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Welcome to the Friday edition of Bloomberg sound On. Welcome to Jobs Day. I'm Joe Matthew in Washington, where there does seem to be a pretty good feel about this. The headline on the terminal says it all fed hiking cycle looks done after US jobs report shows cooling. See Jay Brison, the economist at Wells Fargo, put a fork in it. He says they're done. And I'm not allowed to ask Jared Bernstein that because he's not gonna comment
on the FED and I know the rules. Jared, of course, the chair of the White House Council of Economic Advisors, with us from a sunny North lawn. I do wonder, though, Jared, maybe this is a better way of getting to it. Thank you so much for joining as always on Bloomberg. Is this the steady, stainable growth you were aiming for?
I would say so. First of all, thanks for having
me on. It's always great to talk to you. There are many joes in my life, but you're definitely one of them, and absolutely absolutely, you know, it's interesting that you should use that terminology steady stable growth transition Therein back in I think March of twenty two, President Biden wrote an op ed I think we showed up in the Wall Street Journal where he said there will be some downshifting in terms of job gains, and he said, you know, we should look for numbers like one hundred.
And fifty thousand.
Now, I don't want to make the commander in chief the forecaster in chief. He's got enough to do, but that was certainly looking around a corner. I think everyone recognizes that in order to align supplying demand in the labor market, we need to see some cooling. We've been seeing that for a while. But the key is to maintain the tight job market, as I think emphasized by an unemployment rate. It's been below four percent for twenty
one months in a row. Now, let me ask everyone who's hearing my voice to go to the CEA blog today and read a post we have on the importance of maintaining persistently tight label markets, in this case in closing racial unemployment and employment gaps. We've got some great scatter plots up there. Take a look. It's just one of the benefits of this transition to more steady, stable growth.
You know, I have a bookmarked.
I'm going there right now while you're talking to us, Jared. The fact is, though, and I find this really interesting. You can give me your take on this. If it were not for the auto workers strike, and I know that that was factored in, Wall Street had factored that into expectations, but that would have been another what thirty five thousand jobs, and we would have been, well, I guess potentially.
A little hotter than expected. Are we going to get back to that number next month?
Well, I think the right way to look at this is always to smooth out a few months. On a three month rolling average basis, average monthly job gains have been about two hundred thousand. That's actually higher than what
economists think of as the break even number. That is the number that you would need to just sort of hold the unemployment rate where it is given labor force participation, that's closer to one hundred, so some you know, being somewhere in the range between one hundred and two hundred feels like a good place to be. We still have though this month the LF participation rate ticked down, including for working aged persons. I think we still have some room to go there, and so job gains at this
pace feel right to me. I think they're also the kind of gains that we need to see, especially with easing inflation, to generate real pay gains, which is so important to keeping the consumer side of the economy moving forward.
There are questions about the trajectory among black workers, specifically jared participation and level of employment. Are you worried about what's happening there and why are we seeing weakness in African Americans in this job market.
Well, one of the things we focused on on the blog post I just mentioned today is the gap between black and white unemployment and black and white employment rates. And we did that for Hispanics as well. And if you sort of line up the unemployment rate against the black white gap, say for unemployment, what you'll see is very steep, a very steep slope, meaning that higher unemployment means a wider gap. Lower unemployment means a lower gap.
So let me just throw out a number. This sounds obscure, but stay with me here because I think it's a great number. In response to your question, if you look at the average gap between black workers and white workers and the unemployment rate, it's something like six percentage points. If you then condition that average on unemployment below four percent, it's about two and a half percentage points, so a
much smaller gap at low unemployment. Now, look, any month is going to bop one way or the other, but the fact that full employment disproportionately helps workers and communities of color is well established.
As you right, the unemployment gap becomes less positive in tight labor markets, and the employment gap becomes less negative. Can you forecaste me around that yard? What does that look like months from now?
Well, we're using three month averages to try to filter out some of the BIPs and bops. But you know, basically, I think that conditional mean I just gave you as instructive. If the unemployment rate stays below four percent or in that neighborhood, we should expect that gap to stay historically pretty low. By the way, I will say something about the Federal Reserve today. Today Governor Adriana Kougler was sworn in. We have one of the most diverse fed boards we've
ever had. In her acceptance speech, she thanked the President for the nominees that he has sent up, and we are very, very happy to see a federal reserve that has this kind of diversity. I think it really makes a difference. And by the way, that's not just my thinking. There's research that shows that a federal reserve that looks more like America represents more of America.
I know that your time is tight, Jared.
I've got to ask you about the Psalm rule because I love to walk out with you here. And this is probably not something a lot of people talk about over dinner. But Claudia sam who has her own consulting firm, she says she thinks she's created a monster, Jared. But the rise in unemployment to three point nine percent, Bloomberg says, means joblessness is on the verge of triggering that Psalm rule,
which has been a reliable predictor of a recession. Now you've had guys like me asking you when the recession is going to begin for I think two years now, right, And I realize the context of this question, but I wonder your thought on the next six months to a year.
Okay, So, first of all, on the measurement, I believe the PSALM is measured in three month moving averages, and if you do that, I think Claudia herself said this morning that you know, it hasn't been triggered yet, but look,
it's something we have to watch. Basically, the question you're asking, is the cooling we see in the job market, the kind of cooling that gets us on a transition to what some call a soft landing, which we've talked about as steady, stable growth, or is it something more threatening
than that. Nobody knows the answer to that question. What I come back to is that when you have a persistently tight labor market and an economy that's seventy percent consumer spending, we're now generating real wage gains year over year. Real wages have gone up for the past four or five months. That helps to I think, support that virtuous cycle of a tight labor market as a tailwind and the consumers spending, and that's a big part of what's
pushing us forward. I think there's momentum there, but it's something we have to watch carefully.
Do you ever wake up at night and see two on the ceiling?
I know I'm not supposed to ask you about the FED, but this two percent thing is it?
Is it antiquated?
Well, first of all, let me tell you that I sleep like a baby. I wake up every two hours screaming. So I'm not gonna I'm not going to comment on the I'm not gonna comment on the fed's target. I will say that I have a watch list, and you know it looks at all the headwinds. I mean, one interesting thing I'm getting away from from the FED because I'm not going to comment on the interest rate target. One interesting thing is that one thing that was on our list of headwinds was the UAW strike and we
can cross that off. Now. That didn't mean, obviously that we were in any sort of opposition. The President wanted a win, win for both sides, and I think that's where we ended up.
In fact, you know, this.
White House is always happy to see labor flexing its muscle. But at one level, we have, you know, a headwind there that we could cross off the list.
I'll think of you every two hours, Jared. There's no one else in Washington I could have this very conversation with, and I really always do appreciate it.
Thanks for the time today.
Your life from the White House, Jared Bernstein, the Chair of the White House Council of Economic Advisors. As we assemble our panel, what Rick Davis and Genie Shanzano must think the data this morning really captured a lot of attention here as we try to reset our view going forward the stock market?
Scott Its view? What's the political side of this?
Our Bloomberg Politics contributors make up our signature panel. Rick and Jeannie, thanks for being here. Happy Friday. Your thoughts, Genie on what you just heard from the Democratic administration that has been waiting to claim victory in the fight against inflation. We're not even near two percent, but a report like this does seem to provide some hope.
What do you think it really does?
First of all, Joe, you are my favorite Joe, so we just want to get that out there. But in terms of the politics, I think your conversation with Jared just sort of spells it out. He Jared to me seems brighter, happy or and a lot more joyful than we've seen him recently, and I think speaks a lot. Yeah, he's joking, he you know, he's in good spirits as they say, it's either Friday or they got the job numbers they wanted, and I suspect it maybe both, but
certainly the latter. And you know, this is a good sign for the White House. It does say and the markets are reflecting this that we are having or you know, and I'm not sure the White House should say this just yet, but it seems signs that the soft landing that they've been waiting for and hoping for maybe here again. From a PR perspective, they can't get ahead of themselves
on that, but these are good signs. But the challenge for the White House is they have to be very careful not to take numbers and the feeling of you know, optimism on Wall Street and bring that to Main Street because people on the ground are still feeling the pressure of inflation and mortgage rates are up in all of those things, so they have to be very careful from
a PR perspective. But the signs and the numbers that we've seen reflected in your conversation with Jared are good signs for the White House and for the economy as a whole.
Rick, I remember John McCain's I believe first interview after the two thousand and eight election. It was the Colbert Rapport. I think remember that show. He said, I sleep like a baby. I wake up every two hours in cry, just like Jared Bernstein just said. I know this is a joke, but should we actually read into that a little bit as the disposition of this administration when it comes to the economy, You.
Know, I think yes and no.
I think what Genie hints at is, it doesn't really matter politically what the administration is claiming today victory or sort of at least progress in the fight against inflation, if consumers and voters aren't feeling it. And when you read the latest Michigan consumer sentiment, and that's my bible on attitudes that people have about their own fiscal situation, it went down six percent in October, I mean, and it's already well below what an administration would hope to
have going into an election year. No party in power ever wins if the Michigan consumer sentiment is not above ninety and today it's below seventy. So there's a lot of work this administration has to do to sort of commence the American public that they're making progress.
Reminding us that consumers, things like consumer sentiment. As a data point, gas prices are frequently more reliable of polls than the data we look at from the polling organization's Genie. I'll tell you Bloomberg economy. Economics has been very consistent about the forecast of a recession. The question has really, ever only been about how long and how deep.
I mentioned the som rule because I like to.
Walk out, like I said with Jared Bernstein, but that's a pretty real thing, Genie, and you do wonder about the timing and what might coincide with presidential election cycle.
That's right, and that's a huge concern for the president's campaign team and the president himself if and when this recession does come, and we all hope it doesn't, but the you know, it very possibly could. The timing is going to matter an awful lot. And the reality is, even if the recession wanes before voting in November twenty twenty four, if that's how we've all been living in a recession for so many months and weeks, coming out
of it is not going to be helpful. So again, a lot of this depends and I agree with Rick on how people are feeling. You can't talk them out of feeling like their lives have gotten harder, and the administration, the campaign has got to be cognizant of that. You can't convince people that they're feeling something that they're not.
The numbers aside, you know, Rick, the Administration's got a pretty good story to tell when it comes to the job market. The statement from the White House today pointing to what are they say, say, fifteen million jobs created or something. You've got an incredible string of positive reports. But the matter of inflation is the sticky part, and we know that fuel prices have been driving a lot of that. Are we going to see a release from the spr close to the election?
You know, I think it could look a little political, and obviously depends upon the trajectory of those gas prices between now and then, right. I mean, like we've seen them moving around quite a bit. There's no stability to the undercurrent of oil prices these days. The Saudi's monkeying around with supply, all these international events occurring. Although I would say I've been watching price of oil since the attacks on Israel from Hamas and it's actually been much
more stable than I would have thought it was. Going to be in this kind of a tumultuous geopolitical environment. So you know, I know that this is something the White House pays a lot of attention to. I know, drives a lot of sentiment amongst consumers. You know, it also drives a lot of the inflation figures that the
FED has to look at. So so sure, I would think this administration is going to try and do everything they can to keep prices low, but there's a limit to what they can really impact in the market.
I paid three point thirty five to fill up yesterday in New York. Right now, the average, according to Triple A three dollars seventy two cents. In California five dollars eighteen cents.
That's the average.
More ahead with our panel, Rick and Jeannie. I'm Joe Matthew.
This is Bloomberg.
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The new Speaker of the House finally gets a win on the board. That standalone bill to provide aid to Israel that we've been talking about for days did pass the House yesterday.
It happened on this vote.
The days are two hundred and twenty six.
The days are one ninety six.
The bill is.
Passed YEP, smattering of applause. Passed with twelve Democrats, including one who talked to us on this program yesterday, and it sure sounded like she was an no.
That would be w.
Wasserman Schultz, the Democrat from Florida.
HACKEM.
Jeffries, of course, the Democratic leader in the House, was asked about that today. He held a news conference and talked about the fact that some Democrats did vote yes on that bill, but said that a.
Wide majority did not.
Let's reassemble the panel for their take on what happened here in what comes next, because we know that that bill is doa in the Senate, we know the President would veto it, So maybe now we can get onto something a little bit more constructive. With Rick Davis and Genie Shanzano. Rick, we touched on this yesterday. It actually did pass, and I don't think that was a sure thing around this time. It took some Democrats to do it.
I can only assume that they did not want to have advertisements campaign ads made about them voting against Israel.
But what's the path? Now?
The Senate delivers a product that will look nothing like the one in the House, and then a standoff or what.
Well, it's not a standoff. The Senate will do a package.
It'll include, you know, probably some appropriations bills, the Ukraine funding attached to the Israeli funding that the House passed, and maybe the additional funding that they're talking about with the administration supplemental.
All that will then go into a conference committee.
So they'll take the House bill and what the Senate refers to as it's poison pill on on you know, cutting the irs and and all the stuff that gets chunked into this bill from the Senate, and they'll get confres you know, House members and Senate members, and they'll hash it out and out of this, considering how different that two are, you'll probably see something come out that doesn't look anything like either bill and will be a.
Compromise and and and.
Likely we'll sail through because it will include you know that Israeli funding, which I think is universally supported in amongst the Senate and the House.
Genie listened to Hakim Jeffreys, the Democratic leader, reacting to the bill that was passed yesterday.
The overwhelming majority of House Democrats opposed the partisan political stunt that was put on the floor by my Republican colleagues unnecessarily conditioning aid to Israel, which has never been done during Israel's seventy five years of existence and a special relationship that has existed between.
Our two countries.
It's never been done, and there was no rational reason for it to have occurred.
But now that it is done, Jeanie, I wonder if you see the same path that Rick does here, because the Senate's going to move something that includes Israel, Ukraine Taiwan border most likely, at least that's what we're hearing. And it appears that Chuck Schumer and Mitch McConnell have the votes that will bear no resemblance to what was passed yesterday. Well, I guess maybe one out of four when that goes into conference committee, that could be interesting.
What's going to happen, It's going to be very interesting. On the plus side, you know, there is not a lot of daylight between the amount of funding that the Administration and Democrats and Republicans quite frankly, and the House want for Israel. The question was the pay because they're both at about fourteen billion, and of course the breakdown is fairly similar. It was the pay for, of course, and it was also the lack of attachment to Ukraine funding.
So those are going to be the things that they're going to have to deal with in conference. There should, in normal circumstances, be a pathway forward on this, because again there is violent agreement in the House and Senate. I'm getting this aid to Israel, you know that said, I think the Democrats who voted for it certainly did
not want to vote against a package for Israel. And as the Minority leader said, it's the first time they've seen, or we've seen a conditional package of support for Israel. But you know, I am not critical of that conditional package. We should have pay force. The problem is this pay for is anything, but it's going to cost taxpayers, if you believe the CBO, twenty six billion, so not save us a dime. So let's have a conversation about real pay for it, and that is something that we should
see considered by the House and the Senate. Who knows if they will get there, because of course it is not something historically we have done when it comes to aid for Israel for a variety of reasons.
Well, that's where you have Hakeem Jeffreys calling it a partisan political stunt. Call it what you will, Rick, I just wonder what it means for the future of Ukraine funding, which appears to be will or will be packaged with border money, at least in a House version. If all these get broken up, can they pass on their own. I'm just trying to figure out if this thing, to your point, looks nothing like either bill when it comes out of the wash, what we're actually going to be left with.
Yeah, look, I mean I think legitimately, if each of these bills were carved up and they were all voted on in the House of Representatives, one by one, they would all pass. The limitation on Ukraine is what the Speaker has already said, which is he wants the majority of his caucus to be behind it. Well, that's an extra step, right, If you just put that Ukraine funding on the floor, it would get overwhelming House support because you'd have all the Democrats, almost all the Democrats, and
close to if not over half the Republicans. So when you start doing limitations like oh, well, we're going to check with the caucus verse before we put anything down, and then you're talking about a very close vote. So I think that it's not going to come to that. I think you're going to get more of a package deal out of the conference and that'll go straight to the floor because it'll just be ratification of the conference
and that's usually an up or down vote. So I would say there are some debates going on in the Senate around this Israeli aid. I mean, one of the things you know in the fourteen billion is a lot of humanitarian aid, and there's some issues as to whether or not we have the controls on that humanitarian aid to ensure that Hamas doesn't run off with it. So it's not done yet because of some of those kinds of limitations, but I think that Senate will act soon.
The downside is this conference could last longer than anybody wants. The aid to be delayed a couple of weeks, and so I think that that it'll be interesting to see how quickly they can move.
Looking like they will need it by then Hackem. Jeffreys talked about a shutdown as well today. Gene, you remember this laddered laddered CR we talked about yesterday. Nobody's exactly sure, exactly sure what it is. It would, I guess mean different timing on shutdowns for different departments.
He's not buying it here.
He is this notion of a so called laddered CR like.
The novelty being delicate with my words here, the novelty of my friends on the other side of the ale in terms of how they come up with language that disguise their intentions.
Translation, they want to shut the government.
Down just a minute left, Jeanie.
I don't know if you agree, but that doesn't sound like somebody who's getting off on the right foot with the new.
Speaker, does it.
Well, you know, I have to say, Joe, when you first yesterday to mention the term ladder CR, I did something no professor should ever do. I madly googling what is this thing? Why are they talking about? And all I can think is they don't just want one shutdown, they want multiple shutsdowns, lasting different amounts of times and
in different departments. So if one shutdown isn't enough for you, they're going to have a multiple, and that'll be your winter and your fall, Joe Matthew, as you seek to cover this, That's all I can say.
Great.
I did speak with a Republican member this morning, Rick, who just shook his head when I said, do you know what a laddered CI said? He shook his head and he said, that's not happening in our last couple seconds.
Do you agree?
Yeah?
I agree.
I mean this is just conjecture, and everybody's just going to be anxious to get this monkey off their back. The CR expiring on the seventeenth November, so they'll just attach a new date, probably January fifteenth or something to it and call it today and keep arguing over appropriations bills. I mean, what they need to do is do the government's work and do these appropriations bills so they don't have to keep doing crs. But no, ladderd CR was dead before it arrived.
It's very amazing. Jacob will keep his ladder.
Rick Davis and Genie Schanzano will be back with more on what's actually happening in Israel.
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Anthony Blincoln has returned to Tel Aviv, and the Secretary of State delivered news as soon as he arrived, news that thirty five Americans were killed in the Hamas terror attack against Israel. On the seventh of October. The number had stood at thirty two. It is now at thirty five, something he learned after meeting with leaders in Israel looking at images of him sitting down with Benjamin Dettanyahu in Tel Aviv on the terminal as Blinkin shifts the focus to protecting civilians on this trip.
Hamas doesn't care one second or one iota for the welfare for the well being of the Palestinian people. It cynically and monstrously uses them as human shields, putting its commanders in command posts, its weapons and ammunition within or beneath residential buildings, schools, mosques, hospitals. But civilians should not
suffer the consequences for its inhumanity and its brutality. We provided Israel advice that only the best of friends can offer on how to minimize civilian deaths while still achieving its objectives of finding and finishing Hamas terras and their infrastructure of violence.
This is not getting easier for Israel.
Quite the contrary.
Blncoln said on the outset of this trip, I was getting on the airplane that his purpose was not only to deliver that message on protecting civilians, but to prevent escalation. And what we're hearing today from Hesbelah is deeply concerning Hezbelah's leader issuing a warning to Israel that the Lebanon based militant group is ready for quote all possibilities unquote, suggesting the daily cross border fire between the two could tip into a full blown war. Let's reassemble our panel
with Genie Shanzano and Rick Davis. I believe it was Michael Knights yesterday, Rick, who was talking about proxy groups working for Iran, groups like Hesbelah, like Hamas, that this could be a very difficult weekend ahead. Is that your concern?
Yeah?
I thought the point he made very knowledgeable about these you know, proxy groups that that Iran is you know funding and training. Is that they are maybe the best thing that ever happened for Iran to be able to threaten its neighbors in a way that they don't get to blame, but also the worst night for nightmare for Iran right now, because Iran does not want a full scale war. They do not want to be drawn in to a conflict. This is not what they hope to
achieve right now. So so I'm sure they were just as curious about what the leader of Hesbalah was saying this morning as we were, because if they had declared war, that would have dragged Iran right into this thing, and that's obviously not in their global self interest. So I think this is this is a big chess game of major powers, and these these proxy groups are both giving them some options but also creating a lot of pressure for them, in this case Iran that they don't want
to have. So it didn't surprise me that they didn't clare war today. But I don't think we can take our eye off of that ball.
Wow has well as Secretary General Jeanie describing quote a new phase of fighting against this enemy unquote. When Secretary Blinken shows up in Tel Aviv and starts to urge restraint. Is that message delivered when we're reading lines like this.
You know, I think he and the President have tried hard, and I give them a lot of credit to walk this very difficult line of showing full throated support for Israel in this horrific time and also to urge Israel
to be restrained and to slow this down. But what we saw from Benjamin and Yahu when he went to social media last night, I believe it was and then again in his statements today where he as really seems to rejected what the President and Anthony Blinkn are urging Israel to do with this pause, and again it was a temporary pause for humanitarian reasons. I'm not sure the message is getting through in the way the administration hopes.
And that's why I think, you know, the administration and the United States as a whole, regardless of who's in power in the presidency, are going to have to really think long and hard about doing something we've never done in the US, and that is putting some conditions on this aid for Israel. And I'm not talking about pay for US. I'm talking about ensuring that Israel promises not to build new settlements and to work towards a two
states solution. Otherwise they are not going to be able to see an end to this, and neither will we. It's not in our interest to do it in this way. And this is not about whether Israel has a right to retaliate. It's how they do it. And there is no good end the way that it seems to be pushed forward now, and the administration knows that. Behind the scenes, they're saying that whether it's getting through is another thing.
And it's understandable again because on September twelfth, twenty eleven, we would have done exactly what we did, which is push forward and a rushed away and it's really hard to stop. It's understandable. But for all of our interests, they are asking for the right thing, and they may have to condition it to see it through.
Well, you know, you make a great point, Anthony Blincoln. Today, Rick says the US is providing Israel, what quote, advice that only the best of friends can offer unquote, the United States was not interested in advice following nine to eleven, is Israel, sure, I.
Mean we after nine to eleven, when we went into Afghanistan.
We did it as a coalition.
We did it with a lot of other countries joining us to the fight global terror. In this case, Israel elected to good on their own, although I do believe that there were a lot of countries like US who are willing to help and support Israel. So it isn't a go to loan strategy. And I would say too, we have to constantly remember that Hamas is calling the shots in gazip right. The reason you have a refugee crisis in Gaza is because of Hamas. They control the
rapa game. They're the ones that don't allow Americans to get on the list to get out. Every day, every single day, Americans are trapped in Gaza because of Hamas, not because of Israel, not because of what they're doing in Gaza right now. And so I think that we have to constantly remind ourselves that this is a problem created by Hamas being managed now by Hamas, and only can be solved by Hamas withdrawing and getting out of Gaza. And in the case of the Israelis, they've made it
that they have to root them out. You know a lot of people are talking about, oh, we've got to get fuel to hospitals.
Hamas is holding that right.
It's an important thing to consider when we talk about pausing right, because you can pause the bombing, but you still may see no movement in the people. Rick Davis and Genie Shanz No no great analysis on the fastest show in politics.
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Welcome to our two of Bloomberg Sound On. I'm Joe Matthew in Washington alongside Kaylee Lines. It's good to see a job's day, Kaylee. That means it's Friday, and we're happy with that. And I guess I don't know. Everyone seems to be happy with this jobs report. It's amazing what a weaker that expected number will do. And we're seeing the impact here of the UAW strike. Yep, this all fallen on Washington a day after House Republicans managed to pass the bill with aid for Israel and.
No one else, right, And the concern with that bill in particular is that they required a little something in order to give that aid to Israel, more than fourteen billion dollars, and that was fourteen billion dollars coming out of the funding for the irs. They wanted a pay for, which is the problem that a lot of Democrats have had with it. Why it's probably dead on arrival in the Senate and if it ever even got to President Biden's desk, which it will not, as we understand, Joe.
But the whole concern is about the fiscal trajectory Republicans wanting to exercise that fiscal discipline, and that does in some ways feedback to the other economic conversations we're considering here.
There were some Democrats voted for it, Yeah, twelve, I think yes, although, as Hakeim Jeffrey said earlier, the Democratic leader in the House, that was the exception.
He overwhelming majority of House Democrats opposed the partisan political stunt that was put on the floor by my Republican colleagues unnecessarily conditioning aid to Israel, which has never been done during Israel's seventy five years of existence, and a special relationship that has existed between our two countries. It's never been done and there was no rational reason for it to have occurred.
Why don't we go to the Capitol see what the congressman thinks about this.
Congressman, I'mibarrat, Democrat from California's sixth districts, joining us from the Canon House Office Rotunda. It's great to see you, Congressman. Welcome back to Bloomberg. Is that why you didn't like this bill?
Well, thanks for having me on. I'd associate myself with Leader Jeffries comments, and you know, let's not play politics here. We've got a crisis in the Middle East. Bipartisan support for Israel's incredibly important when you need to get this funding to them as quickly as possible, and it should
have been a clean funding bill. I also would say, you know, the conflict in Ukraine with the illegal Russian invasion is infinitely tied with what we're seeing in Israel in terms of supply chains, munitions, defense production line.
So I would pass both of those together.
Along with border security.
I mean, we do have a problem with the southern border and we should provide funding for that.
Well, the issue Congressman is the Speaker has said that he would like to have Israel separately. He would not like to put something on the floor that ties Israel and Ukraine funding together, and it's pretty clear that he wants a pay for So I understand that a lot of your colleagues had issue with specifically that pay for being money taken from the funding of the IRS. But is there one you could agree to given what you just said about expediency being necessary here?
You know, I think there's a lot that we could do. And the broader issue is that debt.
And the deficit, and that's going to be a bigger challenge.
I am a co sponsor of.
A bipartisan bill to create a debt Commission, something similar to the Simpson Bowls Commission. It's going to take an external group of experts along with members of Congress to really look at some hard choices, whether that's raising taxes, whether that's strengthening Social Security and Medicare through changes. But it is going to take something like that, and I think that's the broader conversation that we should be thinking
about the problem with the IRS. Pay for is even according to the CBO, it doesn't actually lower the deficit. It actually adds to the deficit because you're taking enforcement away.
How do you make that different than Simpson bulls though, Congressman, how do you make that stick in a Washington where there's less bipartisan action. It seems that ever, we can't even figure out how to keep the government open half the time. The chaos that we've seen in the House over the last couple of weeks would make one wonder how that works, unless I guess you'll lock everybody in a panic room until they figure it out.
Well, I think you have.
To pair with outside experts, keep it nonpartisan, have them work together to really get us to start addressing the debt and the deficit, because that is going to be a burden on our children over time. And then you force whatever comes out of that committee to the floor for up or down vote, because if it comes to the floor and everyone starts playing around with it, I don't think we'll ever get to where we need to
go again. The issue at hand though, right now is our friends, our allies in Israel and Ukraine need help immediately, so we should get that funding to them as quickly as possible.
Well, Congressmen, you call Israel a friend, and that's very similar to the language that Secretary of St. Anthony Blincoln was using when he visited was there earlier today, talking about how the US does stand behind Israel and its right to defend himself, also pushing though for humanitarian pauses in the fighting. Do you think there is a risk of a sentiment turn here when it comes to Israel given the sheer magnitude of the civilian humanitarian casualties we are seeing in Gaza.
You know, I really do worry about what we're seeing in Gaza in terms of just to share loss of life of innocent civilians.
Israel does have.
A right to exist, Israel has a right to defend itself, but you also worry about the Palestinians individuals right to live with peace and dignity.
And I just worry that, you know, getting.
To a place where Israelis and Palestinians will ever be able to live.
Side by side peacefully.
He's getting further and further away.
Now.
You know, it's not going to be an easy execution of getting to eliminate.
Hamas, but you know there are different ways to do that.
We should note to our viewers and listeners the congressman serves on both Foreign Affairs and Intelligence committees in the House. But that you should also know as well, a congressmen, that you spent a lot of time helping to settle Afghan refugees, and I know you made it a priority in your district in California. How worried are you right now about the the unwelcoming nature that we're seeing from Israel's neighbors when it comes to Palestinian refugees.
Where will they go?
You know, I think it's really unfortunate.
You know, I think we would love to continue to put pressure on Egypt to accept and allow Palestinian civilians in a sense and refugees.
To leave the battle zone.
We would also like to see the other Arab states step up and help here. We're not seeing that right now, and I think that's unfortunate.
Should the US play a role in that?
Certainly the US will continue to allow Palestinian refugees and others seeking shelter and refuge to come to the United States. But in the immediate concern, where there's an ongoing battle, you do want to get civilians, women, children, the elderly out of harm's way, and that really is the Rafa crossing.
In Egypt, Congris when you speak of the other Arab states, And of course, the other thing that Secretary of State Lincoln was talking about in Israel today is his desire to not see this conflict expand beyond Israel and Hamas. But we already know that there's been a decent amount of activity on the border with Lebanon. The Secretary General of Hesbelah was suggesting that another front potentially could open,
or at least it is a possibility. What is your degree of concern the concern of the House Foreign Affairs Committee that we are going to see this conflict expand more regionally.
You know, I think President Biden's been decisive in moving assets to the region. Our mission as the United States is clear that we will do everything we can to prevent a second front opening. You know, I was in Israel this past summer on the northern border with Lebanon. You saw some of the tunnels that Hesbela has been doing. They've been preparing for things for a long time. The message to Hesbelahs don't do anything right now. The message or Nana is stay out of this and proxy Iranian
proxy groups in Syria, et cetera. You've already seen the United States have to take action against ucci rebels that have tried to fly drones and attack Israel.
So I think we will continue to do what we have to do to.
Prevent a second front from opening, and you know, to try to find a different path forward here.
Well, i'll tell you the language that we're hearing from Hesbelah is downright scary. Congressman Hesbela's leader issuing a warning to Israel, saying that they are now ready for all possibilities, suggesting that this daily cross border fire could actually spiral into a full blown war in what we've been calling a second or I guess third front in this case.
How real is that threat?
You know?
I think I think we take it very seriously.
I think we take some of the attacks in Syria on US assets and elsewhere very seriously. You know, I think this is also a time where a potential pause and some of the actions that the Israelis are taking allow humanitarian aid to get into civilians, food, water, medicines, and then perhaps find a different path forward. None of us is suggesting Israel doesn't have a right to defend itself. None of US is suggesting that Israel doesn't have a right to protect its home civilians.
But perhaps there's a different way to path.
Forward as we look at pass forward. Congressman, I want to return to something you brought up at the beginning of this conversation, the idea that Israel is not the only US ally that is engaged in a war right now. It is also Ukraine, which we know is a much more contentious issue in terms of funding in the House of Representatives. There's been a lot of talk of the Senate getting ready to send a bill to your chamber that would tie a lot of these things together, border security, Ukraine,
and Israel, as mentioned. Do you worry if it arrives in that form in the House that it makes it less likely that any aid any of that will get past because of the Ukraine issue particular in particular, how should that be worked around?
You know, again, I think the broad majority of members of the House of Representatives support both funding for Ukraine and Israel as well as support funding for the border. I understand, and we saw it play out in the Republican majority that there are a fair number of Republicans. I think it's still the minority of the Republican Party that do not want to fund Ukraine, and we saw a few Republicans vote against funding Israel as well.
I would hope we could pass it all together.
If we have to take each bill up individually, Let's take clean bills that don't have any writers on there, and then you know, if it is about the debt and the depth is that, we can come back and revisit that. But we should ought to look at everything in total. But let's get that funding to Ukraine and Israel.
We're spending time with Congressman Amiberra, Democrat from California.
You're a leader in the House.
Hakim Jeffreys held a briefing earlier today Congressman and said that the Republican conference in the House wants a shutdown. Otherwise this bizarre laddered continuing resolution that we've been talking about the last twenty four hours offered by the Speaker probably wouldn't have been suggested. He says, that's the evidence. With that said, we've heard repeatedly that Ukraine funding and some of these other items could actually be attached to
a continuing resolution. Is that the last train out of the station. Do you think the government got shut down or is that a potential solution.
I sure hope not.
I mean, look at everything that's taking place in the world. We've got real challenges. A shutdown would also do damage to our own economy at a time where ours is the best economy in the.
World right now.
I don't understand this laddered continuing resolution proposal that the Speaker's put forward.
We've never done anything like that.
I would we haven't found anyone who understands what that is yet exactly.
I would urge a Speaker to stick to what he promised when he ran.
Let's do a continuing resolution.
I think you would find broad support to do a clean cr that would go to January, perhaps to April, and then let's find some breathing room. Let's negotiate a real budget, real appropriation bills, and that's where we can have some of this compromise debate, et cetera.
And then let's vote on those bills.
Congressman, just to pivot from the conversations of funding, although obviously they are very much live, I'd like to return to something else that happened earlier this week in the House of Representatives, when an expulsion resolution for Congressman George Santos was put on the floor obviously did not succeed. You voted president at that vote. Is that correct?
That is correct?
And why not vote to get him out of there?
You know, so I do believe in the premise innocent until proven guilty. I voted presents because I do think there's a preponderance of evidence that suggests that he was guilty, and he has brought shame to the Chamber and shame to the Capitol that said, the Ethics Committee is doing their investigation, they haven't provided their findings. He does deserve his day in court, and you know, I didn't want to generate him, but I also think he's innocent until proven guilty.
So I voted present.
In our last moment, Congressman, I've got to ask you about the fox. A lot of people associate you for better or worse, God knows, he's a medical doctor. Associate you with being bit by a rabid fox last year on Capitol Hill. There are reports that there's another one back up there. Are you looking over your shoulder when.
You walk around?
I certainly will, and you can only imagine how many pictures of that fox got texted to me last night. So everyone be on the lookout, and yeah, don't try to go interact with that fox.
Is that like the worst ever? The raby shot? That's that's supposed to be the most painful, right.
But they're not a lot of funs so, and it's a lot of shots. So yeah, let's keep everyone s.
Patrick McHenry was bit by a rabid squirrel and told us that it's not true. They don't do it on the stomach anymore. The shot goes in the wound. Doctor, Is that right?
That that's correct? They do, I mean fabul shots around the wound. But then you've got to take your ravy shots. I mean it's four additional shots.
Wow.
Wow, all right, we'll be looking out for you. Congressman, please be careful, doctor Ami Bera with this Democrat from California, Kaylee that I think that would send me right out of.
Washington carrying like Fox.
You're up there more than I am.
Yeah, Kerry may So you're getting the Fox is guilty.
This is Bloomberg.
You're listening to the Bloomberg Sound on podcast. Catch us live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app, and the business app or listen on demand wherever you get your podcast.
The Secretary of State in Tel Aviv ahead of what could be a difficult weekend in Gaza, and I guess Kaylee, for that matter, in Israel, the Iron Dome is not one hundred percent successful, and they're still and during rocket attacks as we see bombings continue in Gaza. Questions about the pause, you asked Ami Bearra about this, Uh, you know, Rick Davis made an interesting point that Hamas is the biggest reason why people are.
Not getting out of Gaza.
So even if there is a pause, that doesn't guarantee that there will be a flow of people.
I guess that's true, or that aid can necessarily get in. Conversely, right, nothing as guaranteed in this kind of conflict when you're of course dealing with an organization that has been designated as a terrorist organization by the US and Europe. But it also raises the question of are these calls for a pause just going to grow more and more intense if we get another really hard to watch and read about weekend, and of course even more so to experience
if you find yourself in Israel Orgaza right now. But there are growing calls even from now Senate Democrats others for greater humanitarian consideration.
Well, you wonder as well if those calls could be drowned out by something worse to the north. It's very hard to tell what has Bela has planned. Yeah, but some very threatening talk today. As Anthony Blinken addresses Israel's right to defend himself, this is the Secretary of State.
Earlier today in Tel.
Aviv, days after Hamas's attack on a Cober seventh, I came to Israel, followed soon thereafter by President to make clear that as long as the United States stands, Israel will never stand alone. Today, in my fourth visit Israel since October seventh, I reiterated that in all my discussions with Prime Mister Yahu, President Herzog, the Security Cabinet, I reiterated and made clear our support for Israel's right to defend itself, indeed its obligation to defend itself.
That always comes with a canveat, though, ye when it's followed by the urge for restraint. Lester Munson joins, he's been great on this, and we wonder what he's got in mind ahead of this weekend. Co Head of the international practice at BGR Government Relations.
Spent a lot of time in the Senate.
In fact, he was staff director of the Senate Foreign Relations Committee and has a unique view here of geopolitics. Lester, it's great to see you. Thanks for coming on this Friday. This is a heck of a balancing act here in the US is trying to conduct it from overseas. When you hear threatening language today like we did from Hesbola, talking about all possibilities a new phase of fighting against the enemy, you wonder if that message that Anthony Blincoln is trying to deliver is being received.
Yeah, he's he's got a really tough job. I think this is his third trip to the region since the terrorist attack in Israel on October seventh. He's trying to do several things at once.
One is.
Solidify the bilateral relationship with Israel. The Biden administration had some turmoil on that before the attack.
He's trying to.
Arrange for some sort of humanitarian relief for those in Gaza who are innocent and who may be victims here of the war that is going on. But he's also there to talk about what the future governance situation in Gaza will be. And so these the conversations he's having, some of them are for public digestion and for display
to Biden voters, to people in the region. Other things are behind the scenes, very clear eyed, hopefully conversations with friends and allies and perhaps even some frenemies in the region to set up the architecture of what is to come once the Israeli counter strike in Gaza is over. So there's there's a high degree of difficulty here for Secretary Blincoln and the administration. Frankly, they've been doing okay
so far. I might have some criticism of some of the things that are doing on the domestic front, but there's political reasons for that. And I think, you know, just as someone as an American, you wish the best for the administration and the president and his team. And so I'm hopeful that this trip goes well well.
And Lester, considering that, as joej just mentioned, as has been reiterated time and again, the US has essentially expressed uncond unconditional support for Israel, and unconditional by definition means you don't attach any conditions to that. So if there is something like an urge from the US for Israel
to provide these humanitarian pauses in strikes. Is there any real, real leverage here to make Israel do that realistically, or is whatever Israel wants to do, what Israel is going to do in the US isn't actually in a position to do that much about it.
It's a great question.
I think the reality here is being met in Yahoo's in a tough spot, and he is my sense is he and his administrator, he and his war cabinet. Of course, he's not the sole decision maker anymore because they've got a coalition arrangement in Israel making these decisions. But that
government is working in lockstep with the Biden administration. So while the conversation about pauses and ceasefires and that kind of thing is perhaps for public consumption, behind the scenes there is a different I think there's a different conversation happening. This is what statesmen and women have to do to get the job done. And I think the net and Yahoo and his allies new allies in the government are actually working pretty well in concert with the Biden administration.
It's quite complex. It is not the same thing that we are seeing for public display.
Secretary of Blincoln today not only speaking to the need to protect civilians, but said part of his trip was an attempt to keep this from escalating. Is that possible, Lester, what's your realistic view.
I think it is possible. That's the reason this diplomatic channel through Cutter is still active. It's why the administration is not shutting down things that it may be in a more perfect world wouldn't have to do. There are ongoing conversations with all kinds of different different factions of this situation in the Middle East. No one wants this to metastasize into something bigger, except maybe in Tehran. Tehran is goading its clients in Yemen, in Lebanon to do more.
The rest of the region, I promise, is working behind the scenes to mitigate that instinct from Tehran. They can't say that in public necessarily, but that's what's going on.
Okay, So, Lester, there's what's going on in the Middle East, and then there's what's going on here at home in the conversation around what's going on in the Middle East.
Providing funding for Israel, obviously, we saw the House pass more than fourteen billion dollars of that with the condition of funding being stripped from the IRS likely not going to go anywhere in the Senate as a hot war is going going on, how do you think Republicans in the Senate and Republicans in the House are going to be able to reconcile this?
So the Senate Republicans the House Republicans are in very different places. House Republicans much more populist. Some might use the word isolationists. I wouldn't use that word, but that's a shorthand version. Senate Republicans much more internationalists, have a little more political flexibility in terms of the party base. Senate Republicans are very interested in using this opportunity to support Ukraine and its war against Russia. They're interested in
augmenting US support for Taiwan. They also frankly want to see some more stiffness along the border with Mexico. There's no doubt House Republicans much more interested in simply supporting Israel. And then this interesting IRS tax thing kind of thrown in. I guess it's some sort of incentive for some folks who might have been reluctant. Notably, twelve Democrats I think it was twelve Democrats in the House voted for that package,
So it's it was a little bit bipartisan. If that's what they got to do to kind of keep this thing moving. I'm willing to give them some grace on this, but there's there is a reckoning coming when that Senate package, which is going to be much broader and bigger, comes back into the House. And then and then I think we're going to see the real news.
Here got less than a minute here, lester to what extent will this foreign policy debate be featured in the Republican primary debate next week? Or is it just Nicki Haley is going to be beating that drum.
I think it's I think it's the leading issue. I think this is the this is the difference maker. This is the opportunity for Haley to show she's different than DeSantis and the Vakaramaswami and frankly, for that matter, Donald Trump, who has not been articulating a coherent message on any of this, really a huge opportunity for Nicki Haley to kind of grab the reins and make herself the main part of the conversation on the Republican side.
Yes, she doesn't have Mike Pence to compete with any longer.
We'll see how that goes. Lester. It's great to see it. Thanks as always.
Lester Monthson frequently part of our political panel on sound On. We wanted to tap his foreign policy experience today ahead of as we mentioned, what could be an important weekend Killee in this whole conflicts in this reel. Thanks for listening to the sound On podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, and anywhere else you get your podcasts, and you can find us live every weekday from Washington, DC at one pm Eastern Time at Bloomberg dot com