement and may or may not be on right now. You know, the reality is this is
pretty common practice. It was one of the things that Joe Biden actually tried to put a halt to, saying you need people with more serious foreign policy credentials in the ambassador role. Obviously, this comes back with the Trump administration, and you know, it's something that we've long seen in the US, and I think it is going to raise some concern But if the engagement is off. Maybe this is best for Don Junior if she's over in Greece. I don't know.
Wow, there's so much I have to learn about still the engagements. I don't know about any of the stuff.
Well, that's unconfirmed by Bloomberg. Okay, you know, check the internet and see what you find.
I've got.
It's all there. Great panel, Jeanie Shanze know Lester months and you never know what you're going to learn around here. Important conversation, though, as we continue to follow what's happening with regard to this transition, we'll have a lot more for you as these meetings occur and we get closer to actual hearings. Coming up, an important interview today in Washington, Kayley exclusive here on Bloomberg with Jenna Allen, the Treasury
Secretary sitting down with David Girl. Will have a taste of that coming up.
Yeah, and we'll have reaction to that conversation from economist Lindsay Owens of the Groundwork Collaborative. So stick with us here on Bloomberg TV and radio.
You're listening to the Bloomberg Balance of Power podcast. Kens Just Live weekdays at noon Eastern on Apple car Play and then Ronoo with the Blue Birth Business Act. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa play Bloomberg eleven thirty.
Thank you for joining us on this Wednesday edition. It just happens to be Wednesday, December eleventh, and that reminds me that we haven't mentioned the countdown clock yet. That's right this hour, Joe, nine days to go until government funding expires. No one is expecting that there will be a shutdown. There's going to be a solution of some kind, very likely a continuing resolution that will go till mid March, when we're all be roughly halfway through the fiscal year
that this budget was supposed to be addressing. Putting a spotlight on the shall we say, difficult fiscal picture of the United States.
Well, look, how many economists have we talked to you on this program about the impact of extending or making permanent the Trump tax cuts combined with tariffs when there is no obvious way to pay for it. It turns our attention to ballooning deficits, and something that can came up today with some parting remarks from Janet Yellen, who sat down exclusively with Bloomberg's David Gore.
Here, she is, well, I am concerned about the fiscal outlook, and I believe the deficit reduction is necessary to keep us on a sustainable fiscal course.
Now.
President Biden signed into law a trillion dollars of deficit reduction over the next ten years. He did that in the agreement to raise the debt ceiling. And our budget proposes an additional three trillion dollars of deficit reduction over ten years, and I think that's necessary to make sure that our fiscal path is sustainable. Now, Congress hasn't really done anything to, you know, beyond what I've mentioned, to improve the fiscal outlook, and I think that's a shame.
I'm disappointed in that, and I think Congress needs to work hard on that. There is a threat going forward that many of the provisions on the individual tax side of the Jobs, Job Cuts and Tax Act JCTA enacted by the Trump administration in Congress in twenty seventeen, they will sunset at the end of next year, and many Republicans have expressed a desire to keep all those provisions in place. Cbo said that will cost five trillion dollars
over ten years. So that really is and so that would be a blow in a situation where I believe an additional three trillion, that not doing the five trillion and three trillion more is necessary, and if the provisions are just extended, this will be a serious blow without finding ways to pay for them. We proposed a lot of pay fors that we think would fairly ask corporations,
wealthy individuals to pay their fair share. We've negotiated an international tax agreement that would create a level playing field
worldwide for multinationals. The United States has not yet joined, although many other countries have, and that would be a revenue raising measure that I think would be very valuable, and there is certainly more so I do hope that the new administration and Congress will, if they extend features of JCTA, find ways to pay for what they do and also make sure that the benefits go not to the wealthiest individuals but to middle class families.
The Treasury Secretary, at least for a few more weeks, Jennet Yellen speaking exclusively with Bloomberg. She talked about a lot more as well, including the notion of a shadow fed chair and you can find the full conversation on the terminal and will be posted on the Big Take podcast when that drops tomorrow. David Gerro was speaking for Bloomberg TV as well as the podcast Bloomberg Radio. They covered a lot of ground.
Kellie, Yeah, but this deficit conversation is important one to consider as we look forward to this new administration that will be coming in. Scott Bessen of course, will be taking over Janet Allen's current role, and Donald Trump will be President of the United States pushing for a long list of tax cuts in addition to the extension of his twenty seventeen tax package. So for more on this, we turned to Lindsay Owen. She is from the Groundwork Collaborative,
where she is executive director. She's also a former senior economic policy advisor to Democratic Senator Elizabeth Warren. Lindsay, welcome
back to balance of power. When we consider these kind of tax oriented questions which we know we will be dealing with next year, to what extent is this about considering a medium to long term impact, which is obviously a higher United States deficit versus the near one, The near term one that Republicans and the Trump incoming Trump administration argue will mean higher growth and more money in the pockets of American people.
Yeah, if you're a top concern around the American economy is fiscal sustainability. If you're worried about the debt or the deficit, you are in for a root awakening next year because Donald Trump and Congressional Republicans are already hard at work in the tax writing committees working on a budget but sting tax package of additional cuts, tax cuts
for the wealthy and possibly even more for corporations. You know, as Yellen said, we know because the Congressional Budget Office has already weighed in just extending the status quo, the tax cuts that Trump passed in twenty seventeen that are slated to sunset and expire at the end of next year. Merely extending those for the next ten years is going to cost nearly five trillion dollars. So we are definitely not headed to a better place from a fiscal sustainability perspective.
But this isn't really that surprising. When we get a Republican trifecta, we get tax cuts and we get budget deficits. That's what happened when President Trump took office in seventeen. That's what we saw with Bush and the Bush tax cuts. So I think we've seen this movie before. We know what to expect next year. You know, we absolutely should be in a position to let those tax cuts expire
on schedule if our focus is budget deficits. I mean, there are also other good reasons to let those tax cuts expire, including it would decrease income and equality in this country. But that's obviously not where we're headed. You know, if congressional Republicans are able to move through their planned tax cuts.
Well, of course we've talked about this idea of the tax cuts combined with the tariffs becoming something even greater. Scott Bessen has talked to us about it here at the table, suggesting you cannot take one element of the plan in a vacuum. You have to put it all together. They also point, Lindsey, as you well know, to rising revenues following the Trump tax cuts when they were first implemented in twenty seventeen, suggesting that COVID got in the way,
that the pandemic distorted what came next. How do you respond to that?
Yeah, I mean there's there were a lot of promises made in twenty seventeen about the long term outlook of the tax cuts. One of the promises made was that the tax cuts would pay for themselves. Obviously that was not born out. You know, we know that the tax cuts cost one point nine trillion dollars when all this
said and done. You know, there was a peereriod of time when the Trump administration was also promising that every family would see a four thousand dollars increase in their wages because of the tax cuts, and that also didn't come true. So I'm not holding my breath for you know more kind of mythical supply side economics, you know, results from tax cuts. You know the data then on this, we have legions of academic research that shows that these
tax cuts won't pay for themselves. What they will do is boost the bottom lines for shareholders who will see big, you know, big benefits.
Well, there's also the question of the impact both the tax and tariff side of the equation that Joe was referencing will have on inflation. When the Fed is trying to get closer to declaring outright victory on that, lindsay, we've course got CPI this morning, for the fourth month in a row, a three tenth of a percent rise in core CPI xing out food and energy. Is this all the justification necessary for a FED cut next week for now? And then what happens once we get into twenty twenty five.
Yeah?
I think CPI came in today sort of right on schedule, right in line with expectations, and as a result, I do anticipate the Fed will move forward with their planned cut next week, you know, headed into next year is a really interesting question. I do think if what we see in terms of economic policy in Washington is tax cuts for the wealthy and higher prices for everyone else, the inflation outlook will deteriorate considerably. So that's obviously something
that we're concerned about and watching closely. But as it stands right now, you know, inflation is still, you know, off of its peak. We're in a reasonably good place inflation wise, and I think the FED is in a reasonably good place as well.
Interesting statement from Lale Brainers coming out of the White House for four months in a row now, she writes, inflation has been close to the level right before the pandemic. It's almost like an almost mission accomplished sign they almost made it. Lindsay, how would you describe the job done here? I know we get one more data point before they leave office, but the job done and beating inflation.
Yeah, Look, I mean, I think the Biden administration has a lot to be pretty proud of. You know, they came in during an incredibly tumultuous economic period and a tumultuous period for the country more broadly, right, we were in the throes of a devastating, once in a century pandemic.
The unemployment rate had come up above six percent, and then you know, shortly thereafter we started to see the surgeon inflation and late twenty twenty one, and you know, they leave office more or less having taken care of all of those issues. Right, the pandemic has subsided. Unemployment is back down to pre pandemic levels, Job growth is nice, wages are beating prices, household incomes are looking nice, and inflation as inched down to close to that pre pandemic
level and very near the FEDS two percent target. So they have a lot to be proud of. Obviously. You know, the sort of electoral benefits of that work, you know,
are are sort of vexing and frustrating to them. But I think you know, just on the numbers calling balls and strikes here, you know, they've done a really nice job with the economy, and I think it is really a testament to their approach, which was to center increasing worker power, to center making federal investments in in markets and the economy so that we could have those good paying jobs that have been powering that record job growth
month over month. And then also they've done a really exceptional job in curbing the worst excesses of corporate power we saw just yesterday the court agreed with the Federal Trade Commission to block the merger of Kroger and Albertson's. I mean, that's certainly something that would have resulted in a spike and grocery prices for families. Obviously, we have you know, web dot storm for now.
Lindsay gets great to have you back, Lindsay Owens with the Groundwork Collaborative, where she's executive director, former senior economic policy advisor to Senator Elizabeth Warren. It's great to have you back here. On this day, we spend some time with Janet Yellen and the incoming likely Treasury Secretary is
making rounds today on Capitol Hill. That FTC appointment, by the way, awfully interesting because it's someone we actually know about, a Republican member of the Commission with a track record.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon Eastern on Applecarplay and Enrounoto with the Bloomberg Business app Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'm Joe, Matthew and Washington. As we turn to animal spirits, you can't get to this without talking about the next at least Donald Trump hopes will be the next head of the FTC. This is one that broke yesterday here Andrew Ferguson to replace Lena Kahn. Now I get back to this idea of animal spirits is partly why we've seen the markets on a tear since the election, the idea that we're unlocking more m and a opportunity that
we'll see a revival maybe in the IPO market. A lot more where that came from, as we heard earlier today from Goldbensachs CFO Dennis Coleman, a new direction to the FTC with this Trump let's listen.
With Fergin's nominee, there could be a new direction at the FTC. Obviously, as a sitting commissioner dissented with the current leadership on a number of cases, and so we could see a more favorable environment heading into twenty twenty five that could actually spur more by way of CEO confidence and in turn unlocking more investment, more activity, and provide a more favorable strategic backdrop.
Let's bring in an expert on this, Jennifer Ree all things Anti trust and FTC. Turn to Jenry, a Bloomberg Intelligence where she is senior litigation analyst. Great to see you, Jen, Welcome back to Balance of Power. Your thoughts on this pick and how it could change the trajectory for mergers and acquisitions. I ask you that knowing we have a Republican member of the Commission here who has a track record.
Yeah, thanks for having me, Joe. I appreciate it, you know, I think it will change things, and I think flip what we've seen to be many abandoned deals under the Biden administration, as well as challenge deals in court, to a much longer list of deals that actually get closed with a settlement. I think to some extent, we're going to go back to the way things were before even the first Trump administration, when we tended to see very
few deals challenged each year. Still investigations, you know, three to four percent of the deals that filed will probably get in depth investigations, because that's been pretty steady and constant across most administrations. But I think more deals will close and if they're problematic with the settlement than we've seen in several years now.
All Right, So, based on the resume here, I just want to talk about what we know about Andrew Ferguson. He descended from several of Lena Khan's rule making efforts, as Bloomberg points out, including a ban on non compete clauses that was a big story we covered this year, and rules to make it easier to cancel subscriptions. How do you read into those in terms of what he might do as the boss.
Well, I think he'll start pulling all of these things back or not fight the litigation. This non compete rule is in litigation now, and of course the FTC can simply withdraw that litigation. He did think that that was overreaching by the agency, and now he's going to be running policy. This will be up to him. He will have a majority as soon as Mark Meeterer, who is the other person that President Elect Trump has nominated to the FTC, replaces Lena Khan, which could take a few months,
but it'll be pretty fast, I think. And so once he has that majority, he'll be able to go forward and do things withdraw some of the rules. I think he will also change the merger guidelines that were issued in twenty twenty three by this FTC in this DOJ that made it more made it so that the FTC could more easily challenge deals. I think he'll pull those back as well.
Goldben Sachs has been on a tear. You're not surprised to see this. I'm guessing, right, what does this mean for the investment banking world, for those who are actually laying out underwriting mergers and acquisitions? Maybe in this new year.
Listen, I think we're going to see a real flurry of merger and acquisition activity, of course, which is great for the investment banks. You know, any companies that we're thinking about doing a deal that they think may have raised some scrutiny or some anti trust issues with the FTC and DJ probably waited right, and they'll get those deals filed now, or they'll get those deals filed in
the new year. I think we'll see a lot of activity because there is hope that we will go back to a time in which these deals can get done and if they're problematic, they can get done with a reasonable settlement, and if they're not problematic, can get done more quickly without a long term investigation in eight or nine months or ten months, and millions of dollars put in before the deal actually it gets cleared and closes.
Jenniferree has been working for a long time on this Kroger Albertson's deal. We've talked about it here before. And look at that Jenna federal judge blocking the acquisition is a twenty five billion dollar deal, almost basically putting the nail in the coffin here. Is this the last vestige of Lena Cohn's FTC?
I think so, you know, she just had two wins. She also won when they challenged the Tapestry Coupre deal, so she does kind of go out with a bang. That was a difficult challenge and they won, and now they won this one. I think This one was probably a little bit easier because I think the extent of competition between these two companies and a consumer facing sensitive
industry was pretty obvious. And the FTC did a really good job at trial showing that in thousands of local regions in the United States this would cause concentration in a grocery store market, and that the remedy that was proposed by the companies was probably insufficient to really ameliorate that problem, and you'd end up with increased prices and reduce choice or reduced quality.
What's Lena Kang going to do in our remaining moment, to go make money or go to academia. What happens from here?
You know, I suspect she'll go back to academia. You know,
that was really her life, that theoretical world. I think, where she really thrives, she may go back to Colombia, you know, you know, because she really made her name right in Academiica when she wrote an article about Amazon and the fact that she viewed Amazon as a company that was engaging in monopolistic conduct that really kind of, you know, put her in the front line of what's called the neo Brandisian movement in antitrust, and I think she'll go back to that.
Just who I wanted to talk to you today, Jennifer Read Bloomberg Intelligence senior litigation analysts. Yeah, I want to go back to my theoretical world. Where is that? Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com.