Trump's Fed Worker Buyout Plan on Hold; Amazon Can't Keep Up with AI Demand

Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.280 --> 0:00:10.840 Good morning. 0:00:10.880 --> 0:00:13.720 I'm Nathan Hager and I'm Karen Moscow. Here are the 0:00:13.760 --> 0:00:15.240 stories we're following today. 0:00:15.480 --> 0:00:18.479 Karen, we begin in our nation's capital. That's after a 0:00:18.520 --> 0:00:22.440 federal judge blocked President Donald Trump's plan to eliminate up 0:00:22.480 --> 0:00:25.360 to ten percent of the federal workforce. There was so 0:00:25.520 --> 0:00:29.720 called buyout. Bloomberg Zamy Morris reports from Washington. It isn't 0:00:29.760 --> 0:00:32.720 really a buyout. It's called a deferred resignation. But hours 0:00:32.720 --> 0:00:35.480 before the midnight deadline for workers to apply, the judge 0:00:35.560 --> 0:00:38.680 sided with several labor unions that had requested a temporary 0:00:38.720 --> 0:00:42.559 restraining order until Monday. Democratic Senator Mark Warner of Virginia 0:00:42.600 --> 0:00:43.600 applauds the delay. 0:00:43.720 --> 0:00:46.160 I don't believe it's been funded. I don't believe Donald 0:00:46.200 --> 0:00:49.279 Trump has any history of ever paying his bills, and 0:00:49.320 --> 0:00:52.360 I fear that federal employees may be marked for riffing, 0:00:52.680 --> 0:00:55.240 potentially without any conversation. 0:00:55.400 --> 0:00:58.600 The administration says as many as sixty thousand government workers 0:00:58.600 --> 0:01:01.080 have accepted the offer to reside with the promise of 0:01:01.160 --> 0:01:05.399 being paid their regular salary through September. In Washington, Amy 0:01:05.400 --> 0:01:07.000 Moore as Bloomberg Radio all. 0:01:06.959 --> 0:01:10.200 Right, Amy, thank you well. Treasury Secretary Scott Besson says 0:01:10.240 --> 0:01:14.160 he personally vetted the Treasury employees on Elon Musk's Government 0:01:14.200 --> 0:01:18.120 Efficiency Team with read only access to federal payment data. 0:01:18.440 --> 0:01:21.240 Besson added that there has been no tinkering with the 0:01:21.280 --> 0:01:25.440 Department's payment system. We spoke exclusively with Besson on DOGE. 0:01:25.680 --> 0:01:28.280 There's a lot of misinformation out there. First of all, 0:01:28.280 --> 0:01:32.160 when you say the DOGE team, these are Treasury employees. 0:01:32.480 --> 0:01:34.000 Are two Treasury. 0:01:33.560 --> 0:01:37.680 Employees, one of whom I personally interviewed in his final round. 0:01:38.040 --> 0:01:42.119 There is no tinkering with the system. They are on 0:01:42.360 --> 0:01:46.280 read only, they are looking. They can make no changes. 0:01:46.640 --> 0:01:49.960 It is an operational program to suggest improvement. 0:01:50.480 --> 0:01:53.400 And that's Treasury Secretary Scott Besson speaking of the Bloomberg 0:01:53.480 --> 0:01:56.400 Sila Mosen. You can catch the full interview on the 0:01:56.440 --> 0:01:59.880 Bloomberg Big Take podcast. Get it on Apples, Spotify, and 0:02:00.040 --> 0:02:01.480 always on the Bloomberg terminal. 0:02:01.600 --> 0:02:02.000 Well, Karen. 0:02:02.040 --> 0:02:04.440 President Trump's laying out more of his tax priorities. He 0:02:04.520 --> 0:02:07.400 met with congressional Republicans at the White House to discuss 0:02:07.440 --> 0:02:09.840 what he wants to see in a tax bill this year. 0:02:10.040 --> 0:02:12.680 White House Press Secretary Caroline Love It says the President 0:02:12.720 --> 0:02:15.160 wants to make good on his promises from the campaign. 0:02:15.440 --> 0:02:18.160 No tax on tips, which is obviously a very public 0:02:18.160 --> 0:02:21.000 campaign promise that the President made, no tax on seniors 0:02:21.080 --> 0:02:26.400 social Security, no tax on overtime pay, renewing President Trump's 0:02:26.400 --> 0:02:28.480 twenty seventeen middle class tax cuts. 0:02:29.120 --> 0:02:31.960 White House spokeswoman Caroline Lovit also highlighted two items that 0:02:32.040 --> 0:02:35.519 weren't discussed during the campaign, ending the carried interest tax 0:02:35.560 --> 0:02:37.919 break that lets private equity managers pay lower rates on 0:02:37.960 --> 0:02:41.720 their investments, and ending tax breaks for sports team owners. 0:02:42.000 --> 0:02:44.400 The White House says the President also wants to expand 0:02:44.400 --> 0:02:47.120 the deduction for state and local taxes. That's a priority 0:02:47.160 --> 0:02:49.320 for our Republicans from high tax states. 0:02:49.600 --> 0:02:52.280 One of President Trump's latest efforts to reshape the federal 0:02:52.320 --> 0:02:55.560 government is facing high profile resistance. The head of the 0:02:55.560 --> 0:02:59.120 Federal Election Commission, Ellen Wintraub, said she was fired in 0:02:59.200 --> 0:03:02.240 a letter from their resident, but she's not leaving. Wind 0:03:02.280 --> 0:03:05.280 Troub posted a copy of the letter on x and wrote, quote, 0:03:05.320 --> 0:03:09.480 there's a legal way to replace FEC commissioners. This isn't it. 0:03:09.880 --> 0:03:12.320 Wine Trub was appointed to a six year term more 0:03:12.320 --> 0:03:15.840 than twenty years ago under federal law commissioners are allowed 0:03:15.880 --> 0:03:19.040 to stay past their terms until a replacement is named. 0:03:19.240 --> 0:03:21.560 Well, Karen, for the first time, I'm sorry. For the 0:03:21.600 --> 0:03:24.640 third time in just two weeks, there may be another 0:03:24.840 --> 0:03:28.960 deadly disaster over US guys. Bloomberg's John Tucker is here 0:03:29.000 --> 0:03:29.919 now with what we know. 0:03:30.000 --> 0:03:31.040 John Nathan. 0:03:31.200 --> 0:03:34.160 A Bearing Air flight has been reported missing as it 0:03:34.200 --> 0:03:36.760 was headed to Noel, Alaska, with nine passengers and a 0:03:36.800 --> 0:03:39.480 pilot on board. This happened at about four pm local 0:03:39.520 --> 0:03:42.600 time yesterday. The rescue crews are scaring the ground for 0:03:42.680 --> 0:03:45.680 any sign of the wreckage of this Cessna jet. If 0:03:45.720 --> 0:03:48.280 no survivors are found, the tragedy would mark one of 0:03:48.320 --> 0:03:51.840 the worst concentrated periods in aviation history in the US. 0:03:52.360 --> 0:03:54.440 Americans are still coming to terms with a death of 0:03:54.520 --> 0:03:58.040 sixty seven people in Washington after that regional jet in 0:03:58.080 --> 0:04:01.720 a military helicopter collided mid air or January twenty ninth. 0:04:02.040 --> 0:04:05.400 Just days later, a Metavac playing crash soon after takeoff 0:04:05.400 --> 0:04:08.920 in Philadelphia with a sick child and five others on board. 0:04:09.360 --> 0:04:13.360 Meantime of that Washington, DC crash, investigators say it was 0:04:13.600 --> 0:04:17.240 likely the pilots of the military helicopter We're wearing ninth 0:04:17.320 --> 0:04:21.880 vision goggles, which can limit their peripheral vision. I'm John Tucker, 0:04:21.880 --> 0:04:22.719 Bloomberg Radio. 0:04:23.000 --> 0:04:24.120 All right, John, thank you. 0:04:24.160 --> 0:04:24.320 Well. 0:04:24.360 --> 0:04:26.800 We now turn to the markets, where mag seven is 0:04:26.839 --> 0:04:30.520 in focus once again. Shares of Amazon are down more 0:04:30.560 --> 0:04:33.440 than three percent in early trading. The company is warning 0:04:33.440 --> 0:04:36.400 investors that it could face capacity constraints in its cloud 0:04:36.440 --> 0:04:39.679 computing division. That despite plans to invest about one hundred 0:04:39.720 --> 0:04:41.839 billion dollars this year, with most of the money going 0:04:41.880 --> 0:04:45.320 toward data centers, homegrown ships, and other equipment to provide 0:04:45.400 --> 0:04:50.599 artificial intelligence services here CEO Andy Jasse on the company conference. 0:04:50.200 --> 0:04:54.479 Call, AI represents for sure the biggest opportunity since cloud 0:04:54.520 --> 0:04:58.479 and probably the biggest technology shift and opportunity and business 0:04:58.520 --> 0:05:01.640 since the Internet, and so well, I think that both 0:05:01.839 --> 0:05:06.560 our business, our customers as shareholders will be happy medium 0:05:06.600 --> 0:05:09.400 to long term that we're pursuing the capital opportunity and 0:05:09.480 --> 0:05:11.279 the business opportunity. 0:05:10.640 --> 0:05:13.640 In AI and Amazon CEO Andy Jasse He says the 0:05:13.680 --> 0:05:16.640 AI race will likely way down profits, operating income will 0:05:16.640 --> 0:05:19.480 be fourteen billion to eighteen billion dollars, and that's below 0:05:19.520 --> 0:05:20.640 analyst estimates. 0:05:20.760 --> 0:05:23.159 Well, soon the focus is going to turn to the economy. 0:05:23.240 --> 0:05:27.240 Karen investors are waiting for the January jobs report. Economists 0:05:27.320 --> 0:05:29.440 are looking for an edition of one hundred and seventy 0:05:29.440 --> 0:05:33.200 five thousand jobs. Let's get a preview from Bloomberg's Michael McKee. 0:05:33.320 --> 0:05:36.800 Perhaps it's reversion to the mean. Economists anticipate we had 0:05:36.880 --> 0:05:40.880 much slower job growth in January after December's blowout report. 0:05:41.320 --> 0:05:44.840 January also a month when holiday helped leaves payrolls, and 0:05:44.880 --> 0:05:48.360 this year there are also likely significant job losses from 0:05:48.400 --> 0:05:51.760 the fires in Los Angeles. Unemployment, however, is forecast to 0:05:51.760 --> 0:05:55.560 be reassuring no change, indicating that while companies may not 0:05:55.640 --> 0:05:58.880 be hiring, they aren't letting workers go. If the labor 0:05:58.880 --> 0:06:01.640 market remains solid, it will help the Fed make the 0:06:01.680 --> 0:06:04.840 case for leaving interest rates unchanged for longer to keep 0:06:04.880 --> 0:06:08.200 the pressure on inflation. Michael McKee, Bloomberg. 0:06:07.800 --> 0:06:10.880 Radio, All right, Mike, thanks, as we await that rapport. 0:06:11.040 --> 0:06:14.200 Dallas Fed President Lourie Logan is skeptical that more rate 0:06:14.240 --> 0:06:17.480 cuts are necessary. She's spoke at an event in Mexico City. 0:06:17.800 --> 0:06:19.799 I what if inflation comes in close to two percent 0:06:19.839 --> 0:06:22.120 in coming months, Well, that would be good news. It 0:06:22.200 --> 0:06:24.880 wouldn't necessarily allow the FMC to cut rates soon in 0:06:24.920 --> 0:06:27.200 my view, and. 0:06:27.160 --> 0:06:29.800 Dallas FED President Lorie Logan did say the Fed would 0:06:29.880 --> 0:06:36.560 likely lower rates if the labor market deteriorated. Time now 0:06:36.560 --> 0:06:38.440 over look at some of the other stories making news 0:06:38.440 --> 0:06:39.960 in New York and around the world, and for that 0:06:39.960 --> 0:06:41.799 we're joined by Bloomberg's Michael Barr. 0:06:41.839 --> 0:06:43.559 Michael, good morning, Good morning, Karen. 0:06:43.680 --> 0:06:46.800 Get ready for another round of winter weather this weekend, 0:06:47.120 --> 0:06:49.560 Bloomberg Medeu Religious Rob Carolyn as the. 0:06:49.600 --> 0:06:52.640 Latest, Michael, Yet another winter storm headed towards the mid 0:06:52.720 --> 0:06:55.520 Atlantic and Northeast for this weekend. Winter storm watches of 0:06:55.600 --> 0:06:57.599 up for the New York City area and for Boston. 0:06:57.680 --> 0:07:00.600 Saturday night and into Sunday. We'll see snow, sleet, and 0:07:00.680 --> 0:07:03.160 rain developing in the district. Tomorrow afternoon it changes to 0:07:03.279 --> 0:07:05.440 rain there not a big deal, but we could see 0:07:05.440 --> 0:07:07.599 three to five inches of snow in the city during 0:07:07.880 --> 0:07:10.400 Saturday night and into Sunday, and more the same in Boston. 0:07:10.800 --> 0:07:12.679 I'm Rob Carolyn, Bloomberg Radio. 0:07:12.960 --> 0:07:13.520 Thanks Ron. 0:07:13.960 --> 0:07:17.120 Panama's president is calling a statement by the US State 0:07:17.160 --> 0:07:21.880 Department in absolute falsehood. The department writing American vessels would 0:07:21.920 --> 0:07:25.680 no longer have to pay charge fees at the Panama Canal. 0:07:26.240 --> 0:07:29.840 The dispute comes days after Secretary of State Marco Rubio's 0:07:29.840 --> 0:07:34.040 first overseas trip to the Central American country. Rubio says 0:07:34.080 --> 0:07:35.880 he's not confused about the situation. 0:07:36.280 --> 0:07:40.160 I respect very much that Panama has a process. They're 0:07:40.960 --> 0:07:43.160 democraticly elected government. 0:07:42.800 --> 0:07:45.120 They have rules, they have laws. 0:07:45.360 --> 0:07:48.080 They're going to follow their process, but our expectations remain 0:07:48.160 --> 0:07:48.560 the same. 0:07:48.800 --> 0:07:53.080 Panama's President, Jose Roe Milinos, says that he will speak 0:07:53.120 --> 0:07:57.800 with President Trump today. Ron Supreme leader says that negotiations 0:07:57.800 --> 0:08:01.920 with America are not in tell gent wise or honorable. 0:08:02.320 --> 0:08:05.920 After President Trump floated nuclear talks with tey ron I, 0:08:06.040 --> 0:08:09.760 had Toola al Kameni also suggested that there should be 0:08:09.800 --> 0:08:13.200 no negotiations with such a government, but stop short of 0:08:13.240 --> 0:08:17.520 issuing a direct order not to engage with Washington. Bird 0:08:17.560 --> 0:08:21.960 flu has sent the price of eggs skyrocketing, impacting everything 0:08:22.040 --> 0:08:25.400 from big chain grocery stores and restaurants to the local 0:08:25.480 --> 0:08:30.000 sandwich shops. At Benny's Deli in Queen's, the five dollars 0:08:30.000 --> 0:08:32.680 fifty cent bacon, egg and cheese sandwich has been the 0:08:32.679 --> 0:08:37.400 mainstay of morning business. However, owner Anthony Bonavita says soon 0:08:37.520 --> 0:08:39.360 he may be forced to raise prices. 0:08:39.800 --> 0:08:43.240 I'm trying to hold on, you know, but most I 0:08:43.240 --> 0:08:44.560 will go up as a dollar buck. 0:08:44.760 --> 0:08:45.640 I don't even want to do. 0:08:45.640 --> 0:08:48.719 That, Bonavita says. An average case of eggs used to 0:08:48.800 --> 0:08:51.719 be sixty to seventy dollars. Now he's paying over two 0:08:51.840 --> 0:08:54.960 hundred and twenty dollars. Global News twenty four hours a 0:08:55.000 --> 0:08:57.480 day and whenever you want it with Bloomberg News. 0:08:57.559 --> 0:08:57.679 Now. 0:08:57.840 --> 0:08:59.720 I'm Michael Barr, and this is Bloomberg. 0:09:00.280 --> 0:09:06.880 All right, Michael Barr, thank you time now for the 0:09:06.880 --> 0:09:10.640 Bloomberg Sports Update, brought to you by Trying Staineoudie. Here's 0:09:10.720 --> 0:09:13.079 John Stashauer. John, Good morning, gim MONI Karen. 0:09:13.080 --> 0:09:15.440 For the first time ever, brothers will be members of 0:09:15.480 --> 0:09:16.760 the Pro Football Hall of. 0:09:16.679 --> 0:09:18.520 Fame, but not the Mannings. 0:09:18.559 --> 0:09:21.600 Many Giants fans were hoping Eli would join Peyton, but 0:09:21.679 --> 0:09:24.080 Eli did not get in, and on the first ballot anyway, 0:09:24.160 --> 0:09:27.120 former Green Bay whiteout Sterling Sharp was named and he 0:09:27.200 --> 0:09:30.760 joined his brother Shannon also named production former Chargers tight 0:09:30.840 --> 0:09:34.040 end Antonio Gainton, eight time Pro Bowler, six time Pro 0:09:34.080 --> 0:09:37.600 Bowl cornerback Eric Allen, and pass rusher Jared Allen. The 0:09:37.640 --> 0:09:40.719 four player class the smallest in twenty years also in 0:09:40.760 --> 0:09:43.040 New Orleans. Out of the Super Bowl, Josh Allen named 0:09:43.120 --> 0:09:46.040 NFL MVP in the closest votes since two thousand and three. 0:09:46.240 --> 0:09:49.400 He edged out Lamar Jackson. The same voters had named 0:09:49.480 --> 0:09:52.280 Jackson as the first team All Pro Quarterbacks. SA Kwan 0:09:52.360 --> 0:09:54.679 Barkley won Offensive Player of the Year. He's getting ready 0:09:54.720 --> 0:09:56.760 for his first Super Bowl. In his six years with 0:09:56.800 --> 0:09:59.360 the Giants, Barkley only once even went to the playoffs. 0:09:59.440 --> 0:10:02.920 His season affiliate course as far surpass all he went 0:10:02.960 --> 0:10:03.920 through in New York. 0:10:04.240 --> 0:10:07.600 Losing or diversities and the injuries that I went through, 0:10:08.760 --> 0:10:11.559 you know the reason why I'm able to be at. 0:10:10.840 --> 0:10:11.480 The age I am. 0:10:11.559 --> 0:10:13.280 And after all those injuries, I never gave up. 0:10:13.320 --> 0:10:14.360 I never lost hope. 0:10:15.040 --> 0:10:17.480 You know, I just thought that I always saw this 0:10:17.520 --> 0:10:19.960 moment coming. I always saw this success coming. At the time, 0:10:20.000 --> 0:10:21.199 I thought it was going to be still in the 0:10:21.240 --> 0:10:22.280 New York Giant uniform. 0:10:22.440 --> 0:10:24.680 The Chiefs are one point favorite with the Eagles, so 0:10:24.800 --> 0:10:27.080 Super Bowl fifty nine expected to be a close one. 0:10:27.200 --> 0:10:30.800 Kansas City's won seventeen straight one score games, and his 0:10:31.000 --> 0:10:33.960 three recent Super Bowl wins, Chiefs trailed in the fourth 0:10:34.000 --> 0:10:36.040 quarter every time Dallas lost at home to Vegas three 0:10:36.080 --> 0:10:38.119 to one. The Capitols won four to three at Philadelphia. 0:10:38.160 --> 0:10:40.640 The Celtics lost at home to Dallas one twenty seven 0:10:40.720 --> 0:10:42.800 one twenty Anthony Davis yet to play for the MAVs 0:10:42.800 --> 0:10:45.560 and Luca Dohnston's yet to play for the Lakers, expecting 0:10:45.559 --> 0:10:48.319 to play the Monday Lakers beat Golden State one twenty 0:10:48.360 --> 0:10:51.439 to one. Twelve forty year old Lebron James scored forty 0:10:51.520 --> 0:10:54.160 two points. Saint Johnson I brings its nine game winnings 0:10:54.160 --> 0:10:57.600 straight to Yukon, taking on the two time defending national champs. 0:10:57.679 --> 0:10:59.920 John Stan Shaward Bloomberg Sports carry. 0:11:02.080 --> 0:11:06.200 Coast to coast on Bloomberg Radio, nationwide on Serious XM, 0:11:06.400 --> 0:11:09.240 and around the world on Bloomberg dot Com and the 0:11:09.280 --> 0:11:12.400 Bloomberg Business app. This is Bloomberg Daybreak. 0:11:12.679 --> 0:11:13.160 Good morning. 0:11:13.160 --> 0:11:16.560 I'm Nathan Hager bringing you now our extended conversation with 0:11:16.679 --> 0:11:21.000 Treasury Secretary Scott Besson, speaking with Bloomberg Salaiah Mosen from 0:11:21.040 --> 0:11:24.000 the cash room of the Treasury Department in Washington, d C. 0:11:24.520 --> 0:11:27.640 They talked about Beson's plans for the dollar, tariffs trade 0:11:27.640 --> 0:11:31.240 and more, but they began by addressing Elon Musk and 0:11:31.320 --> 0:11:35.760 the Government Efficiency Team's involvement with the Treasury's federal payment system. 0:11:35.840 --> 0:11:38.640 Let's go now to that conversation right now. 0:11:38.679 --> 0:11:42.400 There is widespread concern about the DOGE team's access to 0:11:42.600 --> 0:11:46.440 sensitive payment systems. Are you worried at all that that 0:11:46.679 --> 0:11:51.240 access and that tinkering of the payment systems could affect 0:11:51.240 --> 0:11:53.000 the Treasury's market or cause any disruption? 0:11:53.320 --> 0:11:55.959 Good, well, Hilia, thank you for asking me about that, 0:11:56.120 --> 0:11:58.880 because there's a lot of misinformation out there. First of all, 0:11:58.880 --> 0:12:02.839 when you say the doche team, these are Treasury employees. 0:12:03.080 --> 0:12:07.079 Are two Treasury employees, one of whom I personally interviewed 0:12:07.120 --> 0:12:11.040 in his final round. There is no tinkering with the system. 0:12:11.559 --> 0:12:15.640 They are on read only. They are looking. They can 0:12:15.720 --> 0:12:20.559 make no changes. It is an operational program to suggest improvement. 0:12:20.679 --> 0:12:24.200 So we make one point three billion payments a year. 0:12:24.840 --> 0:12:28.960 And this is two employees who are working with a 0:12:29.000 --> 0:12:31.960 group of long standing employees. 0:12:32.559 --> 0:12:35.360 The letter that the Treasure Department sent earlier this week 0:12:35.400 --> 0:12:40.400 talked about how the team currently does not have access 0:12:40.520 --> 0:12:43.040 to change the system. Have they at any point this 0:12:43.120 --> 0:12:45.240 year had the ability to make changes. 0:12:45.520 --> 0:12:46.240 Absolutely not. 0:12:46.640 --> 0:12:49.360 This is no different than you would have at a 0:12:49.440 --> 0:12:52.120 private company. And by the way, the ability to change 0:12:52.160 --> 0:12:55.559 the system sits over at the Federal Reserve, so it 0:12:55.600 --> 0:12:59.000 doesn't even lie in this building. So they could make 0:12:59.120 --> 0:13:03.200 suggestions on how to change the system, but we don't 0:13:03.200 --> 0:13:04.480 even run the system. 0:13:04.840 --> 0:13:08.200 And if they ask for if they request the ability 0:13:08.200 --> 0:13:09.800 to change the system, would you grant that. 0:13:10.440 --> 0:13:14.120 No, again, they have no ability to change the system. 0:13:14.240 --> 0:13:17.960 I have no ability to grant that change. That they 0:13:18.160 --> 0:13:20.960 can make suggestions, then it would go to the Federal 0:13:21.000 --> 0:13:25.720 Reserve and just like any large erp system, there would 0:13:25.760 --> 0:13:27.960 be tests. There would be this, there would be that, 0:13:28.320 --> 0:13:31.600 and then the FED will determine whether these changes are 0:13:31.720 --> 0:13:32.360 robust or not. 0:13:33.480 --> 0:13:36.439 As the Secretary of Treasure, you also oversee the IRS. 0:13:36.720 --> 0:13:39.400 Do you know what kind of access the team has 0:13:39.480 --> 0:13:42.640 to IRS data or individual taxpayer data? 0:13:42.960 --> 0:13:46.160 Well, I'm glad you asked that too, because look, the RIRs, 0:13:46.480 --> 0:13:50.320 the privacy issue is one of the biggest issues, and 0:13:50.520 --> 0:13:54.000 over the past four years we've seen a lot of 0:13:54.120 --> 0:13:58.240 leaks out of there. The IRS systems are quite poor. 0:13:58.679 --> 0:14:02.520 When I started college in nineteen eighty, I learned the 0:14:02.559 --> 0:14:06.200 program in Cobyl. I think there are twelve different systems 0:14:06.280 --> 0:14:10.000 at the IRS that still run on Cobyl. But as 0:14:10.040 --> 0:14:14.559 of now there is no engagement at the IRS, and if. 0:14:14.400 --> 0:14:17.040 They request that access, would you sign off on that request? 0:14:17.880 --> 0:14:20.560 They haven't, so we'll take that when it comes to it. 0:14:21.200 --> 0:14:23.680 I think there is a lot to do there, but 0:14:24.520 --> 0:14:29.760 the president was elected with a big agenda and to 0:14:29.800 --> 0:14:35.280 the extent that getting the IRS in better shape is 0:14:35.360 --> 0:14:38.840 part of that. Sure, because look, with the IRS, what 0:14:38.880 --> 0:14:43.280 am I concerned about? I am concerned about collections, I'm 0:14:43.320 --> 0:14:48.480 concerned about privacy, and I am concerned that the system 0:14:48.560 --> 0:14:51.320 is robust. But do you see customer service? 0:14:52.240 --> 0:14:54.680 But do you think that if they ask for access 0:14:54.760 --> 0:14:56.560 that is something you would consider signing off on. 0:14:57.040 --> 0:14:59.120 There are a lot of things I'd consider. But look, 0:14:59.120 --> 0:15:01.640 we're in the middle of the ex filing season right now. 0:15:01.920 --> 0:15:05.880 We even with the government buyouts that are being that 0:15:06.040 --> 0:15:10.000 expire at midnight tonight, we have the mandated that the 0:15:10.040 --> 0:15:16.000 IRS customer facing employees that they're not eligible for that 0:15:16.200 --> 0:15:19.720 until May fifteenth. So I don't imagine anything's going to 0:15:19.720 --> 0:15:22.200 go on at the IRS until then or beyond. 0:15:22.800 --> 0:15:25.680 Elon Musk just a few half an hour ago tweeted 0:15:25.680 --> 0:15:29.720 out that Treasury needs to stop approving certain payments. Has 0:15:29.760 --> 0:15:32.520 your staff tried to block any payments here at Treasury, 0:15:33.040 --> 0:15:33.800 we have not and. 0:15:33.760 --> 0:15:34.960 I'm glad you asked that too. 0:15:35.280 --> 0:15:37.440 And just to put in perspective, Elon and I are 0:15:37.480 --> 0:15:42.760 completely aligned in terms of cutting waste and increasing accountability 0:15:43.040 --> 0:15:44.960 and transparency. 0:15:44.600 --> 0:15:46.240 For the American people. 0:15:46.960 --> 0:15:51.040 I believe that this dose program, in my adult life 0:15:51.360 --> 0:15:54.360 is one of the most important audits of government or 0:15:54.480 --> 0:15:55.920 changes to government structure. 0:15:56.080 --> 0:16:00.880 We have seen that. When I was in my twenties, we. 0:16:00.880 --> 0:16:04.320 Had the Grace Report, and there's some great suggestions that 0:16:04.360 --> 0:16:08.640 came out of that never implemented under Clinton and Gore. 0:16:09.640 --> 0:16:12.760 I think it was to government efficiency or reduce government. 0:16:13.800 --> 0:16:14.600 Nothing happened. 0:16:14.880 --> 0:16:18.480 So President Trump came in, there's a big agenda, and 0:16:18.680 --> 0:16:21.280 I think that there are gigantic cost savings for the 0:16:21.280 --> 0:16:24.400 American people here. And I think it's unfortunate the way 0:16:24.720 --> 0:16:28.320 the media wants to lampoon what is going on. These 0:16:28.400 --> 0:16:33.040 are highly trained professionals. This is not some roving ban 0:16:33.280 --> 0:16:37.120 going around doing things. This is methodical and it is 0:16:37.200 --> 0:16:39.280 going to yield big savings. 0:16:39.720 --> 0:16:43.120 At any point, would you heed what Musk just tweeted 0:16:43.520 --> 0:16:46.760 and stop payments come from coming through Treasury. 0:16:46.840 --> 0:16:51.960 Well, most of that happens above us, that it comes 0:16:52.000 --> 0:16:56.320 from the Department and the agencies. We are doing a 0:16:56.360 --> 0:16:59.640 complete review, and I want to emphasize to you and 0:16:59.680 --> 0:17:03.920 everyone watching that it is an operational review, It is 0:17:03.960 --> 0:17:06.959 not an ideological review. We want to make sure that 0:17:07.119 --> 0:17:10.840 the American people are getting the best practices, and I 0:17:10.880 --> 0:17:12.399 don't think that's happening right now. 0:17:13.240 --> 0:17:15.720 The systems here at Treasury they're known to be a 0:17:15.720 --> 0:17:19.680 little antiquated, but very very sensitive, but also they're working. 0:17:20.560 --> 0:17:23.680 I'm hearing Bloomberg. We hear a lot about investors being 0:17:23.720 --> 0:17:27.760 concerned that this could hit markets in some way or 0:17:27.800 --> 0:17:32.280 start to cause a loss of confidence. What as a 0:17:32.320 --> 0:17:35.359 long time hedge fund and investor like, do you have 0:17:35.440 --> 0:17:37.240 a response to those concerns. 0:17:38.400 --> 0:17:44.160 People shouldn't be concerned that Treasury we move deliberately. 0:17:43.880 --> 0:17:46.639 And we fix things. That's the way we work. 0:17:47.080 --> 0:17:50.560 So everyone should know that all the payments are going 0:17:50.600 --> 0:17:52.840 to be made, they're going to be in good order, 0:17:53.160 --> 0:17:55.840 and at the end of this review, they're going to 0:17:55.880 --> 0:18:00.200 be substantial savings for the American taxpayer. 0:18:00.359 --> 0:18:03.520 Mister Secretary, you have experienced in currency markets, and now, 0:18:03.640 --> 0:18:07.600 as in your new role, you oversee US currency policy. 0:18:07.960 --> 0:18:10.480 I'd like to ask you what does a strong dollar mean? 0:18:10.520 --> 0:18:10.720 To you. 0:18:11.640 --> 0:18:15.720 Well, First of all, the strong dollar policy is completely 0:18:15.840 --> 0:18:20.720 intact with President Trump, and I am very happy at 0:18:20.760 --> 0:18:26.800 his Economic Club of New York speech in August when 0:18:26.800 --> 0:18:31.440 he re emphasized the importance of maintaining the dollar reserve 0:18:31.480 --> 0:18:34.960 currency status. But let's think about what does a strong 0:18:35.000 --> 0:18:39.560 dollar mean. It really means four things. One that when 0:18:39.600 --> 0:18:43.399 we think about a fiat currency, a piece of paper 0:18:44.000 --> 0:18:48.840 is credibility. So a strong dollar is credibility and a 0:18:48.920 --> 0:18:50.040 rule of law that. 0:18:50.080 --> 0:18:51.560 Is backing it up. Too. 0:18:52.240 --> 0:18:55.960 It means a composite price in the screen the Bloomberg 0:18:56.040 --> 0:19:00.760 Currency Index, that is the dollar moving up against that. Three, 0:19:01.520 --> 0:19:06.520 it is a bilateral price. So what's important to remember 0:19:06.760 --> 0:19:10.119 is the dollar is either a week or strong versus 0:19:10.119 --> 0:19:14.639 something else. So we want the dollar to be strong. 0:19:15.640 --> 0:19:19.400 What we don't want is other countries to weaken their 0:19:19.440 --> 0:19:22.080 currencies to manipulate their trade. 0:19:22.480 --> 0:19:25.920 And then, fourth that we want to have. 0:19:25.880 --> 0:19:29.840 The best policies that create the environment for a strong dollar. 0:19:30.800 --> 0:19:34.800 Let's talk about other nations and how they manage their currencies. 0:19:35.160 --> 0:19:38.399 The President has asked for a tariff study from several 0:19:38.440 --> 0:19:42.600 of his cabinet officers or incoming cabinet officers. Do April first, 0:19:42.680 --> 0:19:45.480 and the Treasury piece of that is to assess how 0:19:45.520 --> 0:19:49.280 to handle when foreign nations manipulate their currencies. Do you 0:19:49.320 --> 0:19:52.280 see any evidence of manipulation in foreign exchange rate markets 0:19:52.359 --> 0:19:52.720 right now? 0:19:53.040 --> 0:19:56.879 Well, well, wait till the study comes out. But I 0:19:56.960 --> 0:20:00.400 think just intuitively, you and I could agree that when 0:20:00.440 --> 0:20:04.439 you see the accumulation of these large surpluses that there 0:20:05.000 --> 0:20:09.280 is not a free form trading system that's going. It 0:20:09.280 --> 0:20:11.720 could be due to the level of the currency. It 0:20:11.760 --> 0:20:17.359 could be due to trade restrictions, it could be due 0:20:17.400 --> 0:20:20.120 to some interest rate repression policy. 0:20:20.560 --> 0:20:21.880 So it could be any of those. 0:20:22.840 --> 0:20:25.760 Are there any countries that you're monitoring or watching specifically 0:20:25.840 --> 0:20:27.840 right now? I know the President in the past has 0:20:28.040 --> 0:20:30.680 labeled China as a currency manipulator. Do you see any 0:20:30.680 --> 0:20:32.919 other nations that need to be closely watched? 0:20:33.119 --> 0:20:36.760 Well, I think we'll see on April first. And as 0:20:36.800 --> 0:20:40.960 you know that China's the most imbalanced unbalanced economy in 0:20:41.000 --> 0:20:44.760 the history of the world, and they are in a 0:20:44.840 --> 0:20:49.640 deep recession right now. They're experience in deflation and they're 0:20:49.640 --> 0:20:52.600 trying to export their way out of that, and we 0:20:52.640 --> 0:20:56.600 can't allow that. We want fair trade, and part of 0:20:56.640 --> 0:21:01.399 that is taking a strong position on the currency and 0:21:01.440 --> 0:21:02.520 the terms of trade. 0:21:02.600 --> 0:21:06.320 Mister Secretary, you said yesterday in an interview that the 0:21:06.320 --> 0:21:10.360 Trump administration is more focused on long term gields than 0:21:10.480 --> 0:21:13.480 what the Federal Reserve is doing, which is a bold statement. 0:21:14.000 --> 0:21:16.760 I want to ask, how do you plan to keep 0:21:16.760 --> 0:21:20.280 a lid on yields considering the deluge of debt issuance 0:21:20.320 --> 0:21:22.320 that is coming down the pike and also some of 0:21:22.359 --> 0:21:23.960 the inflationary risks that are ahead. 0:21:24.160 --> 0:21:27.640 Well, one of the things I wanted to emphasize is 0:21:27.760 --> 0:21:32.080 that we are not focused on the whether the Fed 0:21:32.200 --> 0:21:34.280 is going to cut not cut. 0:21:34.320 --> 0:21:35.800 What we are focused. 0:21:35.359 --> 0:21:39.520 On is lowering rates, So we are less focused on 0:21:39.560 --> 0:21:42.000 the specific of rate cuts and how do we get 0:21:42.000 --> 0:21:45.600 the whole curve down. I mentioned that the tenure I 0:21:45.680 --> 0:21:50.800 believe is the important price to focus on its mortgages, 0:21:50.920 --> 0:21:56.320 it's long term capital formation. So and look, I think 0:21:56.680 --> 0:22:02.439 with the President's policies of energy dominant, it's deregulation and 0:22:02.600 --> 0:22:07.320 non inflationary growth, I think that the tenure is going 0:22:07.400 --> 0:22:10.920 to naturally come down. And then look on top of it, 0:22:11.200 --> 0:22:13.919 what if we do get some big savings on the 0:22:13.960 --> 0:22:17.399 spending side from the dose programs like let's think of 0:22:17.400 --> 0:22:23.800 a naive formula, government equals spending minus taxes for my 0:22:24.080 --> 0:22:31.080 entire career and beyond, maybe even back to pre FDR 0:22:33.920 --> 0:22:39.320 government equal spending minus taxes. The s the Republicans we 0:22:39.480 --> 0:22:40.120 like spending. 0:22:40.920 --> 0:22:42.320 We just wanted to raise it less. 0:22:42.359 --> 0:22:46.840 The Democrats want to raise it more taxes. Democrats want 0:22:46.880 --> 0:22:50.440 tax increases. We want tax cuts. What nobody's singing about 0:22:50.600 --> 0:22:54.040 is what if the S actually went down? What if 0:22:54.040 --> 0:22:57.440 it actually goes down because of everything we're doing right now? 0:22:57.800 --> 0:23:00.440 But what about the inflation concerns that are stemming from 0:23:00.480 --> 0:23:01.959 the tariffs and tariff threats. 0:23:02.960 --> 0:23:07.520 Look that I'm not sure that where this narrative the 0:23:07.560 --> 0:23:12.080 tariffs for the country putting on the tariffs is inflationary. 0:23:12.760 --> 0:23:15.720 That we could have a small one time price adjustment 0:23:16.200 --> 0:23:19.480 that as we saw in Trump one point zero, that 0:23:19.600 --> 0:23:24.000 the deregulation and the other policies, we stayed right around 0:23:24.040 --> 0:23:25.520 the Fed's target level. 0:23:25.960 --> 0:23:28.359 So I'm unconcerned about that. 0:23:29.080 --> 0:23:34.040 I think especially that China, now given all their excess capacity, 0:23:35.080 --> 0:23:38.439 will no matter the level of the tariffs, will end 0:23:38.520 --> 0:23:39.640 up eating quite a bit. 0:23:40.720 --> 0:23:44.560 There's a lot of uncertainty around tariffs. We see them 0:23:44.760 --> 0:23:49.800 threatened or signaled and that they're taken back. It appears 0:23:49.840 --> 0:23:53.200 as if this administration might be unfriendly to businesses. 0:23:53.280 --> 0:23:53.720 Is that right? 0:23:56.280 --> 0:23:59.440 Really, I think it's just the opposite. I think this 0:23:59.520 --> 0:24:05.040 is the pro business administration and history and everything we 0:24:05.080 --> 0:24:09.359 are doing is going to increase the after tax return 0:24:09.520 --> 0:24:14.960 capital and as a result, working Americans will have very 0:24:15.080 --> 0:24:18.479 high real wage growth. That what we've seen over the 0:24:18.480 --> 0:24:22.680 past four years is the government and government adjacent sectors 0:24:23.040 --> 0:24:26.639 providing the employment growth. And why have we experienced a 0:24:26.680 --> 0:24:30.960 supportability crisis? First there was a massive spending met by 0:24:31.080 --> 0:24:35.560 increased regulation which caused inflation, and then government and government 0:24:35.600 --> 0:24:39.480 adjacent jobs do not call real wage growth because they 0:24:39.520 --> 0:24:43.600 move up at CPI. So I think that we are 0:24:43.640 --> 0:24:47.240 going to not only be business friendly, but very very 0:24:47.280 --> 0:24:48.840 friendly for working Americans. 0:24:49.200 --> 0:24:53.200 We're seeing companies already under some stress from the tariff threats, 0:24:53.359 --> 0:24:57.080 China is investigating Google, and also, as you know, are 0:24:57.080 --> 0:24:59.080 well aware that business is like to be able to 0:24:59.160 --> 0:25:02.640 plan ahead. But with so much policy uncertainty, that predictability 0:25:02.680 --> 0:25:05.520 factor is gone. That all points to a little bit 0:25:05.560 --> 0:25:06.560 of a tougher environment. 0:25:06.840 --> 0:25:08.879 Well, look, I think the best thing we can do 0:25:08.960 --> 0:25:13.000 for predictability is make the tax cuts and jobback permanent. 0:25:13.400 --> 0:25:15.399 That would be the single best thing we could do 0:25:15.760 --> 0:25:18.320 for predictability. We can go back to the one hundred 0:25:18.359 --> 0:25:23.320 percent expencing and add some new features that I think 0:25:23.400 --> 0:25:24.440 business is going. 0:25:24.359 --> 0:25:25.280 To be very happy with. 0:25:25.440 --> 0:25:28.160 But again the most important thing is that it filters 0:25:28.200 --> 0:25:32.359 down to working wages, which is what we saw the 0:25:32.880 --> 0:25:34.640 President Trump's first administration. 0:25:35.200 --> 0:25:38.640 This is Bloomberg Daybreak, your morning podcast and the stories 0:25:38.720 --> 0:25:41.760 making news from Wall Street to Washington and beyond. 0:25:42.000 --> 0:25:44.400 Look for us on your podcast feed by six am 0:25:44.440 --> 0:25:47.879 Eastern each morning, on Apple, Spotify, or anywhere else you listen. 0:25:48.040 --> 0:25:50.920 You can also listen live each morning starting at five 0:25:50.960 --> 0:25:53.640 am Wall Street time on Bloomberg eleven three to zero 0:25:53.640 --> 0:25:56.560 in New York, Bloomberg ninety nine to one in Washington, 0:25:56.640 --> 0:26:00.560 Bloomberg ninety two nine in Boston, and nationwide on serious 0:26:00.760 --> 0:26:02.320 XM Channel one twenty one. 0:26:02.720 --> 0:26:05.440 Plus listen coast to coast on the Bloomberg Business app 0:26:05.480 --> 0:26:08.280 now with Apple CarPlay and Android auto interfaces. 0:26:08.520 --> 0:26:11.560 And don't forget to subscribe to Bloomberg News Now. It's 0:26:11.560 --> 0:26:14.320 the latest news whenever you want it in five minutes 0:26:14.400 --> 0:26:17.520 or less. Search Bloomberg News Now on your favorite podcast 0:26:17.560 --> 0:26:21.720 platform to stay informed all day long. I'm Karen Moscow. 0:26:21.520 --> 0:26:22.480 And I'm Nathan Hager. 0:26:22.640 --> 0:26:24.679 Join us again tomorrow morning for all the news you 0:26:24.720 --> 0:26:27.480 need to start your day, right here on Bloomberg dbreak