Ex-CIA Head Discusses Terrorism, Russia, & Intelligence Sharing

Bloomberg dot Com, and of course on the Bloomberg. A pleasure to have with us here in our Bloomberg eleven three Ust to Stephen Roach. Stephen Roach, of course, said the former chairman of Morgan Stanley AGIA, former chief economist at Morgan Stanley, now senior lecturer at the Jackson Institute of Global Affairs at the Else School of Management. Uh, we get this budget today, they'll be talk again of growth expectations here in the US. You've been given some

thought to the expectations for growth more globally. Can we start domestically and just to talk about what we've heard from mcmulvanny, the Office of Management Budget Director. He spoke yesterday saying the days of being content with one point nine percent growth have to be put behind us. All well and good that he says that, is there any likelihood of that happening here in the near term in the US, Well, David, there's there's always a likelihood of

anything happening. But I think to push the button and go from two to three UH in a period where productivity growth is still under pressure, where um you're not going to get any uplift from growth in the labor force, is going to be very, very difficult to achieve. So I think any realistic assessment of the budget or the debt trajectory over the next ten years, which one has to go through to try to make some sense out of this or any other president's budget proposal, is quite problematic.

We'll have a foreign policy expert on and ask him or her what we know about the Trump doctrine, the nascent Trump doctrine. I suppose in the realm of economics we have trump anomics, and I wonder if we're any closer to getting a clear definition of of what that is. Again, mcmilvanny spoke yesterday and he said his definition is principally that it's an effort to get sustained three percent economic growth in this country. Again a very aspirational, golden aspirational definition.

Do you speaking debate all this um, but but you know, I think we we have to be analytical and assessing, UH where this budget deficit, how it fits into the mosaic of of the U S economy. And I think there's a real Achilles heel here, and that is that, UH, the US right now has an extraordinarily low national savings rate. That's the sum total of personal business and UH saving

plus the government budget deficits. And when you run a low savings rate and you want to grow, you import surplus savings from abroad, you run massive current account and trade deficits to attract the capital. The Trump proposals, in my view of realistic assessment, is they're not gonna be balanced. You're gonna get budget deficits, so that will push the national savings rate lower and make the current account deficit wider and our trade deficits become more problematic in the

years ahead. So here's the catch, David, is that with with budget deficits UH and trade deficits likely to expand, Tom will be running these charts on the twin deficits. Once again. Uh, You've got a president then, who wants to turn protectionist against many of our trading partners. How does that add up, Tom? How does it add up to U to go protectionists at a time when your trade defficences are getting bigger? This is vintage Stephen Roach. I'm serious, David, this is this goes to the heart

of what I call balance sheet analysis. Let's stop the show and explain to us that some savings rate which includes the government deficit, what's it mean for the person listening to Bloomberg surveillance? It means that the United States is growing beyond its means. Tom. We we we teach um students when they take their very first economics course, and I'm sure you remember this, tom Um, that the

savings must always equal investment. It's an accounting identity. So when we don't save at home, uh, we then borrow savings from abroad and we run these big current account balance of payments deficits and trade deficits to attract the capital. And so the idea that we can uh now single out our trading partners, whether they're in Germany, Japan. Of course, China or Korea and others as being villains in what

they're doing to punish American middle class workers. This is the most important point, is that we need these trade deficits to square uh the saving investment identity United States and David, what's so important about this and Dr Roach's analysis is dead on is when I mentioned this in speeches or discussions, often citing Stephen Roach, people are just in disbelief. They're like, no, that's not true, disbelief because my name or because you know, but but but Stephen,

this is important. Essentially every month by accounting identities, somebody's got a right to check there's a flow. There's a flow here every month. You know, I, I know, I'm a broken record on on this tim We've gotten away with it because where the world's reserve currency and um you know a lot of countries, including most recently China, have tied their currencies to the dollar, and so they have to buy a lot of dollar based assets to

maintain that relationship. But you know, the day is coming um uh, and we we never know when when the world starts finding other places uh to um uh put its um uh savings rather than a low return uh US economy and then it becomes tougher for us to fund are the circus savings we borrow on terms that have been extremely attracted to us for a long long time. It would be good to speak to someone with experience

on going with extended trips of leaders. That would be Michael McKee, wh or a few years ago used to be on the White House uh A circuit here as well. I I look, Michael McKee at the exhaustion of the trip. Is it real? Is that come with absolutely? I mean, the hours are very long, you fly all night, you get to where you're going, the Middle East in this case, and you've got to start functioning immediately. The president has a bed, but nobody else. Nobody else has a bed.

Your your jet lagged, You're tired, and the days are long. David Girl, I believe we have a headline out crossing the Bloomberg are Islamic state claiming responsibility for the attack in Manchester last night that came at the end of a concert by Ariana Grande. We've been following this throughout the morning. We'll bring you updates throughout the morning here on Bloomberg surveillance. This is according to site, and that's a website of professionals who monitor social media chatter web

chatter about terrorist groups. We welcome all of you worldwide. This is Bloomberg Surveillance on Bloomberg Radio coast to coast. So we say good morning to Bloomberg Boston FM in Washington early morning and San Francisco in the Bay Area over a special good morning to all of you, uh in Europe and in the United Kingdom as well. On London Radio, Michael McKee is here, uh, you know, to talk about the president's trip and offer go to Rome. But much more, Michael McKee about the budget. You've got

detailed notes. What was the thing that stuck out for you in your note taking on this political document of the president? Well, from the perspective I bring to it of an economist, the Rosie scenario that the administration assumes three growth from with no credible way of getting there. Not only that they assume three percent growth and unemployment goes up, uh, so much for the Phillips curve. So at this point, uh, it's kind of hard to take seriously.

Larry Summers out with an interesting moments ago, uh, noting that they double count the tax savings that the tax cuts they propose will create a lot of growth and at the same time will fill in the budget hole caused by the tax cuts. And he called that ludicrous. With within this in Stan Calendar writing in Forbes has been a good friend of the show. Was made very clear this is just simply undoable in your experience when you try to quote unquote make budget cuts and operational government,

not entitlements. How much is a painful cut? How much? Somebody asked me this last night. What's to the bone in the fiscal world? Is it? Two? Is that the cuts we're talking about, you have to take it program by program. Uh. The way Washington works normally, what you talk about when you talk about a cut is a reduction in the rate of increase. Uh. The government continues to spend more money because the United States continues to get bigger, more and more people involved, and of course

the bureaucratic comparative to continually raise their own budgets. Uh. So if you're talking about actual reductions that would probably be painful, then you have to get into the question of whether a program is worthwhile or working. And that's much of the argument from this Office of Management and budget that a lot of these programs don't work and

aren't worth funding. We've talked about assumptions. Just a moment ago strikes me that the director of the OMBA mcmilvany, is making a huge one here when he expects the House version of the Republican healthcare bill to get through. He's really counting on that for this to work. Absolutely. The budget assumes eight hundred and sixty billion dollars in Medicaid cuts. The budget assumes that there will be the rollback of the Obama Care taxes that were imposed on

the wealthy. So yes, he's he This all assumes both that they will pass the rollback of Obamacare, pass trump Care, if you want to call it that, and cut taxes h to the levels that the administration is has proposed to bring Congressman Jan Chikowski, she represents the ninth district in Illinois, Democratic congressman on the House budget me, you're not being accurate. The congresswoman represents my mother's heist there Trier High School, when that Illinois. That's the correct specificity

is key here, odd surveillance. Jeensickowski joining us on our phone line is great to have you with us. You're out with this statement here in advance of the budget release this morning, I say you will resist this outrageous proposal every step of the way. I I assume you're regarding this budget is dead on arrival. Well, I hope it's dead on arrival. I certainly do. I mean, this is a budget of broken promises and then new promises

that he can't keep. Like these massive tax cuts that go for the wealthiest are actually going to create economic growth. We've been there, done that hasn't hasn't worked. And meantime, it's going to be on the backs of people who need their Social Security and their Medicare and their Medicaid. It's it's really remarkable. It's going to uh, you know, the very people that he promised to UH to help um and to to make life better for and make America great for a great again are the ones that

are actually going to be hurt the most. Something that Director mulvanny said yesterday and his briefing with reporters is a real problem here is the efficacy of a lot of these programs. Why should a taxpayer be paying money toward a program that's only I think he's had six percent effective. How does Congress, how do you and others

look and improve the efficacy of of programs? I gather you probably don't have a lot of sympathy with the argument that he that he's making there, But how about the broader point here that there are programs that could be working better? Well? First of all, when he talked about about a month ago about meals on wheels that there's no proof that those programs work, you ask the people who are waiting in their homes every day I've

delivered those meals on wheels two people. Um, those programs keep people out of nursing homes, which are more expensive. He said that nutrition programs for children at at school that there's no evidence that they really helped to increase learning. Are you kidding me? So? First of all, as a Democrat who believes that government programs work, yes, I want to make sure that they are effective, and I'm willing

to look at that. But really, I mean that those kinds of cons and believe me, in newchur Township or New Tour High School is there are people who are waiting for those meals right now? I would suggest congresswoman out of Sullivan High School and with the Illinois blood that you have, that the redrawn ninth district has people that support a Republican ethos, a conservative ethos, even though

it is a very liberal district. What permeates the Trump theology, if you will, is we've got to figure out how to get these people back on jobs, particularly with his food stamps. What is the reality you've seen about the snap program, the food stamp program, and the idea that we need to get people back on jobs. How do you dove tail that when you're on the opposite side

of the debate. Well, first of all, the about half the people that that get nutrition assistance through the food stamp program, the stamp program are children, and so certainly if parents are going to be able to um, have a raise of family and have a little bit of help to put food on the table while they're looking for their job or trying to get job training, which by the way, is also caught in this budget, I think it's pretty hard to explain to them that, you know,

a key element of this budget plan will be huge tax breaks, mostly that go to the wealthiest Americans. Um. You know, as they said this, this kind of idea of trickled down is something that has been tried over and over and over again. And when you cut the state tax, which goes to just a few people, really I think I think feeding helping to to make sure that there's food on the table. And by the way, those programs most people stay on them for a year

or left. It's kind of a bridge over troubled waters. Let's do this. We are out of time today with the horrific news flow we see here, particularly with a tragedy in Manchester, United Kingdom. Cox Cocaswoman Chikowski, we look forward to speaking to you again on the shores of Lake Michigan, the Ninth District north of Chicago, and then off to the west as well. Just seeing the footage here at Eva Gerner Studios of the two Air Force ones, that's how many people are on the trip in I

believe in tel Aviv. I may be wrong on that. I can't tell where it is Jerusalem or Tel Aviv, but they're both out waiting there to fly the President, David, why don't you bring in the ambassador who is a unique distinction of being ambassador to Israel in Egypt decade now, a lecturer and professor at the Woodrow Wilson School of Public International Fairs at Princeton Universe. That's Ambassador Daniel Kurtzer,

who joins us on our phone line. Since ambassad Kurz to this was a quick trip, much has been made of that, the brevity of some of these visits the President. The President made in Israel today, What do we learn about his attitude towards the Middle East peace process from this visit to Israel, his meeting with the President of

Boss Palton Authority as well well. He reaffirmed during his speech he just gave very strong commitment to try to reach peace, indicated that in his conversations with President of Boston Prime Minister Nataniello, both of them were ready to reach forward. But he provided a very few details of those discussions. That may be a good thing. The longer he can continue to the dialogue in in quiet, rather than try to publicly broadcast different issues, he may be

able to make incremental progress. But we really don't know very much about either the President's view of how to make peace. Well, what's the two sides hold him? What's your sense of how the speech he made in Saudi Arabia over the weekend rang out through Israel. That speech in which he called for suiting nations largely to rally together to fight against Iran and to purge themselves of terrorist entities within within their populations. How do you think

that played in Israel? Well, I think it was music to the Israeli ears because he associated himself and the United States with all of the same enemies that Israel has identified Iran terrorists, countries that support terrorists, and uh, there's really no distance between the United States and Israel

on those issues. What made the speech interesting is that he did it in front of forty or fifty Arab and Muslim leaders and in a sense conveyed the idea that we now have a larger group of countries, not just the US and Israel, that are ready to act affirmatively against terrorism. And I think that was the key takeaway from that speech. Where do we go from from here?

You mentioned that the speeches that he delivered were largely short on specific I know the Secretary of State Rex Tillerson was asked if there might be a trilateral meeting here with the President of palacting authority at the Israeli Prime Minister and the President of the United States, and in the future. He demurred. He didn't answer that question. How do you go from the rosie rhetoric we heard from the president to action here after what several years now,

if they're being very little process on peace. Well, Frankly, I'm actually buoyed by the fact that the administration did not seek some kind of the media takeaway. I mean, there's always just tendency to look for a deliverable, you know, what can what we announce as some big outcome of visit. And I think there was a lot of speculation before the visit that the president would want to announce a trilateral meeting or some it of some sort involving the

Arab States, and that didn't happen. Now, it's possible it didn't happen because she tried and failed, But it's also possible because he realized that this is a very complicated set of issues and you can't go for short term gains. You really have to be in it for the long haul. So we'll see over the next period of what the next steps are. He'll probably send out his envoy, Jason Greenblatt.

We now have an ambassador in place in Israel who can move this issue on a day to day basis uh and if those next steps indicate a continuation of the dialogue, then I think because we have some reason to believe that this will go on for a while. Ambassador to thank you so much. Daniel Kurtzer with us from the Woodrow Wilson School as well the former Ambassador of the United States to Israel, David what a more. The news flow is just an extraordinary, incredible beginning with

that a terrorist attack. We've been covering their threat, the point that took place that last evening, and of course the presence visit to Israel apping up. Now he's back at the King David Hotel. He will leave for Rome. I believe in about an hour's a time. He'll head there, have an audience with with the Pope, and then he presses onward to two major summit, the first being the NATO Summit in Brussels and then the seven Summit in Italy.

Is still a long way for this present to go before he makes his way back to Washington or Kevin Cirelli in Jerusalem. Touching on the domestic challenges of Washington as well. Brunt You by Bank of America Mary Lynch with virtual reality virtually everything will change. Discover opportunities in a transforming world. VI of a mL dot Com slash vr, Mary Lynch, Pierced Fenner and Smith Incorporated. There's something new

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power of Bloomberg's news and data. Download or io s app or search for the Bloomberg extension at the Chrome store to try lens out. Learn more at Bloomberg dot Com slash Lens. I've been waiting for this interview David Gura sent the moment I heard that Mr Fields was out. My opinion doesn't matter on this, but we do have the considered opinion of the cars are. If you're going to Google and type up cars are you get the Wikipedia for one, s rat and Steve Rattner, of course,

appears often with us. He has a wonderful journalist integrity along with his financial knowledge, and was selected at one point to save Detroit. You didn't have to save Ford when you were in the trenches of being a czar, which is a phrase you and I hate. How distinctive was dear Born? How different was Bill Ford, the family

and the company. It's something that fascinated me because you had these companies that were essentially identical in every respect in terms of their customers, their footprint, all these things. But yet Ford did not need our help, and the others did, and it was simply a question of management.

Ford had better management. They anticipated the crisis, they put money in the bank, and of course, famously for Bill, Ford reached out to Alan Mollallely, who, other than owning a car, probably knew nothing more about cars than that, and he turned out to be one of the great CEOs of our generation. We'll talk a bit more about that, the shadow into which Mark Fields stabbed aln Milelly of of Boeing Vintage. Coming to to Dearborn, what did he

do well? For Ford? He changed the culture? What what Bill Ford always felt was that Detroit was way too insular, that it was industry people talking, industry people playing golf of the industry people, and he wanted to shake Ford up, and he wanted an outsider who would bring a fresh

perspective and a whole different management approach. And I think you see that courage being demonstrated yet again here where he's reached out to another non traditional auto executive and said, this industry is in the bigger in the midst of actually a much bigger transformation than even what we dealt with in two thousand and nine, and he just wanted to have fresh leadership to do that. You mentioned that the perceptiveness anticipating the financial crisis to come. Are we

seeing that here as well? Is is forward making a calculated smart step in your estimation looking to driverless cars to self driving vehicles, it's not. Yes, I think they are, but remember it's not just driverless cars. There are three things happening that are going to transform this industry. Driverless cars are one, Electrification is a second, but probably the biggest one is ride sharing. The average cars only used four percent of the time. It's most family's second biggest

capital asset. The rest of the time it sits in the garage. You're gonna see. I think a dramatic reduction in the number of cars Americans need to buy, and Detroit is going to have to reposition itself for that reality. Can you quantify that from eighteen million seventeen million the run rate is sixty million? Where Steve Rattner's new sixteen million. I honestly don't know, Tom it's fair, but it's a very fair question. I think it could be twelve. I

think it could be eleven. It could be something like that. I want to go back, and we can do this with Ratner, folks, because he was Honors Economics at Brown, So it's somebody that actually moved the pencil. One of the great unspoken is in corporate America is slick guys versus the grind. And time after time after time, I see companies with an engineering and economics ethos within the C class officers go to marketing guys, go to the smooth guys, and then they have to reverse. I saw

the Google. There was a tangential move at Google. Eastman Kodak I lived in. Is that what we saw here? I mean within the happy talk of the center from the University of Michigan football team, blah blah blah, is just really about an engineering ethos like Mallally that took a sidestep with Mark Fields and wants to go back to somebody that understands how to code or understands how to read a slide rule. I suspect there's some truth to remember. One of the oddities of the situation is

that these guys worked together for twenty five years. It's not like Bill Ford met Mark Fields three weeks exactly and so. And it's a little bit like the Disney situation where you had a guy, Tom Staggs, who had worked with Bob Iger for twenty years and then discovered he wasn't see material. It's very unusual when that happens. But I do think it is a move away from

you called marketing or whatever towards a transformational leader. I think, more even than engineering economics, I think Bill Ford wanted another transformational leader. What did Mary Burro get right, Well, we don't know yet. When Mary barn has gotten right. Mary bar has done a good job of calming the waters. She's I think made some smart moves and getting out of a lot of these margins. Getting out, getting out

of the marginal mark. Getting out is what this is about. Yeah, but you know again, when I was doing cars, there was a view that to be a global car maker, you need to be a global carmaker. And now the view has changed. We'll find out if she's right or not. But that's certainly her view. Um. But but again this is this is this race is going to be defined, uh, not by whether you make cars an India or not. It's going to be defined by the three factors that

I mentioned earlier. How hard is it to affect cultural change at these companies? They've been around for a long time, they're huge, they have such legacies to them. Obviously, you can make changes when you're under financial pressure to do so, but to to embark on a radical change in culture, how hard. It's It's less hard than you would think. And throughout my career I have been struck by the ability of great leaders to make cultural change and institutions

that I thought were impervious best. One of the best examples is Luke Gersoner going to IBM when it was in trouble and he and he affected huge cultural change. Steve Jobs going back to Apple, I mean, you can go on. The list is fairly long. It's not it's it's not impossible when you look at the relations I want to ask you just about the relationship these companies

have had recently with with the White House. What's that meant in your in your estimation, You've had Mary Barr, You've had Mark Fields going to the White House with great frequency for a time early on in this administration to meet with with the president. What's the strength of that connection, that that conduit between the greater Detroit area and Washington. Right now? Trump is a manufacturing guy, and he and and and when you go to Silicon Valley, where I was a couple of weeks ago, they feel

a little unloved by this administration. Uh. In contrast, if you make something, you feel very loved. For the point of view the company is, if the president invites you, of course you go because it can't be bad for your business and may be good for your business. And obviously presidents very focused on auto jobs and auto plants and where they're built and where they're not built and all that sort of stuff. So if I were the CEO of an auto company, I would try to stay

close to the White House as well. Boston yesterday at this TMT conference that JP Morgan arranged there. Steve may not know that cost there's a city to the northeast were the baseball team one game above five. You may not know. I went to Good morning to all of you on route this morning. Continuous. A point that somebody made there is you're looking at who's buying tech companies investing in tech companies. That's a lot of traditional manufactories,

traditional companies. You talk about the the uneasy relationship perhaps between Washington of today in Silicon Valley. How difficult is it for a traditional company like Ford to marry with or do work with tech companies. How how difficult is the the marrying of those two things. It's hard, and some are more successful than others. I think the good news is they're all trying. All the auto companies now

have a footprint of some sort. Obviously GM did that large acquisition, Forward did this kind of joint ventury thing with BlackBerry of ball things, which has an operating system. They all know that they have to do this, but it is hard. It's not in their DNA, and we'll have to see how it i'n false. Steve Retner, thank

you so much. Thank you for having guys today, probably mostly on the Ford Motor Company of Dearborn at Michigan, David Guru, I am on the vintage where I am still in lawe of these seven forty seven there are seven forty seven's and then there's one and it is air Force one taxiing Dave had been a great airport. It is just there's just it's generational. I'm sure there's something else to be in awe of, but it is something to see that plane get out there in text.

I don't think there's a wait. I don't think I don't think he's got a time on the well. But I don't know if you know I've mentioned this on air folks, but I had a modest waited Reagan a month ago with our producer Kieran Buchanan Rita Gupta. I

believe that was a four hour wait. Surveillance correction coming here, Michael Midtown East writing in noting that I was mistaken when I said that that flight that President Trump took from Saudi Arabia to Druthan flying child, you rather flying that route was a pioneering flight Glenn Kessler of the Washington Post, noting that in two thousand and eight, President George W. Bush made a similar direct flight, but in the reverse order, going between Israel Landing and Saudio. Anyway,

thank you to Michael in Midtown East. We value our listeners who are always wiser than we are. We've learned that. No excuse me, let me not speak for you, David, I've learned that more often than now. What I've learned is it Spenno O'Donnell has a unique respective on the United Kingdom. She is our reporter in Parliament. In there's just something I think Spenya. Being a reporter in Parliament is more romantic than being a reporter on Capitol Hill.

What's it like? Actually being a reporter in Parliament is is luxurious, as I would think. I don't know about the cruise. I don't think the culpets have been changed. Um, it's certainly. I mean, you're in a beautiful historic building and and it's a it's a very strange and quirky institution.

Um in a way sort of fulfills every every cliche you've had about probably English public schools, because it very much feels like being in one um at the same time you're in the you know you're in the corridors of power um and you know you're It gives you a very very unique perspective, but also in a way you've got to be careful not to have a narrow one from that because it is a it is a very closed world, the unfortunate reality. And we make jokes

about Parliament in spanness Christian job. But there is terror on the River Thames and there's terror in Manchester. How will the United Kingdom link those two acts of violence? Well, I think the Manchester attack is emerging is something quite different. There have been arrest made, the police have made several raids since last night. It's looking less and less like a learned world attack. We've had several commentators saying that I think for the UK broadly, it's something that people

have been expecting for some time. And compared to France, which is which has suffered a few attacks in the last year, there's so far been the security services seemed to have managed to keep quite a few out in the UK, but the UK has certainly been a target for a while. Where are we in terms of the investigation The Prime Minister Against speaking this morning outside ten Downing Street, said that Tim she's confident that the Security Service knows the identity of the perpetrator of this attack.

The investigation is ongoing. What's your sense of where things are and where they're heading. Well, I think they're going to be very very careful into releasing any further details because it's looking increasingly like they may have suspected that there were more than one person involved in several people at play, whether that was just people who didn't denounce a potential attack or some more sinister planning going on. So for security reasons, I think that's probably all were

likely to hear for some time. What's emerging so heartbreaking Lee in the last hour is details on some of the victims. The youngest victim is an eight year old girl who was at the concert with her family, and it's that kind of detail, unfortunately, that we're likely to get more clarity on as as the day unfolds. How about the the identification of victims? Are we are we getting any identifications thus far? Is that something that's being

closely held as well? Well? We've only had two victims identified, one an eighteen year old girl in one of the eight year old girl I just mentioned, uh time mentioned the attack on Parliament just a couple of weeks weeks ago. Is there response to these events uniform? In other words, are we are we seeing what's happening here mirror what happened after that that event as well. But I think there's more of a sense today of police really stepping up to the mark, and that sort of tells you

that they're treating this a little bit differently. The Westminster attack was horrible, but you know, it was a man in a car. It very much looked it had all the hallmarks of a of a lone wolf attack. This is a suicide bomber that requires a level of planning. They've evacuated a shopping center earlier today, they've made several raids and houses in South Manchester that arrested someone in connection. So this seems to have all the hallmarks of a

planned attack. I drove by the terms the other day and I believe it was the new Scotland Yard building. Tell us about intelligence in the United Kingdom. Identify the m I or this or that in Scotland Yard and how they fit in to the protection of the United Kingdom. Well, what's been interesting is it's had a bit of a checkered history in recent years because there have been cutbacks

to security services, to police forces. But in the last couple of years they've really beefed up sections such as the sort of online data internet surveillance where a lot of these terrorist activities are tracked. Of course, you know, these cells are often formed on kind of special sites and that's one thing that they've really sort of stepped up.

I think. However, but this incident is really going to highlight is that security is going to be very much part of the dialogue again, and inevitably the fact that there have been cutbacks in the last ten years is going to become a matter of discussion. Sonya Donald, thank you so much for prospective this morning. She is a

bloomberg news in our parliament reporter. Let me ask you, Director wils if I could just how you reacted to the reports in the post in the Times of the President in that meeting with the kisley At, the Russian ambassador to the US and the Russian Foreign Minister Sergey Lavrov evidently reportedly sharing closely held information with them, declaring afterward that that is that within his mandate, he's able

to do it. How did you, as somebody who's spent a career in the intelligence side of things, react to what happened there? Well, the president is the ultimate authority of classificified material, and if he says something is classified, unless you want to impeach him, Uh, it's classified. So there's no real dispute about it. Uh. In terms of his responsibility, it's clear. And the president is the ultimate

authority on this. And so people who think he has been misusing that authority are in a great difficulty because they can't factually cite individual words, documents, sentences, numbers, or whatever. Uh. You can recite something that somebody said, somebody said, somebody said, But uh, if you can't prove your case, Uh, there's really only one answer, which is that it is the president's authority. Now, if you ask, hypothetically, would it be

a good idea to share with Russian establishment at the top? Um? And this is a KGB state we're talking about for all practical purposes um Uh, any information that might lead to they're figuring out how we were getting important intelligence. That would be a very bad choice. But people make

choices in those jobs. For different reasons. I was faced one time with the question, uh, whether or not to go to a major media owner and explained to him in terms that he could understand, but which also disclosed some extremely sensitive intelligence, UH, whether or not I would do that or just sit there and let them publish without knowing something that could well give away an agent. And I decided to go to the executive and explain

to him exactly what was going on. And he said, okay, we won't we won't use the number in the story, thank you. And I said, that's that's the way it's supposed to work. But but you can't really do that with uh, you know, a Russian uh intelligence officer masquerading as a diplomat. If I be interrupt, this is important. The president has a unique relationship with Mr Putin and with Russia. You you supported the president, you were part of his campaign, and you abruptly walked away. Does President

Trump understand James Woolsey's Russia? I don't know. UM, I'm I didn't really walk away. I just told them I wanted to recognize that I was not advising the transition. Might advise the campaign, but they weren't asking me for advice on the transition. I was still out uh doing press interviews and so forth, but I just didn't want to fly under false colors. UM. I I think that Russia,

even though it's ideology, Soviet ideology, is dead. Um really has historically except for the reign of the wonderful Alexander the Second. I wish they had more of him. Uh. Russia is a bit like the old farmer that Abraham Lincoln used to say lived on the farm next to his parents when he was growing up. The old boy used to say, I don't need much land, just what

it joins mine. That's kind of Russia. Uh. You know, if if you've got uh one country, region or area, then it's pretty good chance that maybe be a good idea to take the next one. And that they've always been like that. It's it's not any thing particularly related to to their recent communist passed, but they're My experience with them in for negotiations, three of them were really

really tough, and we made modest progress. One I headed up the conventional force in Europe negotiations and uh Vienna, uh and uh. Right after the Berlin Wall went down, you have never seen such friendly Russians. Let me tell you we were popular guys. Oh yes, this is critical. Dexter Filkins wrote yesterday on Jim Maddis General Madis in the New Yorker magazine. David Gerr and I interviewed the interview. Everyone's saying, what a Secretary Tiller is going to do?

What is Secretary Maddis going to do to instruct this president? Do you agree with that that they're the adults in the room and that they've got to somehow mold inform this unique president. Well, Uh, they've got a lot to do because President has a lot of experience negotiating and some experience uh with Russians, although not a great deal, um, but that isn't all you need in order to be

able to deal with the Russians. And I think that he started out with a somewhat friendlier uh stance than has now evolved over the course of the last several weeks. Even good a question. Let me ask you just go going back to intelligence sharing. I think that you know, we're looking at the Brexit process play out obviously that that could have grave consequences for how much intelligence has shared with and by the United Kingdom. We saw what

happened reportedly in the Oval Office as well. Certainly this is going to be something I think that will come up at the NATO summit that next week. What's the state of the way that we share intelligence right now? Are we doing it effectively? Is at being done in in the most effective white there's not a single UH approach. Sometimes you're working on something jointly with a country that you're very friendly with, that you've worked with many times

in the past. Let's say Britain UH, and UM, you actually develop an asset or a technique with the two of you making a contribution. In those circumstances, even if the United States does most of the collecting of the intelligence, UM, you wouldn't be able to operate jointly and effectively for very long. If you said to the British okay, bye, bye bye, thank you for the help. We'll just sit

on this now ourselves. We don't do that. We we work closely with with friends and allies, and sometimes that doesn't go well, but lots of the time it doesn't. Multiplies are are effectiveness. We'd like you to come back and just as the beginning idea to talk about the state of our Navy. A lot to talk about there there is. I'm I'm worried about carriers survivability, especially if it's true that the Russians have this two plus moel

per hour torpedo that they've provided to the Iranians. That's a deadly idea, and particularly within the close confines of the Persian golfer just outside of James Wilsey, thank you so much. He has the sixteenth Director of the Central Intelligence Agency and we're thrilled to have him in today. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene. David

Gura is at David Gura. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio. Brunt You by Bank of America Mary Lynch. With virtual reality, virtually everything will change. Discover opportunities in a transforming world, be of a mL dot Com, slash VR, Mary Lynch, Pierced Fenner and Smith Incorporated,