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What is I think one of the most read stories on the Bloomberg right now or second or so, and that has to do with Apple, which rallied on news that Apple is considering using artificial intelligence technology from Anthropic or open AI to basically power a new version of series. So it's a big deal because it means maybe possibly sidelining its own in house models. The story a Bloomberg exclusive. It's buyer own. Mark. He's, of course, Bloomberg Newsmaging editor
for Global Consumer Technology. I'm convinced he never sleeps because he's constantly putting out exclusives and breaking news stories. All right, Mark, take it away. What's up at Apple?
So Apple, right, their strategy for artificial intelligence that they unveiled last year was twofold in house models that run on the phone and in house models that run on the cloud. Right, that competes with chat GPT, with Claude, with Gemini, with the market, and Apple has figured out pretty quickly they're not very good, right. So Apple is now evaluating for the first time using a third party model, either Claude from Anthropic or chat GPT from OpenAI to
power Siri. Obviously, as we all know and experience in our day to day lives, Siri is not very good. And Apple had been working on an overhaul of Siri using its own large language models for next spring. Now it's exploring maybe using Claude or chat GPT instead in order to get new features the door more quickly and make the voice assistant more appealing. So it is a
pretty big development. And you see that Apple stocks spiked on the news because if they do indeed go down this road, which by the way, is not for certain by any means, it's going to me and Apple is going to be a real AI player for the first time.
How much time do they have, mark I mean, I guess I feel like any company that wants to compete has to have a successful AI offering. On the other hand, this is a company that already has us kind of hook line and sinker. Right, we have own me and my family exactly, and me and my family as well. Right, I can't imagine living without the genius of their products, and I really feel like an emotional connection to Apple. On the other hand, they have utterly failed in this sense.
Carol reminded me that Siri is now fourteen years old, and she is more incapable than my four year old m You.
Guys are very focused on your current setup. You're focused on the current generation of consumers. You're concerned about your families. Right, what Apple's concern is and what my concern is and the market's concern is the next generation of consumer. They're going to lose a whole bunch of people that are new to the smartphones. There are people born every day, There are people who buy their first smartphone every day.
There are families getting their first smartphones every day, right, and those people have a decision make to make about which ecosystem they want to enter. And right now, all the talk is about how Apple's AI is completely behind the times, and so that decision, right is a lot easier when you realize that the Android ecosystem is a big step ahead and what is perceived as the future of technology.
What does they say about Apple as a company like this would be a real big shift right in strategy or are you help me out here?
Right?
Apple likes to go in house for core technologies. Like I've said many times before, AI is as cores technology for the future of hardware, as the touchscreen has been for technology over the past twenty years.
Right.
Apple owns the technology and the patents and everything behind touchscreen and multi touch, those gestures that we all take for granted today. With AI, Apple has tried to do something similar, build those models in house and own the core tech like they own the touch screen, like they own some of the camera tech, like they own with their processors and all their products. Now, but what are you supposed to do If it's not very good. You have to find an alternative. You have to go outside
and use a partner. They tried to go in house, it didn't work. They're going to pull back, in my view, go external, use external partner, and maybe one day do a brain transplant. When you're lms that you're building internally
are good enough for primetime, but something's got to give. Interestingly, they are working concurrently on a new serie LM project that uses in house models, and so there's still many debates internally and options being poured over to decide if they're going to go with anthropic, Open AI or Apple Foundation models for this REVAM coming next spring.
By the way, are there AI companies that are in the lead, Like is open ai doing better work at least in terms of the products that we can access now than Anthropic, than Google, than Facebook.
You talk to a bunch of people in the industry, you're going to get different opinions. I would say the top two are Entropic or open Ai, Google and third and if you want to talk about the big companies metaphor and rounded out with Apple. If you're going just for the top five biggest companies that have some meaningful share of the space, you talk to people at Apple, though, the word on the street there is it's all about Nthropic, and so Anthropic is really the focus of Apple for
this new generation of Siri. They're using Ententropic to power a lot of their internal AI technology. But again, as I say in my story, Nthropic wants billions of dollars at a scale that doubles annually for series to be powered by Claude, And so Apple is now taking a close look at open as well, which has historically given Apple extraordinarily favorable terms.
It's not a desperation or smart move in terms of what Apple's doing.
It's a smart move in response to desperation.
Interesting also that they could end up working with open ai at the same time as open ai works with Johnny Ive to build what may be like an iPhone killer, right mark, You've.
Seen Apple go down this road before, like the company that Apple detests more than any other. Like if you were to take Apple executives in a room and say who do you hate the most in the whole world, they would say Qualcom. When the five G transition happened five years ago, Apple was an inflection point like they are today with AI. Are we going to partner with Qualcom who we detest, or are we going to miss out on five G and risk really upsetting customers and
losing market share? And so they bit their tongue partner with Qualcom, and behind the scenes they've been working on a replacement for Qualcom and they've just started rolling that out. So you'll see something's happen similar with AI believe.
Pretty wild stuff. All right, Thank you as always, Mark, We really appreciate it. Mark German, of course, joining us here with the latest on Apple. As we mentioned, Mark also reminding us the stock was up about two percent here at the close on his reporting, the stock is down eighteen percent year to date. But read all about it, all the details. Mark again a Bloomberg exclusive on Apple. Joining us. Mark is Bien, Managing editor for Global Consumer Technology.
Joining us out there from the West Coast.
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's. During that listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Can you believe it was about a week ago that we were focusing on the Middle East in the US strek on our rout list?
Yeah, it was tretty intense.
I actually heard Tim go through the whole timeline on Friday, which I thought was a fascinating replay because we're right back to where we started, right. Oil shot up to eighty one dollars a barrel on Sunday night, and we're back at like sixty seven right now.
Yeah, I'm just like kind of amazing the trip that we've already taken and here we are today talking a lot about what's going on in Washington. We also had the NATO meeting of leaders last week. The Middle East, tariffs, military spending, and the Russia Ukraine wore were certainly some of the things that came up there. The war between Russian and Ukraine it is now in its third year, Ukraine saying Russia fired a record five hundred and thirty
seven missiles and drones and a massive attack overnight. We also had a headline just a little while ago a story crossing the Bloomberg that President TRUMPI was signed an executive order today terminating the US sanctions program against Syria. That is, according to White House spokeswoman Caroline Levitt, so a lot going on geopolitically. We wanted to broaden out a little bit today. So delighted to have back with US. Ed Price, former British trade official now non resident Senior
Fellow at NYU, New York University. He has advised members of the European also British Parliament's a former British trade official, and he writes often about politics, economic policy, and more. He's with us remotely from upstate New York. Good to have you here with madd and me on this Monday. I want to jump right to there's so much going on,
but you write in barns, President Barons, excuse me. President Donald Trump's efforts to reshape the nation have roots in Richard Nixon's unfinished presidency.
How so so well, high end, happy Monday. It's because of two dates, nineteen seventy one and nineteen seventy four. Nineteen seventy one was, of course the Nixon Shock, which was effectively the transition from a dollar that made reference to gold to a dollar that didn't, which is fiat currency. And nineteen seventy four is when Richard Nixon's presidential career came to an end. Of course, in that year he
resigned after Watergate. And so what I mean by that is that the two underlying currents behind today's news would intend at home are effectively a dollar story and a fiat dollar story. And on the other hand, the centralization of presidential authority and power that Nixon attempted and failed at, but that it seems Trump so far has had a better run at.
Right, Nixon said, if the president does it, that means it's not illegal. And Trump has certainly said that in various ways over the past eight years. What about Nixon's resignation, I mean, it seems that Trump has gone the other way, right, Nixon was caught doing something illegal and kicked and screamed and left, and Trump has been sort of kicking and screaming and turning into something that was okay if you look, for example, at January sixth.
Yes, January sixth was egregious, and yet it stands. And I think that that hints at how if Watergate happens today, nobody would blink, right, I mean, somebody busting a safe open in line about it simply wouldn't make the news.
Not even I mean they would celebrate it.
Right, Well, they probably would, depending on their political views. I would caution everybody, including myself, because I'm so guilty of this of always sort of looking to Trump as the independent variable in all cases.
Well, I want to jump in for a moment because I was just thinking at as you were talking what you were saying, is it more about the US public has changed, and that they wouldn't bark at a Watergate today versus what they did during the Nixon administration. Does it say more about the US citizens at large or many of them, versus an individual president or individual administration.
Well, Ultimately, American politics are a subfunction of the American people, as you rightly point out, and every couple of years we have a major election and the views of the people are thereafter represented in our government via those elections. So yes, I would say that the American people have moved from, you know, for want of a better word, a puritanical view of the world to something a little less puritanical in say, the last twenty or so years.
But it's also a function of the Supreme Court because, as Matt just mentioned, when you know, Trump says that his own version of if it's not if the president does it, it's not illegal, the Supreme Court has effectively said that for him too, when it rules that anything within his official remit is not subject to prosecution. So there's a there's a shift I think in the presidency, the people, and the Supreme Court.
You know, I wonder how you feel about the in a sense, the state and local tax deduction debate, as as an outsider looking at the balance that the US founders intended between state and federal power. My reading of this, because admittedly I don't like paying this much money, is that it's federal overreach. Undo federal overreach to cap the state and local tax deduction because they're in pining on states' rights to sort of taxation autonomy. But no one else
seems to talk about this at all. Do you see the power shifting to Washington and away from state capitals?
I do, as a broad theme, And I know you enjoy paying taxes, Matt, so I'm sorry to hit that's I'm sorry to hit that an ongoing problem for you. Yes, there is a centralization of power in the American body politic. That is one theme that I think Nixon introduced perhaps and that people like Dick Cheney tried to theorize with the with you know, his vice presidency and the unitary executive.
But there's another theme pushing back at that, which is, as you just mentioned, states rights, liberty, individual rights, and so on. And these two strands are bumping up against each other constantly in American history, but it seems that in twenty twenty five they're bumping into each other with ever more friction.
You know what I wonder too. I mean, the US is by far still the largest economy in the world, and I know that is the current situation. Those mantles can change, but it is still significant, even you know, significantly still above the second largest, which is China. So I understand that its prospects could be dimming based on the actions of the current administration, at least some might
say that. But I do wonder because of that and still having the most liquid markets, or you know, you think about the treasury market's still very liquid, and I know you've got some very significant thoughts about the diminishing of the dollar. And we saw the dollar eyeing its longest monthly slide since twenty seventeen as we wrap up
the month of June. I mean, does that, just by size alone, ed though, continue to make the United States a pretty dominant presence in the global economy, and not just economically but politically.
Well, yes, and no, I mean it's not just a monthly slide. The dollar has had its weakest start to a year since nineteen seventy three, losing over ten percent that in the ft this morning, and in seventy three, I think it was fifteen percent so there are signs in the data and anecdotal reports of a weakening demand for the dollar. But that's a double edged sword, because, as you rightly say, the US is present in the world, it is primarily present through the dollar. That was Nixon's decision.
He was faced with the choice between continuing to supply the dollar as accords global demand and that required a feac currency or not, and pulling back into sort of a dollar supply that would be more appropriate for the US economy. He chose the former. But that's good until it's bad, right, And we don't know the horizon at which investors, other countries, sovereigns, pension funds, central banks will really take a look at the dollar itself and say we don't buy it as a store of value anymore
because it's over supplied. So that over supply does keep the global economy ticking, It keeps Uncle Sam's presence all over the world. But there is a day not too far in the future where inevitably a preponderance of people will really scratch the head about whether the dollar is actually worth what it says it is.
I will say that if you back out and look at the dollar as measured by either the DXY or the Bloomberg Dollar Index.
Over the last say, twenty five years.
We're still well above the average and at relatively high levels. But I see this in treasuries as well. You know, as FED Federal Reserve independence is threatened. And maybe Donald Trump can't do anything to Jerome Powell, but Paul Tudor Jones told us last week that he expects Donald Trump to put the yesest yes man in charge of the Fed as soon as he can. In twenty twenty six. The market doesn't care. They're still buying treasuries and the tenure yield is back down to four and a quarter.
Well, I guess it's like a dualism, isn't it, Because while the good times are rolling, the good times are rolling, this is Hyman Minsky. But as they're rolling, the bad times are storing up. And if people still look at the dollar and say everything's tikety boo, will keep buying it. It's still the best game in town, then day it is because it's reflexive and that's what they're doing, and
they're creating their own reality. But I mean, we would be very silly to look at Trump's antics with regard to Jerome Powell and see anything other than an assault on central bank independence. And frankly, if I was in the FED, I'd be hopping mad because they've just pulled off the soft landing. Admittedly they haven't, you know, they haven't got inflation under control in a way that they might like, but they did a pretty good job with
soft landing. And then along comes so called Liberation Day in all these other announcements that are really the sending minds racing as to what the future of US economic data is. But I can see your point. The dollar is the dollar. It is doing well now, it will continue, but at some point something's going to happen.
One thing I do want to ask you and is still happening now, and it's third years of war between Russia and Ukraine. Ukraine's saying that Russia fired a record five hundred and thirty seven missiles and drones in massive overnight attacks. It keeps going on, and I always get worried a little bit ed, you know, as we kind of run from the shiny new old thing to the other shiny new old thing. And we kind of are doing that a lot, especially I know in terms of
our coverage. Sometimes it's domestic new termes, it's geopolitics, trade terrors top of mind for you as we continue to see this war unwined, and it does feel like the world is growing a bit weary in terms of supporting it.
Yes, this war was Putin's choice. The fact that there is a war in Ukraine was Putin's choice. The fact that the war continues is not his choice. It's the selection of other countries. It's been the selection of Iran
that helped him build his own domestic drone program. It's been the selection of China and North Korea, who have respectively helped him with material and now men and I'm afraid to say that it's also the selection of the United States and Europe because we were in a position earlier in this war to take a different strategic approach, to provide long range weapons, for example, to Ukraine, perhaps
even just send peacekeepers. I know I'll get some emails for having said that on your show, but it's an international agreement to let this thing continue and to let Ukraine bleed out. And I, for the life of me, don't understand why A Biden accepted the nuclear threats and framing of Putin and the President Trump doesn't seem to want to end it the way he could.
We never have enough time. Hey, great to check in with you. Ed Price, former British Trade official, non resident Senior Fellow at NYU, joining us on this Monday book.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa played Bloomberg eleven thirty.
I just want to mention shares of HPE healle the Packard Enterprise rallying in fact top performer the S and P five hundred, followed by Juniper, the second best stock in the S and P five hundred. This on news at the Justice departm settled its lawsuit challenging Hulett Packard Enterprises thirteen billion dollar takeover of Juniper, less than two
weeks before our trial was set to start. The deal requires the combined company to sell HPEES instant on wireless networking business, and auction off a license to Juniper's competing missed business. So just wanted to lay that out. We're watching that. There is a lot overall that going on at HPE, including like many companies, I should say, in the tech space, it also includes a focus on supporting
the big build out that is artificial intelligence. So let's get into that with our next guest with us as Trich Trish dam Kroger. She is chief Product Officer, Senior vice president and general manager of High Performance Computing and AI over at HPE. She joins us from Portland, Oregon. Trisch, by the way, former Deputy Associate Director of Computations at the Used Department of Energies Lawrence Livermore National Layer Laboratory. She led a group of more than one thousand engineers
and scientists focusing on supercomputing efforts. Trish, good to have you here. A lot to get to. I want to ask you, though, pure anything you can share with us in our audience, our Bloomberg audience about the news today about the Justice Department lawsuit being settled. The stock is up in a big way, just big broad macro anything we should know.
I just We're happy and I'm sure more will be coming out.
Oh, okay, to be continued, all right, look forward to that let's talk about your world and what's going on in AI. First of all, set the picture in terms of what you guys are seeing and your understanding of what's going on in certainly kind of the supercomputing LLM world. How much the AI demand and ramp up is. How would you describe it today? How has it changed in the last few months? Is it more, is it less? Is it the same? Give us some kind of context.
Yeah, So I think over the last two years we've seen this huge growth and interest in AI, especially the large language model builders and we all know who those are, you know, and topics, the open AI, the grocks of so there, we've definitely been seeing that. I would say that I wouldn't say that we've had a market increase over loss. It's been kind of a very steady growth rate of you know, anywhere from depending upon the segment, of forty percent down to twenty percent. So lovely growth
for this market. People building up the infrastructure.
But interesting, So you don't see massive are you saying you don't see growth in adoption of these platforms? Do you not see your colleagues using them like exponentially more for work?
So I definitely see that yes, I think that the enterprise market is still trying out a lot of this, but on average, they're saying about five hours per week. People are using them for the repetitive task. I mean, I definitely use it for help with email and transcript and so a lot of those repetitive things. I still think there's some killer apps that will be coming along
that will get more widely adopted. What I see the main spend right now is the Tier one and Neo clouds that are spinning to develop the models.
So does that mean okay, and forgive me, I'm going to bunce around a little bit. But Salesforce CEO Mark Benioff talk to our own Emily Chang for one of the episodes of the Circuit and he said that AI is doing thirty percent to fifty percent of the work at Salesforce, and just talked about how much work is being done. I feel like there's momentum around it. Do you think it's not going to be as dramatic in terms of the impact on workers in the workforce?
You know, it's that's a great conversation and I've had it with many different segments when we talk about this. I do think it's going to impact certain areas more and more, right those you know, even as my daughter who's a software developer, right, is she going to be out of a job. For those entry level we're still I mean, AI is now helping her code, not replacing her.
And will it come to that maybe and you know, maybe five years or something, but we're still just it's definitely an aid and not a replacement for a lot of the work that we're seeing. I do think more of the manual labor. AI will definitely start replacing that and is replacing that.
But in terms of your job, you're in charge of high performance computing effectively. And I guess the idea here is that HPE has a supercomputer or some sort of computing system that is more efficient than others. And you know, because as Carol says, we talk about the energy usage of this all the time.
Are like, wow, you know, one.
Server uses as much energy as Atlanta. You're working to try and cut the energy needs by making your systems more efficient, right, right, So.
Let's just go back. HPE acquired Gray over five years ago, and Cray is the leader in supercomputing, so we have the top three fastest supercomputers in the world. El Capitan is an example at Lawrence Suburban National Lab where I came from. So these are great examples of very dense parallel compute. It just turns out that AI needs the
same exact compute. Put us in a really good place because we've been doing this for fifty years, and we've been doing liquid cooling for fifty years and have a ton of IP in this space and truly the experts in the world. So we have taken that expertise and we are helping it to accelerate the infrastructure build out of our customers, getting them to where with our one hundred percent funlysts direct liquid cooling that means everything's cool, not just the GPUs and CPUs, but the switch, is
the memory, every component is cool. That reduces the energy needs by over ninety percent. So that's a huge win for As you talk about the increase need of power, we're talking gigawat data centers, not megawatts, and what we can do to help our customers reduce their power built.
And in terms of development and constantly looking to create
products that make this much much more sustainable. I'm assuming you guys are seeing that it'll even be better, I don't know, in the next year, two years, Like talk to us about that kind of evolutionary process, because it does kind of blow my mind that I feel like the stories when from AI companies and chat you know, touchipt and so on and so forth, to all of a sudden, all the power demands as Matt mentioned too, and it's gone to Okay, So how do we make
it happen? I mean, Alpha Metz Google agreed to purchase two hundred megawats of power from Commonwealth Fusion Systems Plan first commercial Plan, which is expected to begin delivering electricity to the grid in the early twenty thirties. I mean, these guys are thinking not about today, next week, next month, but what power they're going to need, you know, five ten years from now.
And you know, I was at Davos a year and a half ago and I came home, I'm like, Babe, we've got to invest in small nuclear reactors because I mean, it was so clear that that was going to be where everything needed to go. But when we look at that, we're also bringing in our expertise, so new technology to kind of help. So one of the things is just power management. So through software turning things off when you don't need them, you know, just basic management monitoring is
going to be core and what is needed. The other thing is we have are working with different companies to look at heat reuse, so taking that the hot water that comes out of your supercomputing and using it to heat buildings. We do this with a number of our customers. We're also doing some.
That is cool either that's very cool, so you basically use the energy. Yeah, after you've cooled the system, you use the energy that's essentially left over to achieve some other tasks like hitting the building.
Right. That's happening up in louis and Finland. We're working with a company in Quebec and they're they're growing tomatoes in the greenhouse with that energy. So this is I think going to be a great opportunity to not you know, just maybe waste that energy. We're also looking we're working with Nrail, a Department of Energy lab to do R and D of what more can we do. So we have some strategic programs and then a lot of our customers are also using the supercomputers or AI machines to
look at future. We work with this small startup in the US that's looking at how to use AI to make to get small nuclear reactors or nuclear actors to the market faster by decreasing the needs of the regulatory not the needs, but how to get through that system faster.
Or some of my favorite start stories are from the supercomputers, where there's a National Agnition facility at Lawrence Livermore National Labs where they've used AI to come up with the design for the pellet for fusion energy, which could be a holy grail of energy.
For got a long way off still.
Yeah, you know, I mean you talked to different people, but yeah, that one's going to be longer, but definitely I think the small nuclear actors, micro nuclear reactors are closer. Yeah, and then there's you know, different different compute whether you talk about quantum computing and those kind of things that I also think are a little bit further out. But maybe in between that, fusion and the nuclear's cool.
Stuff, very cool stuff.
I'm actually what positively surprised you said when Carol told me.
She's like, we're going to talk about the energy. You need to.
Say, I know, but this is really fascinating stuff.
I'm so glad we had you on my pleasure.
I love talking about this.
Yeah, we can talk. We can tell come back soon. I really appreciate it. Okay, Trisha dan Kroger, she is chief Product Offer so senior vice president, General manager of High Performance Computing at AI of HPE.
That's serious stuff, solid German name too.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five ys during this listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
All right, so called big and beautiful, but what we do know is that it is indeed a massive tax and spending package, a lynchpin of President Trump's campaign promises. It's making its way through the congressional process amid Republican internal fighting and Democrats launching attacks to exploit the divisions. Do you want to point out that last night Republican Tom Tillis he warned Republicans were at risk of a
backlash by failing to keep President Trump's healthcare promises. The Congressional Budget Office estimates that eleven point eight million people could lose health coverage over the next decade as a result of the bill. Here's Senator Tillis.
I'm telling the President that you have been misinformed.
You supporting the Senate.
Mark will hurt people who are eligible and qualified for MEDICAI. We're gonna make sure that we fulfill the promise and then we can feel I can feel good about a bill that I'm willing to vote for, but until that time, I will be withholding my vote.
All right, little heated there that of course North Carolina Senator Tom Tillis last night on the Senate floor. Whoever said governing was easy? Let's get more this process. What's next for President Trump's marque piece of legislation joining US As Bloomberg News congressional reporter Eric Walston, he's up there at the US Capitol in DC. All right, Eric, where are we in this process that's already been a bit long in the tooth.
Well since nine thirty am. Democrats have been throwing amendments at this bill to try to highlight the divisions among Republicans. None of the amendments are succeeding, and nor are they likely to, but it will make Majority Leader John Thune's job of wrangling what are really eight key holdouts for the bill even harder. We have Susan Collins and Lisa Murkowski, sort of the moderate wing of the party, who were concerned about the cutst to medic had food stamps and
renewal energy. And we have another group Rick Scott, Ron Johnson, Cynthi Alumus, and Mike Lee who are conservatives and want much deeper cuts to medicaid. They have an amendment that would potentially remove twenty million people, and they have another three hundred and fifty billion dollars in order to cut the federal match for Medicaid. That's amendment is going to be brought and as an attempt by leadership to get
them on board. It's not clear what would happen if that does fail, if the likes of Susan Collins, Murkowski and the Democrats bring it down. So Thune has this work cut out for us. We're expecting this bill to go late into tonight before it can pass, and then there's an open question of whether it can pass the House. We know Speaker Mike Johnson's been meeting with President Trump.
There are people on the right and left of the GOP in the House that are worried about the Senate bill, who could very well see what I've been calling a hot tack summer of the bill bouncing back and forth between the chambers throughout July.
I just don't understand how this gets through it all, to be honest, Eric, I mean, everybody seems so sure that, even though people have issues on both sides, it's going to pass.
But you know, on the.
Salt Caucus, how could they capitulate and still expect to win anything ever again in New York, New Jersey or California. And then in terms of deficit hawks, I mean, Scott Bessen was on Bloomberg Television this morning saying he's a Hawk, but they're going to have to raise the deficit ceiling dramatically.
Yeah.
Well, two issues there. The Sawcaucus mostly has capitulated already except for Nick Loloda. The rest of the Salcax is on board with this deal. It's a forty thousand dollars cap for five years and instead of permanently, and it did basically allows or sort of bless a work around by some path through businesses in order to claim unlimited salt. That's the deal right now. Nick lo Looda is dug in as a no vote and that really matters because
of the slim majority in the House. We already have Thomas Massey, a libertarian from Kentucky who's a dedicated no Nick Loloda. Add to that, that really makes the math very hard for Mike Johnson, the Speaker, who could probably only lose three or four people depending on dem absences.
As far as the deficit hawk issue is concerned, we saw a very interesting development here in the Senate where they change the rules essentially to allow a new form of accounting that would count current policy as the baseline
for measuring bills. Basically, they're changing the measuring stick midway and calling the extension of the Trump tax cuts free, costing zero dollars instead of the three point eight trillion dollars it would cost well at the same time, including a bunch of temporary tax breaks like the salt deduction, like tax, no tax on tips or overtime. This is basically creative accounting, and it seems to be winning over at least the votes of most of the deficit hawks in the park.
But it doesn't change the need to raise the debt ceiling, right, because what you're talking about is an accounting gimmick. At the end, of the day. We're going to have to spend more money.
Right, Yes, the destitally has to be raised. A lot of that's money that's already been appropriated, not directly caused by this bill. It's going to be raised by five trillion dollars under the Senate bill, and something has to be done to avoid a US payment to fault as soon as August. You know, there are amendments that are pending from Mike Lee and others that would raise it as little as two trillion or even five hundred billion.
I don't think that's likely to pass because basically Republicans and Donald Trump have concluded they need to raise this debt ceiling to get them through the midterm election, to not deal with it again right before voters have to go to the polls.
All right, So we're going to dig into this a little bit more in just a moment, but I want to just put it out to you, Eric. I mean, it's so easy as we cover something like this to get caught up in the process, the congressional process and the fighting and that kind of stuff that's going on to get this massive legislation passed. Having said that, you know who wins who loses rich poor, big companies versus small,
North versus six Blue versus Red. I mean, does America come out better on the other side of this, It doesn't sound so if we're going to have a much bigger deficit.
Well, I can point to the Yale budget lab which is very credible. It says it's basically a very regressive bill. You're seeing the in net income of poor people, people who depend on Medicaid and food stamps going down, well, the net income of the very rich going up. This is a key talking point for Democrats and they're hoping to make political gold of it in the next election.
Republicans on the other hand, and say that, look, these most of the Trump's tax cuts are going to expire if you don't do anything, if there's just gridlock, you see a four trillion dollar tax increase that would hit the economy, which is already you know, experiencing turbulence from Trump's tariffs, etc. So there's an argument to be be there on either side.
All right, we're gonna leave it on that note. Listen, we so appreciate it, of course. Bloomberg News congressional reporter Eric Wilson with us from the US Capital in DC.
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