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I'm joined now on Bloomberg Television and Radio for an exclusive interview with a Democratic Senator from Georgia, Rafael Warnock. His first time on Bloomberg TV and radio. He sits on a key committee that is in focus this week, the Senate Commerce, Science, and Transportation Committee, which is leading the fight on the FAA reauthorization bill. Senator, thank you
so much for being here on Bloomberg. Of course, you and your colleagues are up against a deadline this week, Friday May tenth is when this reoff has to happen. There needs to be an amendment agreement to have it happen quickly. Where exactly do things stand, What amendments deserve to get a vote?
Well, thank you so very much. It's wonderful to be here with you. Kaylee. Listen, our aviation industry is so very important to the American economy and of course, we want to make sure that consumers that flyers are safe, and that our airlines operate in an efficient manner. So this comes up every five years. I'm on the Commerce Committee. We've been working on this bill for more than a year. I have been especially focused on the issue of boastering
our workforce pipeline. We have a shortage of pilots, aviation mechanics, other people who work in the industry, and we are barely pulling from all of our human talent. So I have provisions in the bill that address that along with other things, and I remain very hopeful that we'll get all of this over the finish line before the deadline come Fridate.
Okay, so, Senator, in your mind, there is not a chance that a short term authorization may need to happen, considering this doesn't just need to make through your chamber, but the House as well.
Listen, we are in the midst of the sausage making that happens in Congress. But I think there is a commitment, a large consensus that we need to try to get this over the finish line, and I remain hopeful that we will.
Well, Senator, there is some disagreement even between you and some of your other Democratic colleagues, around certain provisions, including more flights out of DCA, the airport just down the road from where you and I are. It's staunchly opposed by senators and neighboring state Senator Warner, Kate van holland Cardon, to name a few, are all opposed to this. I
know you're for it. What do you say to those though, who suggest that adding slots at Reagan could potentially lead to further delays or even safety risks.
Well, have great respect and really affection for my colleagues in Maryland and Virginia, but they are wrong on this issue. To put it bluntly, they're just wrong. This will not compromise safety in any way. We have addressed this issue with the FAA. Basically, we want to make sure that flyers throughout our country have access to the nation's capital. This is the seat of government. And basically this is a modest proposal that will add about one percent to
DCA's daily operations. I think that my colleagues respectfully have certain interests that they're trying to protect. Their safety issue simply does not hold water. And I'm hopeful that at the end of the day we'll be able to have some more flights. Really, it's just a handful of more flights coming in and out of the airport that serves the nation's capital, and certainly people west of the Mississippi should have access as well as folks on this side who go back and forth every single day.
Well, Senator, in addition to serving on the Commerce, Science, and Transportation Committee, you also serve on a few other key committees, including the Senate Banking Committee, And I'd like to lean on that expertise you have for a moment, if you will. We got to report out yesterday an independent third party probe into a toxic workplace culture at the FDIC. There are some Republicans who are now calling for the resignation of the FDIC chair Marty Gruenberg. Do you think he should resign?
Well, let me say that I am still reviewing the report. What I am seeing there. Some of the things that I see there are concerning, even disturbing. But we will hear from the chairman. In just a few days, he will appear before my committee and we'll get a chance to hear from him directly, and we'll see where we go from there.
But let me just fair enough, Senator.
Clear, let me be clear that an abusive and toxic workplace environment where people feel that they are being abused in some way that is hostile to the work environment, is intolerable, and one way or the other, it will have to be addressed, and we will make sure that that happens well.
And Senator will look forward to that testimony before the Banking Committee in just a few days. There, of course, is a lot still happening that is getting attention outside of Washington, including Israel, where there have been moves into Rafa, the Gaza city in which more than a million Palestinians
are taking yef region. We have now gotten confirmation from the Defense Department, from the Secretary Lloyd Austin that the US has withheld pause for now a shipment of bombs to Israel overconcerned about how they may be used in Rafa. Is this appropriate for the administration to be doing at this time, Sir, I'm very.
Concerned about what's going on in Gaza, and I'm already on the record I said many weeks ago that I'm very concerned about any incursion in Tarrafa. I pray for a day where Israeli mothers and fathers and Palestinian mothers and fathers can do what all of us parents want. I have two young children myself. Put your children to bed at night in peace and awake into a world that embraces all of them. And so we intend to make sure that we keep an eye on this situation.
But we need a ceasefire. In this situation, Israel has a right to defend itself. I am deeply offended and hurt by what happened on October seventh, where we saw this attack, where we saw rape and sexual assault used as a weapon of war. But I'm also very concerned about over thirty thousand Palestinian lives that have been lost in this conflict, the majority of them being women and children.
So I'm hopeful that at the end of the day day, we will recognize that the answer to death and destruction is not more death and destruction.
Well, and Senator, of course, your Chamber, together with the House, did ultimately advance supplemental funding not just for Israel but other allies as well, And of course you're still doing the work to finish the job of further efforts that need more immediate attention, including the FAA reauthorization that we began this conversation with just finally, Senator, there are things that may not be attached to that FAA legislation because
not all of the amendments can get a vote. Is there going to be any other major vehicle with which legislation can get done for the remainder of this Congress, Look.
That remains to be seen. We remain engaged. There are a lot of issues to address. I'm glad that it's part of the FAA. Part of what will happen is that we will also reauthorize the National Transportation Safety Board. That's important when you look at issue like what happened with Alaska Airlines, the trained derailment in Palestine, Ohio, the
bridge in Baltimore, a bridge that I know well. I pastored in Baltimore, and we're rooting for our friends there, and I think the Congress understands on both sides of the isle that that's important to the national economy. So we'll remain focused on these issues. I'm proud of Georgia.
Georgia is a great aviation state. It holds the world's busiest, most efficient airport Hartsville, Jackson, And again, I hope that by the end of the week we'll be able to say to our constituents that we got this done all right.
Senator Rafael Warnock, the Democrat from Georgia, thank you so much for joining me in this exclusive conversation on Bloomberg
Television and Radio. Now, we'd like to keep the focus on the goings on on Capitol Hill because, of course, while immediately they do have to deal with issues like the FAA reauthorization, technically there also needs to be more appropriations bills passed between now and the end of the fiscal year on September thirtieth, although they could very well punt until after the election to solve those issues, but we still are think it's worth checking in on the
fiscal outlook for the United States as we look forward to the work that is ahead. And I'm pleased to say joining me now in studio is someone who has an up close and personal view of that. Phillips Weigel is with me, Director of the Congressional Budget Office. It's great to see you here in our Washington, DC studio. Thank you so much for joining me. I know that you're set to give updated forecasts for the ten year
budget and economic outlook pretty soon. Can you just give us a broad overview of how that's likely to change now compared to the last time you issued a forecast like this.
Yeah, thanks so much, and we'll have that updated ten year outlook later in the spring, so sometimes before the end of the spring, which is June twentieth. The early indications for twenty twenty four are that outlays a rising by more more than we expected in our February twenty twenty four update. And we see that in a variety of ways.
You know, one is.
Outlays for student loans and for SBA loans. Those are credit re estimates that the administration has said that the instance is the money coming in for student loans and the money coming in for SBA loans is going to be less than they had booked in the budget before, so that will increase the deficit. There's a security supplemental of ninety five billion dollars that's new legislation since our
February update. That will also mean an increased deficit. So there's a variety of other things, many of those pointing in the direction of a wider deficit.
Deficit well, of course, when we think about deficit reduction, there's kind of two things that factor in. One you could spend less, the other you could raise revenue. Obviously, all of that has difficulties, especially in that spending less. In large part, there's only so much you can do in terms of spending cuts when you have mandatory spending
like social Security and medicare. Is it easier for lawmakers to act now on those issues rather than waiting for it and pretense potentially exacerbating the deficit in the interim period.
Yeah, it is.
One of the challenges of looking at the deficit is that we know that the current situation is not sustainable, but we don't know when that moment will come.
When in succesfull.
Market is to lose faith in the willingness of the United States to take on the job of deficit reduction, and so acting sooner makes it easier in a sense that the changes, whether on the spending side or on the revenue side, those changes are smaller the sooner that we act. But as you said, it's difficult at any one moment to act.
Well, something else that makes fiscal sustainability more difficult is that the cost of borrowing. Right when we are now here at Bloomberg talking each and every day about this idea that interest rates may stay higher for longer, how do you think about that in terms of the fiscal outlook? What are the implications of that.
There's an important implication of rising debt on interest costs. Now, net interest outlays for the US government this year are already set to be more than defense spending, and soon there'll be more than non defense spending. This is the discretionary spending. So net interest outlays have risen and are becoming important as our debt gets larger. Well, that means
that we're more vulnerable to higher interest rates. And so as an example, if interest rates are fifty basis points higher than we had in our budgetary projections, well, net interest outlays will be about two trillion dollars higher over ten years. So it's an increasing and important vulnerability.
Well, and there also is kind of this circular effect here right where you have to consider that higher interest rates are a product of higher inflation. But there's an argument that the deficit can cause inflation. That you know, fiscal spending as a whole can be inflationary. How do you think about that kind of feedback loop.
No, it's an important feedback, and in some sense it means that the US is yet more vulnerable. So if higher deficits feed into higher inflation, as they clearly did over the past several years, well, then that means higher interest rates and more net interest outlays. Now, inflation has come down over where it was, say, two years ago. There's been an uptick of inflation early this year, but we still expect inflation to moderate through the rest of
this year and then into next year. The challenge is the pace at which that happens, the impact on interest rates, and then how those changes interact with our debt.
Yeah, who knows what will be on interest rate levels or inflation levels by next year twenty twenty five. Something else I wanted to ask you about twenty twenty five is, of course, that is when we're going to have to be dealing with the tax cut question that was passed during the Trump administration back in twenty seventeen. In twenty
twenty five is when they expire. How much would it cost if Congress were to renew that at a time when we're talking here about high deficits, and again this would be less revenue coming in.
No, that's right, that important parts of the twenty seventeen tax Act expire at the end of next year, at the end of twenty twenty five. Those are not in our physical projections in the sense of the taxes revert to the pre December twenty seventeen law and is more revenue. So extending the parts of the tax act that expire would cost upwards of three trillion dollars over ten years, and really closer to four trillion dollars including the interest service.
Okay, So when we were considering this back in twenty seventeen, the CBO did find that the economic benefits of that legislation wouldn't outweigh the costs of the higher deficit, so they didn't pay for themselves. Given how much has changed in the interim period, though that was twenty seventeen, we're here seven and eight years later. Have you changed the way you might think about the economic value of lower taxes?
You know, it's something that we look at all the time, and we revisit our analysis of the twenty seventeen tax Act. In April twenty eighteen, CBO put out analysis saying that the twenty seventeen tax Act had a positive impact on business investment and from there to economic growth and job creation, and we saw that in the beginning of twenty eighteen. The challenge is that in the middle of twenty eighteen there is a slew of tariffs and other trade actions.
Then since it has had a negative effect on business investment. So that's the sort of analysis we would do again with whatever Congress is considering extending some or all the tax cuts or none of them, we would look at those impacts on the economy and then on the budget.
All right, Phil Swegel, the Director of the Congressional Budget Office, thank you so much for joining me here in our Washington, DC studio. Great to talk with you, and we'll look forward later this spring to getting your updated ten year budget and economic outlook.
You're listening to the Bloomberg Balance of Power podcast kens just live weekdays at noon Eastern on Applecarplay and then ron Oto Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, jo Say Alexa playing Bloomberg eleven thirty.
I'm pleased to say that joining me is Republican Congressman Andy Barr of Kentucky. He is a member of the House Foreign Affairs Committee. Congressman, welcome back to Bloomberg. Thank you so much for being with me. I would love to get your reaction to the news the confirmation we have gotten from the administration today that they have in fact paused the shipment of these large bombs to Israel
overconcern of how they may be used in Rafa. The high civilian death toll potentially that could could result from them, is that appropriate in your mind?
It's a direct abrogation of their responsibility under the Constitution to take care that the laws are faithfully executed. Congress, on a bipartisan, bi cameral basis, directed the administration to provide this military assistance to Israel to defend itself against terrorists, and the administration does not have the legal authority to just ignore and disregard the will of the American people, through their elected representatives in Congress.
We passed the assistance package.
We did not authorize the administration to pause these shipments, and this is an affront to the relationship between our
two countries. The fact that this administration is rejecting an Act of Congress and turning its back on our key ally in the Middle East is obnoxious, and Congress will certainly be asking searching questions about number one, the lack of authority for the administration to do this, and number two, why on earth this administration would put domestic politics ahead of our own national security and the security of our allies.
Well, Congressman, the counter argument would perhaps be that this isn't even so much about what's happening domestically as the idea that in Rafa there are more than a million Palestinian civilians who are taking refuge and they want to make sure that the civilian death toll does not go higher. Is there nothing Israel could do, no level at which that death toll could rise to that would alter your view of how the US should be approaching Israeli policy.
Well, this argument is based on the faulty presumption that it is somehow the Israeli Defense Force's fault. Hamas terras use innocent men, women and children Palestinian innocent Palestinians as human shields.
The problem is not the Israeli defense forces.
The problem are is the cancer of hamas terras embedded in Rafa.
That is the problem.
We need to give Israel the time and space to do what needs to be done to prevent October seventh from ever happening again and to rid Gaza of radical Islamic terrorists. Until Israel is able to deradical and demilitarize Gaza, we will continue to see this kind of outrageous terrorist activity perpetrated against our key allies.
Well, Congressman, it's great to have you weigh in on this matter. As a member of the House Foreign Affairs Committee. You also are a member of the House Financial Services Committee. In fact, you would like to be the next chair of that committee, and I want to ask you on an issue relevant to your role there. We got a third party independent report yesterday about a toxic workplace culture at the FDIC. We have had a lot of calls for the chair of the FDICE, Marty Greenberg, to resign.
Would that really, though, solve these deep rooted problems in your mind?
Well, the report found that Chairman Gruenberg would be particularly challenged to fix these problems, and I certainly agree. That's why I called for Chairman Gruenberg's resignation, which is overdue here and really, the question you have to ask yourself is if this toxic work workplace. If this culture of harassment and misconduct, it's that existed in a regulatory, regulated financial institution and ensured depository institution that the FDIC oversaw.
Do you think for one minute the regulators the bank examiners would say that we should keep management in place.
The answer is, of course not.
And so we need to hold the FDIC to the same standards that they would hold their regulated banks to. And in this case, it's very clear that the only way to start to clean up the mess at the FDIC is to hold the leadership to account, and that means that Chairman Gruenberg should go. The other point here is that it's more than just a toxic work environment. It is actually threatening safety and soundness of our financial system.
Because we know the fdi C, because of these problems, has had a employee retention problem.
Bank examiners have left. There is a shortage.
Of talented and capable UH and UH and and well trained UH bank examiners at.
The fdi C.
This is directly attributable to the toxic workplace. And you know the you know this is this is this is a threat to safety and soundness of the banking system. So I think this is a this is a damning report, and we have to see some accountability.
Another banking related matters, sir. There was talk that this FAA reauthorization bill that technically needs to be done by Congress this week might have some things attached to it, including safe banking for marijuana companies, potentially even stable coin legislation. It seems less likely now that those things will ultimately get passed through this vehicle. Do you see another vehicle with which they could in this Congress?
I do.
I think another must pass piece of legislation that could be a vehicle would be the National Defense Authorization Act at.
The end of the year.
Maybe it might be politically more achievable in a lane duck after the election to do this. But as a supporter of both the stable coin legislation that we marked up and the Market Structure Bill for digital assets, I think this.
Is very important.
I think it's connected to national security. When you think about stable coins. The United States needs to promote dollar denominated stable coins in the global economy to protect and advance the dollar's dominance, and the dollar is the.
World's reserve currency.
Blockchain is coming, digital assets are coming, stable coins are coming. We need to make sure that we provide regulatory certainty and clarity for investors in crypto and in digital assets, to make sure that stable coins which are coming to reduce friction, to increase the speed with which transactions occur, to to find, you know, innovation in our financial system, we need to make sure that those stable coins are denominated in dollars. That's why this is so important, and
it is connected to national security. So I'm hopeful that if we can't move it as a standalone before the end of this Congress, that we can attach some version of this to the National Defense Authorization Act.
Congressman, finally, I literally have thirty seconds left with you, but I can't let you go without asking. As you understand, it is Marjorie Taylor Green's motion to vacate the speaker effort dead at this point.
Certainly on pause and mercifully so.
The last thing that any conservative, self described conservative should do six months ahead of a very consequential presidential election is to vacate the Speaker's office. That would be so counterproductive and certainly not good for the country.
All right, Congressman Andy Barr, the Republican from Kentucky, thank you so much for joining me live today from Capitol Hill.
You're listening to the Bloomberg Balance of Power podcast kens just Live week days at Noone's Tern car Play and then Proud Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts. Watch us live on YouTube.
I am, indeed Kaylee Lines in Washington, where President Biden is not today. He is instead in Wisconsin, a critical swing status he campaigns for reelection, and he's there for a very specific reason, together with Brad Smith and Microsoft, announcing a three point three billion dollar investment the company plans to make in Wisconsin. Coincidentally, on the exact same site where fox Con was originally supposed to build out, a project that was announced and heralded under the Trump
administration that ultimately never came to fruition. The President just wrapping up remarks in Wisconsin on his Investing and America agenda. All of this, of course, meant to highlight the manufacturing renaissance that this president has tried to claim credit for bringing about through his various pieces of legislation. And it's on that note we bring in now our political panel.
Morrig Gillespie is with me from New York. She's founder of Bluestack Strategies, alongside Brad Howard, a Democratic strategists and Corcoran Street Group founder, is.
With me now.
So Brad, just to begin with you, as we've seen the President making a number of trips like this to swing states, specifically to areas in which we are seeing companies lawed plans for investment and for job growth. All of it, though, are about projects that are sure going to start, but aren't necessarily going to be completed between now and the time voters actually go cast a vote for Biden or not in November. How big of a struggle is this for President Biden to be talking about
things that voters can't actually see tangibly. Yet in many cases.
Well, I would disagree, because that what the voters can see of the jobs these projects are creating, and these are good pay union jobs that can't be exported.
Right.
So this is part of the President's commitment to being the most pro labor president in American history. In addition, this is a constant, a direct consequence of the President's economic package that he past and some of the more historic investments in infrastructure, in chips manufacturing, that he has been promoting since. And so I'm glad to see the White House going out and telling this story and showcasing and taking legislation that's a very abstract thing and turning
it into real life jobs in these swing states. And so I think he's smart to point out the kind of fake facade of the GOP of the President Trump record, which was a disasters for in terms of jobs, and you're looking at the president who's focusing on not just making the wealth like the president. The President Trump had a tax plan that made the wealthy wealthier, and we're seeing the wealth Actually there's a study out this past week that the wealthier paying less taxes effectively than average
hardworking American families. That is messed up, and that's a result of the Trump tax code of reforms that he made when he was president. Biden has focused like a laser in the middle class, and I'm excited to see that he's in the rust belt, going back to some of these states where jobs have left to come back in and really focus on rebuilding with good labor jobs.
Well, as we talk about the contrast between Biden and Trump here specifically more again this facility where Microsoft is going to be building is the same site where Fox Cone originally was going to when it was announced under the Trump administration years ago, and ultimately that didn't really come together. How stark is that contrast for Biden? Is this just an opportunity to kind of flex on Donald Trump in some sense?
It's certainly not a coincidence that they're doing it this way, and it is a strategic move by the Biden administration that is a good opportunity for them to tellt what Biden has sought to do for the economy. I would say that to your point in how you questioned things about has Biden really delivered on those promises? And I think that that's where the American people need to be reminded that's what Biden's team should be doing, because they
don't feel it. They don't feel as though the economy is in their favor and that things are going well for them, and MP is hitting on that. He is constantly reminding them that are telling them that the economy is better under his presidency. So it's definitely going to be a factor that continues to be part of the conversation as we go towards November. But I think this is an opportunity to hit on Trump that Biden is certainly taking advantage of here.
On the subject of former President Donald Trump, he also has been in the news in the last twenty four hours. He of course, was in court in New York yesterday and his ongoing hush money trial. Stormy Daniels took the stand with at times salacious testimony about her sexual encounter with Donald Trump. Court, of course in that case is
on a break today. But we also learned yesterday, perhaps more in favor of the former president than the Stormy Daniels testimony, that the Florida case, the Document's case in which Judge Aileen Cannon is overseeing it, has been postponed indefinitely the trial that is, because of a bunch of motions and pre trial hearings that she says need to
take place between now and July. Brad, How consequential will it be if the only time we see Donald Trump in court between now in November is in New York, where we've seen him now four weeks and to this point there has been no real indication that it is changing his standing in polls.
Yeah, and I think, like I agree with most most folks who analyze this and say, you know, you know, I think there was an Axios article out this week that said, the only people that really matter in this selection are six percent of voters in six swing states. Most most folks have their mind made up whether they
think Trump has committed crimes or not. I don't think the outcome of this trial is going to change that in any dramatic way, though we have no data to suggest, because he's the first indicted candidate we've ever had from president of the major party nominee. So you know, we'll see how that plays out. But what I do think the consequences of him being forced to stay in the courtroom are that it allows President Biden to have the
campaign trail to himself right now. You know, Biden's out touting the economy, he's out talking about what he believes in, and he's fundraising to pour money into these swing states so they can build up operations. Trump the money he raises is going to his legal defense funds, So you know, I think there's a multitude of factors here that make this at the end of the day, I think a net loss for Trump. I don't think it's going to
necessarily change too many voters' minds. We'll see what happens if he is convicted, you know, if he's if he has proven innocent, that could be that could give him a big boost. Who knows, because it may put some validation to the attacks that this was just a part of an endeavor. I'm a little frustrated because I do think this is kind of the weakest case, uh that that we have again, that that the prosecution has against
done in trump of all the trials. It's unfortunate this is going first because it has paused what I think is the real concern, which is the Florida case about his mishandling and classified documents. So you know, we're this this is this is like a TV soap opera play out at the moment, no one really knows how it's gonna ends. Probably gonna be some twist and turns like you see the soap opera. So grab the popcorn watch and let's see how this plays out.
Ah, the drama, there is never a shortage of it, and Maura I would also point out there didn't seem to be a shortage of drama in the Indiana primary yesterday. All of us seem to have forgotten that primaries are still ongoing because at this point we already have our
presumptive Democratic and Republican nominee. So in theory, what do they matter, except perhaps in a situation in which Nikki Hayley, a former Republican presidential candidate who ended her campaign two months ago, drew twenty two percent of the vote in the Indiana primary. More if you're the Trump campaign, how do you look at a number like that?
They should be concerned because that is a choice that twenty two percent of the you know, those who voted and made to not vote for Donald Trump, knowing that
he's a presentative dominee. And to me, it is just a reminder of what makes the fundamentals of our democracy is that we have a choice, and if we don't like the top two choices, we have an opportunity to vote for somebody else, and in this case is still in the ballot, to vote in the primary, and the primary is an opportunity that we've seen that in other states on the Democratic side as well, or they're doing protest votes, and I think in this way, Republicans are
reminding Donald Trump that he does not have all of us, and it's an important opportunity to try and reach out to those voters.
Well.
Brad as Mora raises the protest votes we have seen in Democratic primaries and states like Michigan elsewhere where voters were basically choosing different variations of not voting for Biden in the primary, whatever language the specific ballot was, using some protest on his policy toward Israel. There was a lot of conversation about how that may not actually translate into the general election, that the primary vote was kind of more of a throwaway when you knew that Biden
was going to get the nomination, no matter what. Should we be thinking the same way about those who are selecting to vote for Nicki Haley in the Republican primary or these situations different.
Very different, And here's why. When you look at the Democratic primary, these are protest votes from the left, which means in November, when the ballot you have the two party candidates, there is no option to go further left right, and so President Biden is who they're going to come
home to in November. This is very typical, even in Michigan, and you go back and look at Barack Obama in twenty twelve, he had a protest vote of twelve percent, Joe Biden was only fourteen percent, and Barack Obama went to defeat at Romney. So it's kind of a proof point of what I'm talking about here. The difference with these vote protest votes you're seeing in the red states. In the Indiana, for example, are people that are in
the middle. They think Donald Trump has gone too far to the right, particularly on the issues of abortion, and
then of course all the legal trouble he's having. So they have a place to go, and that's Joe Biden, who's a good, decent human being who they may disagree with on some policies, but at the end of the day, they think he's going to protect democracy and make America proud, and so they do have an option here, and the Biden campaign knows that realizes that they're making an all out effort to get some of those disenfranchised Republican voters, the Hayley voters, to come into the Biden column, and
we oddly the Trump campaign is insulting those same voters. So we'll see where they land at the end of the day. I suspect most will come home to Trump, but we only need you to go to Joe Biden.
All right. Brad Howard, Democratic strategists and founder of the Quirkoran Street Group, alongside Mara Gillespie, the founder over at Blue Stack Strategies, our wonderful political panel today. Thank you so much.
You're listening to the Bloomberg Balance of Power podcast Ken Just Live weekdays at noon Eastern on Apple car Play and Enroud Otto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
We have spent a good deal of time this hour talking about President Biden's trip to Wisconsin today, highlighting his efforts to revitalize manufacturing in the US, but of course the efforts of this administration have not and did just there. We've seen a lot of other effort underway, including a focus on competition and an effort to strengthen enforcement of antitrust law. And that is where our next guest comes
in Doha. Mechi is here with me in the studio from the Department of Justice or she is the Principal Deputy Assistant Attorney General for the Antitrust Division Doha. Welcome to Bloomberg. Thank you so much for being here. If we could just begin with very high level. Obviously, this administration has focused immensely on competition. We have seen a lot of antitrust action from the DOJ and from other regulators as well. What effect, broadly do you think it
has had on actual deal activity? Have you discouraged it from happening?
Sure?
Broadly speaking, anti trust is about opening up free markets, and I think that our approach to antitrust enforcement, which has been focused on understanding business and the facts and the way anti trust law applies to those facts, means that we have spotted and appropriately challenged deals that harm consumers or harm workers. But as a general matter, they're still deal making activity. The vast majority of deals don't even get so much as a phone call from the
Justice Department. Some ninety eight percent of deals are still
getting through without so much as a question. For the small percentage of M and A that raises questions about competition, we are investigating thoroughly, and when appropriate, we are going to court to challenge those transactions, and we're having success and often we are seeing that when we are concerned about competition in certain kinds of mergers and acquisitions, parties are often abandoning transactions then face the threat of litigation
from the Justice Department. Well, certainly we've seen that, for example in the airline space in a case I know that you were involved in, but in that case is with many others we have seen that have gotten a great deal of attention. We're talking about public companies. We've seen increasingly, though, a lot of activity in the private sector in private equity.
How are you thinking about deals in that perhaps less transparent space, if you will, considering we have seen so much activity happening specifically in private markets.
To appreciate our approach, our approach to private equity, you really have to understand where we've been. And for years before the Biden administration, there was a sort of normative assumption that private equity transactions tended to be competitively neutral or beneficial. And what we've done is actually bring private equity to the same level of analysis and scrutiny as
any other kind of transaction. And so there we're thinking about not only whether a private equity deal changes concentration in a market right, whether it allows a company to have very high shares for example, But we're also thinking about the type of transaction. Is it a serial transaction, right where a private equity firm is buying a number of firms in a market or perhaps even an adjacent market.
Is it a tock in transaction. Is it a transaction that is premised on dropping quality or increasing take rate or raising prices. And so we're thinking about private equity just as we would any other kind of company.
Is there a specific market or industry in which private equity involvement is getting more scrutiny from the Department of Justice that you feel is perhaps more problematic.
You know, one of the great privileges of working at the Justice Department is that we are tasked with policing the entire US economy. And it turns out that private equity also is active across the entire US economy. And so we're taking our facts as we find them. Certainly, there's been a lot of writing about private equity and healthcare.
There's been writing about private equity in real estate. I was recently reading something that suggested that certain pe firms are acquiring more than one thousand homes per day, and if they continue at the current rate of buying housing stock that private equity firms may own a substantial percentage
of all homes in the United States. And of course we know that housing is a important vehicle for wealth building, and so that should raise some questions if we are concerned about the exercise of power and housing, for example.
And there are many other industries where we see a lot of private equity activity, enterprise software, We're seeing it in food and beverages, We're seeing it in hospitals, and so there it's our job to just ask questions and make sure that we are appropriately scrutinizing those transactions.
Well, it's interesting to hear you bring up housing because, of course, is we're in this twenty twenty four election cycle. Housing policy and housing costs affordability certainly is something that continually comes up. We've obviously seen the administration outlining a lot that they would like to see done in housing. Unclear how much of that can be accomplished and how much you would need another years for if President Biden does get another four years, what should we expect from
the Anti Trust Division at the DOJ? Would would policy largely continue as has had been during this first term.
So I'll say that we've used the full complement of tools to address housing problems. So whether it's an amicus brief that addresses commissions, for example, that realtors can make in housing transactions or rental pricing software, we take this really seriously because housing is important, and we also know that buying a home is a really important part of the American dream. But pivoting to the reality that it's an election year, you know, it's business as usual for us.
We have a visionary Assistant Attorney General and Jonathan Cantor, and a wonderful Attorney General who is himself an antitrust lover who came in with a vision for vigorous enforcement, and for years we've been executing on that vision, and I expect that to continue.
I'd like to ask you about something. And I realized that this is a hypothetical scenario at this point because Byteedance does not seem interested in divesting TikTok here in the US, despite legislation that has passed and been signed into law by President Biden that would require them to do so basically within the year or else face a ban in the US. But even if by Dance were to say, okay, you know what we will be selling TikTok.
How easily could that run into antitrust concerns? Is there any tech or media company in the US that could acquire an operation that big without it raising a competition flag for you?
You know, as a department official, I can't really respond to hypotheticals, but I'll say that any transaction really goes through the same kind of inquiry you had, ask the same questions about whether a transaction raises concentration concerns, whether it increases the power of the acquiring firm, and so I would expect that that kind of analysis is no different. There's no special consideration for any one company, no matter its size or or prominence.
All right, Dohal, great to have you here on Ballance of Power. Thank you so much for joining me in studio. Doha Mechi is from the Department of Justice, where she is the Principal Deputy Assistant Attorney General for the Antitrust Division. Great to have her here today.
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