Fed Doesn't Have the Adequate Tools, Koesterich Says

for black Rocks Global Allocation. Russ, great to speak with you once again. Sorry I couldn't be there in person. Let me ask you first of all, just what you're gonna be listening for tomorrow? As I mentioned the FED kicking off this two day meeting today, I expect we'll get some commentary on on the balance sheet. What are you gonna be listening for? When FED chere? Jannyellen takes to the podium after that meeting, concludes tomorrow, Well, good morning.

I think there are a couple of things. Obviously, the balance she's gonna be front and center. I think the other is we had up until August a string of consistently weak inflation reports that started to shift in August thanks to some some hike in gasoline and energy prices.

What is the Fed's view of inflation. Are they still concerned about the disappointments earlier in the year, or do they believe those are transitory and therefore a December hike is more likely if we see indications that that that inflation area had wins. Our transitory confirmed something that Janet Yellen said now many months ago, she walked it back a little bit when she was speaking and testifying on

on Capitol Hill. Has her initial assessment of that been confirmed by the data that we've seen here over these last few months. Well, certainly the August print was stronger than we've seen. But I think there is a legitimate question here because many times we talk about the transitory nature of the data. We cite particular instances, whether it's hotel accommodations or data charges going down, and the fact is, well,

those might be one off events. You could also view those through the prism a secular downward UH price pressure in many industries and telecom in hotels, and that's something that that may continue, and perhaps the inflation numbers are not quite as transitory as we think we're focusing here on inflation. I think it's safe to say that, uh, since since these last few meetings, we've been speaking less

about the labor market. When you when you look at the US labor market today, the health of it, how much of a concern isn't Do you think that we've been a bit neglectful here not talking more about the state of the labor economy, focusing so much on inflation. Well, you know, the funny thing is, the labor market has been so steady, uh in some ways, you know that the CPI print has become what the non farm payroll number used to be. I think what's remarkab about the

labor market is not the consistency the job gains. It's the fact that we're creating jobs at a faster pace than than to to keep a neutral unemployment rate, and yet wages remain stuck at around two and a half percent. And that, to me is the big conundrum. And it ties back to this inflation argument. When are we going to start to see will we start to see that for aditional relationship the so called Phillips curve between the labor market and inflation. So far, it just hasn't manifested

the way economic textbooks say it should. So that's the question, as you've been chewing this over, are you Are you any closer to, if not an answer a theory on why that's the case. Well, I think the theory is that there has been some things that have changed, and it's not as if the laws of economics have been repealed at some point. I think if the labor market remains tied enough, you will nudge wages higher. But clearly some of the mechanisms have changed, and I would cite,

uh the role of globalization, I would say technology. I'd also probably cite the decline in private sector union membership as severing one of the links between cost pressures and wages that existed up more clearly thirty or forty years ago. Broadcaster with a set from Blackpark, Tom Keane wandering you walk to work today? Tom? How did you get in with the the traffic? I walked to work, of course, Key.

It was so busy and the security was so There's a little knoll on Central Park where the risk you can get down to pick me up. They usually do that at three SHO couldn't even do it today even know It's like where Nathan Hale was before he got over the third Avenue. It was tragically killed and it was like a revolution kind of thank good morning, David. Gr Lots lots going on here in New York. Terrific news flow. We'll get to that through the hour. Good

morning everyone, coast to coast and worldwide as well. Russ consters with us and just brilliant ideas for us over the last hour and a half with you. Let me tie in your work with one Jeffrey Rosenberg, he of Carnegie mel and Mr Rosenberger black Rock will join us on our FED show this tomorrow. Are you strategizing in a one unit one economy Gaussian probability world, a Bell curve of one America? Or are we so split in our wealth, in our inequality, in the amount of equity?

Were we so split that it's not only two America's politically, but it's who America's financially. For black Rock, well, certainly the economy looks different, and I think you're asking a very legitimate question. You We spoke back on on the air a few minutes ago about the wealth effect. Now the wealth effect goes exactly to your question. We've seen this enormous surgeon wealth household wealth up fifty in about six years. That is very significant for one part of

the country. It's almost irrelevant for another part, particularly to the extent that much of those wealth games came through the stock market, whereas you will know, many Americans simply don't participate. And I want to really emphasize, folks, this is something David and I've talked about, which is it's not East coast, West coast anymore, or you know Nashville saying they're the third coast. It's about in every region.

David helped me with the Carolinas here. I mean in every region, there's a city here, a city there that's booming. Is that right, David Caroline, you mentioned North Carolina where I'm from. Of course, a lot of that seems to center around places where you have us tuitions of higher education. You've got universities and colleges, and that seems to to

make a difference. And you see a lot of effort, particularly in western North Carolina, central and western North Carolina, to to kick start communities that had relied on furniture other forms of manufacturing. And then do we have a fed dealing with that Russ and then that lead us to bubbles. You know, Steve roach X Morgan Stanley now at Yale University. Uh lad the charge on bubble analysis? Are we bubbly? Are we bubblicious? Well? I think there's a couple of things. I mean, first of all, on

the FED. In fairness to the FED, people have leveled a lot of criticism at them. The FED really doesn't have the tool set to adequately deal with some of the issues we're talking about. You know, rates are very blunt instrument, and I'm not sure that the ideal mechanism to tackle inequality. Uh. In terms of bubbles, you know,

I don't think we're necessarily an equity bubble. What I do believe is that we're in this unusual set of circumstances where stocks and bonds are expensive at the same time. We haven't seen that, at least to this extent, in many decades. Let me ask you just about the prospect of change at the fedizer If we've talked about this a little bit this week and the week before, of course, fights chairs stand Fisher announcing his resignation effective in a

couple of weeks at time. Who knows what's going to happen to the FED chair. There are other vacancies on the FED as well. How what transformative is this moment for the FED? You know, it's it's a great question because we talked about the FED, we talked about the fans reaction function. But obviously the FED is an organic institution and it will change as its members change, Which raises the question, what is the FED gonna look like

in a year? Uh? You know, my my own view is I don't believe we're going to see a significant shift in policy, uh, given some of the comments from the administration, given some of the views they've expressed on the dollar, I would personally be surprised if we saw many of the open positions filled by UH economists or or or others that have a reputation as being fairly hawkish. Do you think we're to see more business people? In other words, is the day of the FED stacked with

with PhD economists coming to an end? Well, I don't think it's coming to an end, but I certainly think you will see more business people. There's been that Tennessee already with the administration up and again that's not necessarily a bad thing. I mean certainly the economy is changing in ways that are not fully captured by textbooks and getting some of that granular, more tactile experience. I don't

think that would be bad. And Browing Russ Costers, thank you so much for a perspective with black Rock with their strategy and sset allocation as well. David Burrick here in Washington, d C. And the Ronald Reagan Building for a Bloomberg Live event on the future of healthcare, Unlocking and supporting value. Tom Keane in New York and our Bloombergo eleven three oh studios, and I'm joined by Dr

Toby Constate with the CEO of the Cleveland Clinic. I'll be speaking with him a little bit late or on a panel with three other CEOs, the head of American Cancer Society, the head of Visor, and the head of Walgreen's Boots Alliance as well, and we're gonna be talking about value based healthcare. I told you, what is it, uh exactly? Help me do my homework here head to the panel. This is the new watchword. We're hearing this

a lot across the healthcare spectrum. What is it exactly? Well, currently and most places are being paid on the basis of uh, an individual procedure or treatment. And what we're really looking at is beginning to treat people on the basis of the outcomes and that and the idea is to keep people from getting sick, keep them out of the hospital, and we'll be paid on the basis of maintaining their health. And so the healthy you are, the better off it will be for us. And uh so

the objectives aligned with the patients. You say we uh, and I wonder what we means in this context. I'll be talking with you you run a big, big hospital, big medical center, and be talking to the head of the pharmaceutical company Walgreens Boots Alliance in the American Cancer scize. Well, are all the parties together working on this. Who's who's taking the league when it comes to this transition. Well,

the risk are really going to be on the providers. Uh. You know, we will be paid a certain amount per months, remember per months to look after patients. Uh, and we will be responsible for all of their care. Uh. And so the really the providers, I want to take the risk and the WIE as the providers, what's the risk exactly? It sounds at face like this makes a lot of sense that that you should be paying for something that works, you should be paying for things that are bundled, paid

for the whole the whole day. What's what's the risk that you're taking on with this transition. Well, the risk is UH twofold. First of all, Currently there's an upside risk. If we do better, we get to share in the UH in the difference if we then eventually it will be downside risk too. And if we don't do is well and cost less for taking care of patients, we're going to be responsible for that and we will lose money on it. So there's incentives both up and down.

Where did this this idea come from? Does it date back to Michael Porter at Harvard Business School who had this revolutionary idea? Why are we doing it at this point in time? Is it's something catalyzed by the Affordable Care Act? Well, it actually dates way back before that. Romney really I brought this in in Massachusetts, uh and with the idea and we've really been looking at a new way over the last decade or so on how we get paid in healthcare and what the objectives of

the reimbursements are. Ducher cosgrew wonderful to speak to you again after Davos this year, when when you look at the four or seven or eight, I can't keep count iterations of Republican proposed legislation in Congress, in Senate at six Pennsylvania Avenue. What's the best proposal for doctors and nurses? Well, I'm concerned about all of them. To be honest with you, I think the concern is that there's going to leave

a lot of people uncovered. Uh. And I frankly don't think that the bills, the repeal bills, deal with the base, the root cause of the problems. The root cause the problem is, I see, it is the rising cost of healthcare. And that happens really for two reasons. First of all, you've got an older population. Uh. And secondly, there's more things that we can do as healthcare providers to to take care of them. So you're seeing across the world increasing costs of healthcare. Uh and uh, none of these

bills really begin to deal with that. Are we going to go across Lake Erie and do a Canadian plan? Are we heading for some form of Canadian or United Kingdom plan? Well, I don't think that's a political reality at this point in the United States, I think that what I would like to see is that none of these repeals really take effect. If you look at the bill and you go back and what it really started out to do. It really wanted to increase coverage, which

it did. It needed to improve the quality of healthcare. And if you see across the country over the last eight years, gradually you've seen an improvement in quality of healthcare for hospitals. UH. And then UH, the thing that

it has not done well is control the cost of healthcare. UH. And so UH and I would hope that what we would see is UH coming together and a bipartisan fashion to begin to look at the cost of healthcare, both the efficiency of how we deal with patients who are sick, and also how we begin to keep people well and deal with the three epidemics which are really plaguing in the United States right now, which is smoking, obesity, and UH, the opiate condiction. David Gern, I want to get to

the opioid issue here at a moment. Thank you Allen Krueger of Princeton for important comments yesterday. Dr Cosgrove, David Gerrn, I have to rip up the script and we do that with Toby Cosgrove, who wandered out a medical school in three cups of coffee. Later was in Denaying running twenty two casualties, staging flight, trying to get people on airplanes so that they could live coming out of wounds in Vietnam. We do this with a backdrop of ken

Burns the Vietnam War. Yes, Mr Burns will join us. UM. We've been really trying to work with his schedule, and we'll have ken Burns on October. Dr Cosgrove George Will calls ken Burn's effort a masterpiece. What did you see in Vietnam that you need ken Burns to tell in his documentary? I think ken Burns will tell a story UM that is clearly the horror of war. UM. And there are no good, good guys or people who wear

a high how white hat and a war UM. And I think until you have participated in war and you really don't recognize the magnitude of the destruction it is in both human lives and property within that is the medicine that you learned. We've gone to a medicine that is so removed most of us barely know who the pediatrician is. Or maybe the surgeon wandering by and three levels you may be not even sure who's going to

operate on a given day. What can we learn about the medicine of another time and place around Vietnam, around the general care we knew that we can bring forward and rekindle today. Well, first of all, I think that you clearly recognize that the quality of care across the country has improved and dramatically over time, and uh, even since the time of the Vietnam War. Just uh, let me put it in perspective for you for a second.

During the Civil War, of everybody who was injured died an he started injury in Vietnam, ninety five percent of the people who are injured survived. Now it is closer to so the quality of the care, both for civilians

and the military has improved enormously. I think what is being lost and in fact, what we're trying to improve is, uh, the fact that we need to to concentrate on patients um and all of the things that surrounded patients, particularly the emotional aspects and the empathy that are require are

to drive that. And at the Cleveland Clinic, one of the things that we did is we UH said that our matra is going to be petting patients first and everything that that involves, and everybody in the hospital, whether you are a neurosurgeon or you're driving the bus, UH is uh. The reason that they're there is for patients. And I think once you're centered around that, it begins to change of the attitude that people have in the

empathy which they exhibit. My one of my first summer jobs was at UNC Hospitals in Chapel Hill, working with the department that looked into quality. It was clear that was becoming the rage in healthcare policy, doing better at measuring the quality of care, looking at how patients were fearing and how they felt. Where do things stand now

when you begin to assess the efficacy of treatment? Are we are we doing a better job of ensuring that the treatment is a quality treatment and that patients are doing better as a result. Yeah. We want people to come in the hospital to be safe, uh, free from errors and mistakes, and I think we're question that we are having a much more high reliability UH for our organization. The quality has improved, UH, and it is improved with

measurement UH. And one of the things that I think is so important is the transparency that goes with measuring quality. The transparency has to be both internal, uh two members of the healthcare team, and it has to be external to the community. And we've attempted to do that over time. But if you look at quality, quality really falls into three categories. Uh. It's the clinical quality, which we are

measuring like crazy. But until recently, we did not consider the physical nor the emotional quality that went with the hospitalization. And now we're much better at that um and measure it, report it, share it both internally and externally, and right down to individually. David, this is what you and I love to do, and this is what our team puts

together every day. Alan Krueger yesterday a prince and I believe you have Dr Cosgrow with you in Washington from the Cleveland Clinic, a Dr Toby Cosco, the CEO of the Cleveland Clinic. And I'm still thinking about many of the statistics that Dr Krueger brought up yesterday on the show, among them that nearly half of prime age men, men between the ages of twenty five and fifty four who aren't in the labor force, take pain medication on a

daily basis. Two thirds of those men are about two million of them take prescription pain medication on a daily basis, and brings some economics to what is a crisis in this country, the opioid crisis. Dr Toby Cosco has been thinking about and speaking out about this as well. Give us the lay of the land that we talk about it as a crisis. What constitutes that particular crisis? How

bad are things as you see them? Well, I think if you look at it just in terms of deaths UH, this year there will be sixty two thousand deaths UH from overdoses. UH. That compares of what went on in Vietnam and then the total Vietnam War there are fifty eight thousand deaths UH. They expected to go to ninety thousand deaths over the next three years, which is UH doesn't begin to talk about the number of overdoses that there are. Just in Caihua County, we saw over seven

thousand overdoses come into hospitals uh uh in the last year. UH. And that doesn't count the financial uh cost of maintaining this, nor the social or emotional costs of looking after these patients. It's really ah escalating at a very fast pace. How did we get here? And we don't need to to assign culpability if if you don't want to do that, but this is certainly something that has, as you say, taken off. How do we get to this point where so many people in the US are taking these kinds

of drugs. Well, first of all, you know, we have had a try to maintain people without pain. Uh. And I think that you have to say that inadvertently the medical profession was responsible for a lot of this. We had gave out pain medication, and people did not realize the addictive nature of a lot of the new pain medications. Octic coding, for example, is UH was touted as not being as addictive as UH codeine was UH, and so

it was prescribed widely. And then on top of that, pain became one of the new vital signs, and people trying to contain people's pain by medicating them uh. And then the government began to reimburse us on the basis of how well we looked after people's pain. All these things began to suggest that physicians should give more and more pain medications, which they did. Um. And Uh. It turns out right now that of heroin attics started with

some sort of perscrission drug. Uh. And then on top of that, Uh, we have seen uh an influx of new medications um. Uh they have seen um coming in from China. Now, Uh, what you have have begin to drugs that begin to be a hundred times more potent than morphine. Uh, and they're now being laced into the drugs, and so you may get a drug that has been laced uh and invertly way overdose from that. It goes back to the conversation we're having before the breaking part.

We're talking about measuring quality. There's certainly been efforts to measure pain as well. Is is the measuring of pain is subjective thing. I know we've counted on patients to rate with the smiley face to the wincing cartoon face, how they're they're feeling at this point, Uh, is that still a problem measuring how much pain the patient is in and when the patient needs to take the kind of medications that we're talking about, No question about it.

It is a subjective measurement and various. If I remember one time I had a kidney stone and I was well medicated, and uh, in in fact, that hurt a lot and so I just wanted more something. Yeah, please get rid of the pain. Um. But you know, we have to understand that about of people in the United States at some time in their life have back pain. And if we give all of those some sort of opioid medication, we're going to put a lot of that

medication out into the into the environment. And so we have begun to look at new ways we can begin to treat people with back pain. Not everybody needs to have some sort of medication. Uh. And so we've treated with psychological support, with physiotherapy, et cetera. You're a Williams guy, I believe you know there's a small school up in New Hampshire called Dartmouth. Not that you'd pay attention to that, but when you when you in the Dartmouth grad Center,

Apportman of Ohio get together and talk about opioid. Portman's had the courage to lead on this. How do we get from Portman's leadership to Ohio solution or the beginning of solution on this this heroin opioid epidemic. Well, I think the first thing we have to do is recognize the magnitude of the problem. Uh. And I think that generally not recognize what a serious problem that is. And I don't think it was generally recognized until fairly recently

even amongst the medical profession. Um, and certainly it is not recognized amongst the general population. And until such time as people understand the magnitude of the problem, we're not going to get a solution to it. Because the solution is not just uh located in the medical profession. It's not just located uh in the public. It's frankly, it's gonna end and require education in the schools. It's going to require the physicians, it's going to require the law enforcement.

It's going to require uh, the appreciation of this by legis legislators. Uh. So all of society has to begin to understand what it is, how serious it is, and and um the METI factorial approach to fixing it. Do you blame doctors? I mean, we we all perceive I know, Dr. Costco, if you're gonna be nice on this, But the fact is, David and I and everyone we know perceives quality or levels of doctors. Is there a part of the doctor

during industry that's really been wrong on opioids? Well, I think all of us frankly, did not appreciate the magnitude of the problem. We didn't understand how addictive the drugs were.

We didn't understand, uh the propensity that some people have to get easily addicted to some of these and uh so it's a process of education, educating us as a profession, and uh so we certainly are culpable or part of the issue we uh We talked to Dr Krueger yesterday is as we've mentioned, and one of the things he said is Washington's very good at convening meetings. You can get stakeholders to the table. We can talk about these issues, we can outline how big a problem it is. But

solutions are another thing entirely. Imagine you've thought about what could be done differently or should be done going forward. Is it going to be something that emanates from this the nation's capital. Is it going to be done at the state, local level? What could make a market change here? And what we're seeing, Well, first of all, you know, I think it has to be all of these. Uh you know, let me tell you what we've done locally. We've begun to enter into reducing the amount of uh

pain medications that we give to our patients. The state has now said that you get a seven day for adults uh in five days of prescription for children. UH. We have made it easier to understand about how people have had a successive prescriptions and so we uh so we can get that from the electronic medical record. We have begun to have education both for the community and

uh for our physicians. We've begun to look at uh narcan, which is the antidote for overdose, and make that so you can get it without a prescription, UM and all. And we've begin to expand our treatments UH locations and capabilities to deal with people who are addicted. So that's sort of what's going on and the local ground level. Obviously Washington can help a lot with dancing and by being um a voice about the magnitude of the problem,

particularly coming from the president. UM. But uh so it's going to I think there's lots of things that can come together. It can begin to help. I've got about thirty seconds left here. When somebody becomes addicted to these kinds of drugs, what is it like to get off of? How do you? How do you how do you begin to do it? Well? First, of all, I think you have to understand the problem and have to enter into

a treatment. Uh. And treatment really is, depending on the magnitude of the problem, can be drug assisted UM and that's has been increasingly successful for people who have done that. Talk to Tubacatro, thank you very much for the time today joining us. Who knows the shock of the deficits. Douglas Holtz, he can he joins us on her phone lines or olds he can anything to talk about here. But I guess we go to the deficit. You have a vector of deficit to GDP growth that borders on frightening.

Is anyone in Washington where of where our deficit to GDP is heading? I'd say people are aware of. The Congressional Budget Office has issued numerous reports, including the Long Term Budget Outlook, that paying a pretty dire picture, but it hasn't risen to the level of action so far. And the fundamental action that is needed is something which puts so Security, Medicare, Medicaid, the Affordable Care Act at the large federal health and retirement programs on a sustainable trajectory.

Right now, so Security scheduled to have to cut benefits across the board under two decades. That's a bad way to run a retirement program, and it's a disservice to the overall economy to have a big deficit. The Wall Street Journal reports this morning the stuff of Douglas holes Heekins nightmares. One and a half trillion dollar tax cut. Uh that isn't paid for? Uh is what happened to

the Republican Party. Didn't you used to be a Republican I mean, the Republican party with the deficit party at all? Where did those people go? I think they're still out there, But there is a division, uh, certainly in the folks who are running the House, sent in the White House right now. There's no evidence from his campaign that the

president is concerned at all about budget deficits. When he announced his candidacy, I remember distinctly him saying, I'm not going to touch so security, I'm not gonna touch Medicare. I'm just gonna go get the money. I don't know what that means, but certainly, any reasonable assessment of the fisc Closs says that you're going to have to make

sensible modifications of those programs. It's an imperative. So you know, the president sets the tone in any administration and in any UM Washington, and that's an important issue right now. Douglas seekin with this, the American Action Forum president, obviously former director of the CBO. But we all knew that Mike Rickie Alice Rivlin will join us on our FETE show tomorrow. Excellent. Well, and she invented it and the whole silly you can kick the thing forward. I'm not

sure that she would disagree with doug on the budget deficits. Uh, there is an argument monetary modern monetary theory. They're having a big convention UM next week, next month UM out in Kansas City. The people the adherence to this that suggests that because we have a printing press and we have a fiat currency, we can live with these deficits. It's not really a problem. And Uh, in essence, you can if you want to consider it monetization. The only

thing you have to be careful of his inflation. So, given the experience of the Obama administration and the big deficits that were run up in trying to get out of the the Great Recession, why just for the sake of argument, couldn't we have a tax cut like they're talking about and a deficit like they're talking about and still survive it. So I think in the end, you can't decide now whether you like or dislike the rumors of a trillion and a half dollar additional deficit over

the next ten years. That does depend on the quality of the tax policy. UH. There's no question that the US is growing poorly. It's transford activity growth is too low. UH, standard of living is rising too slowly. UH. Some combination of regulatory reforms, tax reforms, UH, and infrastructure and education are probably the best recipe. So we'll see what gets proposed there and I'll reserve judgment on that. But I think you have to always think about the death at

very differently. At this point in the cycle, we are essentially at full employment by any measure, versus when you had ten percent unemployment. Those are very different animals. These deficits are far more difficult to get rid of, and they're more important to get rid of. Michael mckaway US, you only agree because the Denver Broncos are doing better than good and Mike, it's always a good time to

speak to Dr whole Skin. Douglas hold Skin the American action for him, we talked about a vector for the deficit to GDP. Uh, Doug, is it a different vector? Is the makeup of our growing deficit to GDP different than the last time we did this ballet. Each time we do this, it becomes more and more a story that's just about the entitlement programs. I mean, if you go back to success in balancing the budget in the late nineties, that was largely accomplished by a the dot

com bubble. I don't think we want to have a big bubble again. Be caps on discretionary spending, the annual decisions by Congress. And we're in a very different world now. We're we're in a world where two thirds of the budget is so security, Medicare and Medicaid, federal health programs. Uh, those programs are growing faster at rates like six and seven. Then you could plausibly have revenue grow, which is about

four percent nominal. And in the end, those pro grams are growing so rapidly that they're really pushing out of the budget national defense, basic research, infrastructure, education, all the things our founders saw as the role of government. So we have a real problem both on the top line this nash Treen revenue and spending and in the composition of the budget when you look at those entitlement programs, do you have it? I suppose this is a naive question.

Stan Collender would say, there you go, thinking logically again, Um, that's illegal in Washington, didn't do that. Do you have any hope that as uh, maybe misquoting WC. Fields are missing attributing this, but the the nearness of a hanging may concentrate the mind. Do you think that we will see any action over the next few years in terms of the the the entitlement programs? Well, I mean really

two thoughts in that. The first is how important it is to move quickly, because it takes a long time to change those programs, and and changes have to be faced and people have to know what the deal is on their retirement for examp of Well, so there is some you know, urgency in my mind that's making some steps forward. And if you don't, the only thing you'll be able to do to close the deficit in the

crisis jack of taxes. And generally you're in a crisis because the economy is not performing well, and that's gonna be the wrong time to be doing that. So you want to avoid that that sort of constellation of problems by getting going. Now, the one thing we did see this year was the House and the Senate take up healthcare bills, and if you look inside those bills, those were major reforms of two entitled programs, Medicaid and the Affordable Care Act. Whether you like those reforms or not,

and that's a different debate. The fact that they took up entitle reform I think was really a tremendously important thing. It looks like the sentence trying to revive that effort. I don't know if there's any real reason to be be optimistically getting done, but we do need to take on these rising spending programs and do it in a way that's sensible for the beneficiaries. Well, speaking of the entitlement programs in healthcare, you just mentioned, it looks like the

the dead have arisen in Washington. Graham Cassidy, Uh, It's sort of two questions about this. But first, um, what do you think the odds are that the Senate would actually pass this? Oh? I think they're they're well less than fifty as we speak. But there has been a remarkable change in sentiments on the ground in the past week. I think even last Friday, there was no real reason to believe that Graham Cassidy was other than an exercise

by its authors. But Republicans in the Senate have heard repeatedly from the people back home that they're unhappy with their failure. They're hearing from the donors that they're unhappy with their failure, and they are now serious about taking this back up. And that that's a sea change for me even a week ago. And I'm quite surprised by that. So we'll see how it evolves. I still don't see how it gets over the finish line, but um, the

fact that they're even taking it up, I think is important. U. Let me follow that up with this question here and talking about the tax reform and the healthcare programs. Senator John Kennedy, this is not the old John, obviously, Senator from Louisiana. Yes, he said, he's quoted in the Wall Street Journalist Morning quote. For every economist, there's an equal

and opposite economist, and they're usually wrong. Do you think the financial crisis did such damage to the reputation of economists that politicians feel completely free now to ignore whatever recommendations and economists may come up with if if it

doesn't fit their preconceived idea. I don't know if it was just the financial crisis, but I do think you know, during the course of my career, I've been concerned that economists have oversold their capacity to forecast the economy, forecast the impact of policy changes, and basically fine tuned business cycles from Washington that that's never been a big success, and they're a long track record of of failure in that front. The financial crisis. Don't saw that comming out.

I don't think that's helped um, but you know, it's it's not just economists. You you could also appeal to your common sense and uh, some of the things that are that are going on. For example, having a projection in the in the budget where interest on public borrowing will be the third largest program in the federal budget in ten years. I mean, that doesn't take it consteralize. Jeez, you're tying up all the money on just paying interest.

This is an important insight, Mike, thank you to bring this up, and we consider Sender Kennedy to be of great value when he speaks with Bloomberg Surveillance, Doug, I'm going to disagree with the polarity of economists. There's one guy over there, there's another woman over there. They don't agree, and it makes for great TV or radio. The fact is, is a common central tendency to economists on a Venn diagram. There's a lot of commonality between John Taylor Stanford and

Paul Krugman of Princeton. And the issue is within the crisis that central tendency was so far off I would go to the center rather than the polarities at Senator Kennedy brings up, I think that's a fair comment. I really do. I mean mccamas builds do agree, and um, the places where they don't agree get the most attention. And quite frankly, the notion that somehow e commists are uniquely equipped to to do forecasting, I think it's misplaced. I mean forecasting the teacher isn't hard like this is

critically important? Is not? A Rabenia stated what everybody got wrong was the amplitudes. A lot of people predicted it, but we completely missed the sign functions, the amplitudes of these shocks and the crisis. Question From a listener here, Tom uh for doug as Congress considers fiscal policy and they're looking at gigantic tax cuts as as it um. They want to know which stimulus works best. I mean the government can buy things, can increase transfer payments we're

talking about that, can cut taxes. Uh, can use corporate tax provisions. Um. What would be the best thing, the most effective thing to boost growth? So, Uh, this is not a stimulus um moment. We are essentially at full employment. There are very few opportunities for low hanging fruit where you put people back to work and do Keynesian style stimulus. This has to be genuinely focused on the supply side of the economy and raising the trend rate of growth

and and doing that by raising productivity growth. So what is interesting about this set of discussions about tax formers. They are very much focused on the business tax issues and on the capacity of businesses to invest, innovate, do it in the United States and and higher workers and agin them raises. Uh. That's the key, and that's that's the test by which you should judge the tax proposals. If it's provide cash individuals to go out and spend, there's not gonna be much out of that. That has

no no lasting impact on the economy. Thank you so much, Douglas huls A good generous of you to be with us this morning with the American action for him. Michael McKee is at the exit stage right, and it's good to have Mrs Lund Chris with us joining us now Scarlet Food of of fame and fortune. Tomorrow we have our fed day Scarlet Food leading our coverage with Bill Gross every two PM as well. But now is a

lovely annual visit. We treasure this visit with a guy fourteen years in of building hockey from a comedy of four hundred some whatever the small amount of money was into a billion dollar business. I want to ask one question. I know Scarlett really wants to drive forward the present business converse station where you are now, what's the next stage for NHL. You had your huge Canadian TV deal, you this success of NBC up sports hockey. What's the

next big commissioner like transaction for you. Well, first of all, it's good to be with you for our annual visit. And I know time flies when you're having fun, but it's actually been twenty four plus years through a decade. He's okay, you know, it's you get to be our age every year matters. Uh, We're very excited about the start of the season. UH. For us, the opportunities presented by digital platforms and the social media really gives us

a way to connect with our fans. Our fans tend to be very tech savvy, very avid, and since historically, and I'm now talking thirty years ago, we were underserved by traditional media, the current landscape gives us a lot of great opportunities. Secondly, we currently have two teams in China and the opportunity to grow the game worldwide. There are a lot of places throughout the world where hockey

is already strong. Roughly of our players come from outside and Mr would suggest that would be as Sweden actually is the largest exporter of NHL players. And I'm out of touch. Is Yager in a uniform this year? Not yet? Are you working on that? I don't work on that is saying that it's a good there's a good chance we'll see No, No, I don't know. I don't know. He doesn't have a contract. And he's a great ambassador for the game. He's one of the great players of

the game. And we'll see if he hooks onto those of you globally. Not a hockey. Yeremi Hugger is two. You can still quite that Charlett. He works harder than any other twenty year old player. You talked about digital platforms. The NHL streamed a handful of games on Twitter last season. What did you learn from that experience, what worked, what needs to be tweaked refined? Well, the the issue I think ultimately is going to be not just taking broad

cast content and stream it. It's whether or not, Uh, some of the social media or other digital companies decide that they're gonna produce games differently. That may be directed more to the way that excuse me, perhaps that's a surveillance sneeze that perhaps millennials and Gen z s will want to consume the games differently. We don't know that that's the case, because frankly, Rogers in Canada and NBC in the United States do incredible jobs covering our games.

But as more and more young people are either cord nevers or there are cord cutters, we have to make sure that however we're presenting the game is relevant to particularly young people. How do E sports fit into that? Then? I view E sports as an opportunity for us to teach people the game and to use this hockey to them, introduce hockey to them, and to create a better sense

of community. Ultimately, what we're gonna work on is a series of competitions where fans of teams will compete against each other and have some you know, North American tournament that's called engagement. Tom very good, Okay, I didn't. I didn't miss that, Gary. You know that I've been a critic of the changes in the games. I sometimes want to get upset called the National Deflection League, which is the only way you can get the party doesn't. What

are you gonna do to open up the game? You've got some guys on NBC that used to play the game differently than it's played. Now, what are you gonna do to open up the game? And let me start with block shots? You got two guys in the ice gifted defenseman essentially being second and third goalies. Well, in effect, our game has what you called deflections because our players have never been more skilled. Coches have never been better

on their system. Having said that, the game has never been faster, never in terms of lead changes in the game and ability to have the unpredictability we have in our season would would we like to see it a little more open, perhaps if goaltenders were a little smaller. And I don't mean physically, I'm talking about equipment, which is something that we're working on that will open up

more space. Saw well, we we it's a work in progress and it's something we do with the Players Association and the Unofficial Goaltenders Union, and there's some resistance to some of the changes, which we understand because this is their livelihood. We we'd like to shrink the equipment, but not cause any risk of injury. I know, Scarlett, you've got I'm gonna ask one more question on this. I don't want you to go back to Gump Worsley. I don't want you to go back to me watching Don

Cherry and l Arbor block shots years ago. I want you to get back to what Rennick did the guy on NBC ron excuse me, Jeremy Ronick A Thay, and what he does on NBC, what he did for the black Hawks, which is a thirty or forty shot that goes by the guy. I would respectfully suggest that's missing. Well. You you would be an advocate of bigger nets, which would open up more angles, but I'll take a shrunken goalie equipment. But also physically, the goalies are bigger in

terms of height and weight than they've ever been. But it's not a problem, but it's a trend that we're watching and we'll make adjustments. One of the things we're doing as well is we're going to heighten the standard on slashing this year. Please. In the preseason game yesterday with the Rangers, we don't we don't want broken hands and fingers, particularly for the skilled players. So a slash adder around the hands, we're going to call him more tightly.

Love it, love it. We're breaking news this morning on this Okay, that's not breaking, that's okay. Well, I understand you talk about bigger goalies. The players are smaller, they're more skilled. I'm thinking of Tyler Wong, who was an undrafted rookie still on a minor league contract, played in the Golden Knights first preseason game How to Hat trick Um, but his size five nine highlights how much the league has changed during your tenure from what was once just

about size and braun it's speed and skill. The game we opened up the game. We we there are two things that play. One is because of the system we have, all of our teams can afford to be competitive. We have extraordinary competitive balance, the best in all of sports. And if you look at it, last season, seven teams made the playoffs that didn't make them the year before. And and I like competitive balance. I think it's a

little more elegant. But but also um, we the four of the five worst teams from the year before actually made the playoffs as well. So no matter who you root for, you have hoped that your team can make the playoffs. We opened up the game, um in terms of how it's called. There's less what they used to call obstruction, hooking and holding and clutching and grabbing, and so if you've got speed and you can got skill,

you can play this game. Let me ask you a final question here on the Vegas Golden Nights, Bill Fully, the owner of the team, has said that his team won't be available to bet on it some casinos on game day. Is there any plan for the league to ask bookies not to take better The answer is, we're not concerned about the betting on the game per se. There's a lot of betting going on, some of it legal,

some of it's illegal. What we want to do is make sure that the environment in the arena is typical of what you see at an NHL arena, which is fan friendly, kid friendly, and like, we don't want it. Not that there's anything wrong with it, but we don't want it, like, for example, at a race track where you can go get a ticket and go sit down and watch the event. We're looking you know, people are gonna bet we don't want to make it part of the same experience you mentioned last year in your ute

and wisdom. The resurgence of the Toronto A believes arguably the most valuable sports entity in the world. Some would argue that, but I don't. I'm with them on it. What's your insight this year on this season? Who are you watching? Um, it's it's well, well, what's gonna be interesting is the fact that we provided the Golden Knights with the deepest expansion dract you've ever had, so they will they should be more competitive, be fun to watch.

What when you look at our game, the number of young players across the league, whether whether it's Keel and Buffalo or a line a uh in Winnipeg or McDavid and Edmonton or Austin Matthews in Toronto and two or three other young players on each of those teams. Uh, this is a young man's game, Gary Batman, thank you, congratulations on another NHL season. 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