Balance of PowerWatch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg Politics Editor Laura Davison as Donald Trump begins his second week in office.
- Director of the Wadhwani AI Center at the Center for Strategic and International Studies Gregory Allen as the markets react to DeepSeek's AI model.
- Republican Main Street Partnership Sarah Chamberlain as House GOP members head to Doral.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino about the confirmation process for Trump's cabinet nominees.
Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple Coarclay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Pretty good day for some golf, certainly if you're in Miami. Happening at the Trump National Doral, Miami. The House Republican conference on the ground Kumbai Yah, and yes, golfing to start things off today. We expect that we will hear from House Speaker Mike Johnson a little bit later on three o'clock three thirty is going to have a news conference at Dorral, the official proceedings get rolling a closed door event with the Boss himself, Donald Trump, of course at Dorrel about an hour's drive. I read south of mar A Lago. But boy, what a weekend it was. We try to unpack all of this. Donald Trump fresh off Las Vegas. Did you see him at the craps table. He's in Las Vegas to rally the troops as if he were still in the campaign. And yeah, he did show up at a casino talked about the no taxes on tips. That's where this whole thing was born. Right here's Donald Trump in Vegas.
I'll be working with Congress to get a bill on my desk that cuts taxes for workers, family, small businesses, said very importantly, keeps my promise for a thing.
Cook And I know you didn't hear anything.
About this, and I'm sure it had no influence on the state.
But I'm sure you haven't heard.
But we're going to get it for you. No tax on, no tax subcack of it. They loved it so much. Remember even Kamala Harris picked that one up. And it is potentially complicating matters for those lawmakers who are tasked with extending the Trump tax cuts. This is just scratching the surface on what we need to cover. With Laura Davison, she's with us now, off a very busy weekend. Great to see you. Your team must be breathless here. We all said the same thing at the end of last week. Are we going to this is the new normal again? We're going to do this every week.
There is no slowing down, just to keep them tablism high, and it'll keep flowing.
Well.
So the arc of the weekend was incredible. It started with what they're calling the Friday Night massacre parkening back to Richard Nixon, Donald Trump firing the inspectors general. This is a long list at the Departments of Defense, State, Transportation, Veterans, Affairs, Housing and Urban Development, Interior, Energy, Commerce, and Agriculture, as well as the EPA, the SBA, and the Social Security Administration. That's a pretty broad swath of government. What's the point, Why what is he doing here?
And I'll note this also includes some people that he appointed to these positions when he was in office, But the inspector general, these are really the people. They're typically not well liked within their agency because they're the auditors that are looking to, you know, find holes an efficiency, you know, where things programs that aren't effective, where there may be gaps in funding and that the money's not being wisely spent.
Although this is an interesting.
Move for you know, someone who has had Elon Musk at his right hand side saying he wants to root out, you know, wasteful spending and all these things, it's the igs who actually go and find all of that.
That would be sort of list number one and where you want to go.
But this is clear that he wants to have all the people who are you know, doing this kind of work be loyalist, be in locksed up with him. This he said, this was something that normally happens. I'll just know that this is not a normal thing. Generally, these people span administrations and do not you know, do not come and go.
So this is the so called deep state. I guess he's trying to get out to your point though, these are some of his own appointees, and he failed to notify Congress. You have to give him thirty days or something on that. Does that matter or does nothing matter?
You know?
And with all of these, you know, there are already been some questions raised about you know, the legality of this.
Could this be challenged?
But you know, with the fire hose of everything that's coming in, you know that both the administration as well as sort of folks who are filing lawsuits challenging some of these moves, they have to prioritize. They can't fight everything tooth and nail.
Okay, So we move on to the law loyalty tests also happening now about one hundred and sixty staffers from the National Security Council were sent home and they're calming through I guess their social media prior statements. What are they looking for?
Basically looking for anyone who may have criticized Donald Trump a job and they are likely out of the job.
I mean, these are folks, These are civil servants.
These are not political folks, even though they work for the National Security Council. They were sent home on Wednesday. They still have their things and their desks in the White House, but they were basically informed that they would be believing had their email access access cut off, you know, immediately escorted out of the building. They now essentially to come back when they when they go to pick up their stuff. You know, most of them are assuming that they will not be coming back. Employed. They are escorted full time. It is harder for them to get on the White House campus than it is for a foreign national.
Wow, this is you know, and by the one of the most high profile firings the Coastguard commandant. This is or was Admiral Linda Fagan, the first woman to lead a branch of the UA military. Is that a good look for the administration.
Not particularly I don't know exactly on the reasons behind this one. But this is kind of what you see you know, Trump doing. You know, he wait wait until Friday night to announce a lot of these and these were so this is he is clearly looking at, you know, both the federal workforce as well sort of this upper echelon of management and people he wants to install his own people or you know, force people to leave.
Amazing accused of an excessive focus on DEI at the Coast Guard Academy. Your point is you're probably not going to survive the scrub. If you've got shown the door for a loyalty test, you're probably not coming back.
That's very i mean very very likely, you know, and a lot of times they already have people who they sort of identified to fill some of these backfiells on the lease slots. You know, I'll know that the Trump incoming Trump team is way more organized than they were the last time.
There's still you know, been a lot of the kind of that first week.
You know, a lot of staffers didn't have emails, so there's a lot of confusion as to exactly what's happening. But there is a plan and kind of you know, as as more people get appointed, get their Senate confirmation. These are kind of being triggled down throughout the reverr.
This place well with Trump supporters though right Drain the swamp. That's what it looks like.
Absolutely.
The real question, though, is if you suddenly start cutting programs for things like food stamps or certain farm aid programs or things that affect.
People, bump into somebody, you know.
Out in the community.
That's when people might sort of realize, oh, I was counting on that subsidy, or I was counting on that payment. And you know, there's a constituency for essentially every program in the federal government.
That's why it exists.
And you know when you start cutting things, that's when the rubber meets the road.
As we spend time with Laura Davison here on Balance of Power, we almost had a trade war yesterday. Who lasted for a couple hours. Maybe we did have a trade war. Maybe it was the shortest trade war of all time, Columbia. We stepped back from the brink. I saw an email go out around eleven o'clock last night. They got this done in time for business on Monday. What started this to bring Donald Trump to threaten to twenty five percent tariff against Columbia because they've been intercepting these flights of my from the US and that seemed to be working well until now this.
Yeah, so the Columbia government said that they would not accept this military plane that was coming with migrants, and they were both shackled at their ankles as well.
As handcuffed on their hands, and they really objected.
To the fact that it was military.
Was the and it was sort of a confluence of the military.
They also in some of the statements that came out later, it was clear that they were concerned about sort of dignity human rights around the treatment of their own citizens coming back. So that was sort of the points of negotiation throughout the day. But this is really going to be instructive on how Trump is thinking about tariffs. He said, look, you know, this country did this thing.
I didn't like.
They refused these flights that I want to go. So I'm going to come out and announce a tariff, you know, effective immediately twenty five percent, and out additional sanctions and travel restrictions for the country's diplomats.
And then Columbia was.
Forced to immediately respond because a twenty five percent tariff on anything coming into the US would have been a really big deal for them, and with an amount of matter of five six, seven hours, they were able to come to some sort of resolution that both the Columbian government was happy with and Trump was happy with, at least for the time being. We'll see if this drops up. But this is really the question as everyone's looking towards February one, which of course is the date that Trump has said he wants to impose tariffs on Mexico, China or sorry, Mexico, Canada and maybe China.
We'll see where that lands.
And you know that's six days away, that's Saturday, So it's unclear if the terrifts are actually coming or if that's really more of a starting point for negotiation.
Yes. Yeah, that's a nice looking economy. You got there be a shamed of something happened to it. We haven't even talked about deep seek. We have a minute left. This is the story of the day at Bloomberg. The markets are falling out of bed over this, and Donald Trump at some point is going to have to respond. I suspect, unless you're gonna tell me he has already considering the TikTok divest or ban. Is this the next app to be banned by the Trump administration?
It certainly could be.
You know, we know from all the statements last week and the executive orders and the big press conference at the White House that he is very focused on AI. He says he wants to be dominant in AI. And this is the kind of thing that Donald Trump is very scared about that China is going to come and sort of usurp the US's lunch. So I expect that we will see some response from him soon if he hasn't announced something in the past couple minutes.
Since our national security implications here potentially right if for scooping up Americans data, it's kind of like TikTok all over again.
But you know, with even more access to emails, access to location data.
It's a watching Gmail and your phone number. Good lord, And it's only noontime on a Monday. As I said, just think of the week that Laura is going to have. We'll go through this together with the help of Laura and her team. Thank you as always for being with us here on Balance of Power. I'm Joe, Matthew and Washington. We're going to go deep on deep Seek coming up next with an expert on AI from CSIS. We sit down with Gregory Allen next. Only here on Bloomberg.
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This is a tough market, but we need to get the facts here and we'll get back with Charlie in a bit to see how this is evolving, hopefully not regressing a more than six hundred and sixty point loss. Here on the NASDAC that vis is up twenty five percent. It's kind of all you need to know, and it has everything to do with deep Seek, as Charlie was just mentioning, it's where we started our day here. Everybody woke up to this news on the terminal. How many notifications about deep seek did you have or had you already downloaded it? Maybe you're part of this whole story, enter Jevins' paradox. Maybe you saw the tweet from Satya Nadella, the CEO of Microsoft. Jevins Paradox strikes again. He writes, as AI gets more efficient and accessible, we will see its use skyrocket. He's defining it here, turning it into a commodity. We just can't get enough of. Interesting and a great place to start our conversation with Gregory Allen. You've met Gregory before on this program. He is one of the foremost experts on AI in the nation's capital and in fact director of the Wadwani AI Center at CSIS, the Center for Strategic and International Studies, former Director of Strategy and Policy at the Department of Defense Joint Artificial Intelligence Center. This is the guy you need to hear from today. It's great to have you back. I can only imagine your thoughts when you see an AI story explode like this in the mainstream media. I've got a lot of specific answers questions for you that hopefully you will have answers to. But in terms of Jevins Paradox, why does it matter here?
So? I think the stock market is looking at Deep Seek and they're saying, oh my gosh, here is a company who has found a way to make pretty high quality AI much more widely available for much cheaper. So therefore the price performance of a company like open Ai, how are they going to justify that cost when suddenly it's so cheap to make? And the Jevins paradox has a really important answer to everybody who's out there shorting in Vidia or shorting myrosoft right now. It basically says that as something becomes cheaper, people want more of it. So Jevins the observation actually dates back to the Industrial Revolution, where he pointed out that steam engines are getting more and more energy efficient, but we keep using more and more coal because as we get more energy efficient, then you can economically justify using coal and an application that you couldn't before. The exact same thing is true in computing. The cost of one flop when operation of computing has dropped by oh, I don't know, twenty trillionfold since you know, the nineteen fifties when we first invented computers. But are we using more computers or we're using less computers? Are companies making more money selling computers or less money selling computers? The basic point here is that Microsoft is Thank goodness, AI is so cheap because now the universe of people who are going to want to buy it from me just grew.
A lascinating What does this mean for the energy companies? By the way, it's not just the Nvidios that are down, it's the constellations and the others that we've been talking so much about clean renewable. Is it going to be nuclear? Will we still need expensive energy? If Jevins correct, well, it's the exact same phenomen decline in price as well.
No, it's the exact same phenomenon just applied to the energy. If you go back ten years, how much was data centers as a share of the US electrical grid demand. It was hardly anything. But at the exact same time that computer chips got more powerful, that algorithms got more efficient, Suddenly data centers are actually a pretty reasonable chunk of the US grid, and now it's looking like they're going to consume a lot more. Well. Increasing efficiency has already been a part of that story. An Nvidia chip today is literally ten thousand times more efficient than an Nvidia chip a decade or two ago. And at the same time that they're getting more efficient, at the same time that you're using less energy per unit of computation. You're making the economic and the business case that much more attractive for every additional use case for that competition.
I have to bet this all sounds pretty positive in the Grand scy So let's get to this case specifically in y Wall Street is so freaked out Deep Seek. We're told this happened with six million dollars in funding. Is that possible? Is that true?
So it's which part of the story you want to say, Ok, this specific model training run. Right, when you're training an AI model, how much computation did you use on that one run? Yes, that was six million dollars worth of computation. But there's all the other model training runs that didn't work. Right When deep seek says that's what it costs, that didn't say their entire computing costs, for all of their research and development, for all the work that went into creating this model with six million dollars. They said, this one individual training run with six million dollars. Another thing to note here is part of the reason why everybody's so excited is this is a model that has reasoning capabilities. This is the advance that Opening Eye came out with in that one series of models in September of last year. Well, it turns out what deep seek has proved is that upgrading a pretty decent base model think like GP, to a reasoning model that is actually not as computationally intensive as had been understood widely in the press. But inside the big AI companies, opening eye Anthropic, they already knew all of this. They were already benefiting from all of this. Recall that Sam Altman said that three the most advanced category of model, the one that was blowing away benchmarks. In December of twenty twenty four, he said, the price of giving away that model usage free, right, So costs are coming down for everyone, not just for deep Seek. What deep Seek is doing is replicating a series of research that American AI companies had already been benefiting from. They just weren't sharing it loudly and publicly.
Okay, did this company get its hands on in Vidia chips or did it reinvent the wheel with some kind of popcorn chip that had stacked in a way that we've never seen before.
So according to this company, according to deep Seek, they used in video chips all right, but they specifically used in Vidia H eight hundred chips. So Folks who watched the export controls debate in Washington export control policy in Washington closely, such as myself, you may remember that in October twenty twenty two, that's when the Biden administration launched this AI chip restrictions export controls strategy. But they got the performance thresholds wrong. They thought that they were saying, oh, you have to buy two generations old of in Vidia chips. But what in Vidia found out is actually, if we make this one tweak to our existing best in class chips, they're actually legal to sell. So there was a whereas the Biden administration was under the impression that they were putting China under like a fifty or sixty percent performance penalty, actually they were only imposing like a ten percent performance penalty. And there was an entire year between October twenty twenty two and October twenty twenty three when it was illegal to sell unlimited numbers of these eight eight hundred chips.
So this is the whole story.
This is the story they have been. Export controls have a lagging effect. Right, It's not like you stop selling it and everything that's already in China magically blows up. Right, They still have what they already bought. And in this case, we are dealing with the failure of the design of the export control architecture of October twenty twenty two. Later this year, we're going to start living through the success story of the October twenty three architecture the December twenty twenty four architecture. And it came out of the mouth of deeps Sikh's CEO. He said, the number one challenge my company faces is US export controls. Right when Biden and Shijingping meet to discuss foreign policy issues time and again, I've heard this from Biden administration officials time and again, Shujingping changes the topic back to these export controls and why he needs them to go away immediately. He's not asking to get rid of them because they aren't working. He's asking to get rid of them because they are working, because they are imposing significant costs. Now, I don't want to suggest that there's no legitimate technical innovation underpinning this new Deepseek model release. There's some legitimately impressive stuff in here. Folks who work at American AI labs are reading these papers. They are seeing innovations they can use think about what advantages America can secure that are durable and hard to replicate, and what advantages China can secure that are durable and hard to replicate. All of the algorithmic innovation, all of the architectural innovation that is represented in this deep Seak model, one percent of it is available to American a companies. They get to copy any new innovation. By contrast, all the computational advantages that American companies have, Chinese companies can't copy that because they can't make the chips fascinating.
So I'm listening to you and I'm I'm amazed by everything you're telling me, and I'm wondering why all these stocks are down today well and making the case to buy a video.
Well, I would say, in the long term, the stock market is based on truth, but in the short term sometimes it's based on vibes. And the vibes pretty.
Much today is what's going on.
That would be my strong impression.
I mean, this isn't Blackwell we're talking about, it's not Ruben we're talking about.
Right, We're talking about deep Seat and it's it's legitimately important right there. This is an update in what people think is possible. But it's an update that folks who have been living in the AI industry are familiar with. Right right now, we're living in the world of GPT four is the base model. One is the sort of reasoning model updates. But I remember when GPT two came out and it was trained on a supercomputer, and now it runs on my laptop. And I remember when GPT three came out and it was trained on a supercomputer, and now it runs on my laptop. So the point is here, there is no real update in paradigm. Computers start in supercomputers and they end up in personal devices, and that has been the trend literally since Alan Turning invented the first computer during World War Two. It gets faster, smaller, cheaper. But at the same time you have to ask yourself what kind of durable competitive advantages can we create? And I think it's worth pointing out that we are on the cusp of a threshold. Right Sam Altman himself last year early last year said that the performance of his model was quote mildly embarrassing at best, and he had the best one in the world. But the point is we are maybe a year year away, maybe a handful of years away. From AI models being able to perform so many different tasks in the global economy, and in some cases being able to do so at better than world expert levels. So we are approaching this threshold when AI will go from useful for some things, fun for some things, to shockingly useful at so many things. And the companies and the countries that crossed that threshold first are going to have an extraordinary first mover advantage.
That's not what we're talking about here, though we're out of time.
Basically, this is all we got to talk about.
One more things, well, forty five seconds, go for it.
Deepseek is having major outages right now. They have attracted a lot of attention, They've got a lot of new users being attacked. They are not being attacked. They have run out of chips. It is the exact same story as when Gina Romando went to China in mid twenty twenty four and they said that Huawe had a new phone, but they couldn't make enough chips for them. Now they don't have enough chips to run the data centers to serve the users who want to use deep Seek.
While way two point zero.
Here, it's a very similar repeat of the.
Story amazing, aren't you glad? We had Gregory back with us today on Balance of Power. Fantastic csis. He's the mind you want to talk to and hear from today on Bloomberg.
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While we have heard from the AI cryptos are David Sachs, we have yet to hear from the President of the United States Supports just a week now into his term, but he is busy today. In fact, he was spending the early portion of today golfing at his Derau resort.
Yeah about that, lord, little morning golf, a little lunch, I guess at poolside? Did you see this one hundred and twenty five foot slide at the pool? Are the members using the slide this week? They might have to take the plunge on a couple of things here, Kayley, this is interesting as we've talked about one bill or two, what's the agenda going to be? This is apparently the two day retreat that's going to decide at all.
Yeah, that's what we're referring to.
Hear the Republican Conference retreat into Ralph, Florida, where Donald Trump will be speaking behind closed doors this evening to lawmakers, potentially outlining the way in which he'd like them to move forward on his legislative agenda. So for more insight on this. Now, joining us in our Washington, d C. Studio is Sarah chamberlinch He's president CEO of the Republican Main Street Partnership. Welcome back to Balance of Power, Sarah, I do wonder what Main Street members are planning to say in return to Donald Trump about the way in which they would advise his legislative agenda be pursued.
Well, the first thing is they are going down the slide. I'm open with this type margin.
Nobody gets hurt.
So some of have played golf for them.
But what they're really advising is one they need one bill and they need to have make sure salt is in it.
Immigration is Immigration will definitely be in it. But they're really pushing salt.
It means a great deal to our California members, New York members, and actually our New Jersey members, So there's one area that they're pushing him hard at.
So how much of this is pep rally of versus negotiation versus productivity. You've got a lot of factions, as we've discussed in this Republican conference. Is at Donald Trump's job to bring them together and so they can come back to Washington to start writing legislation or to make a deal that they can go home with.
So I think it's really believe they're not going to be a combination of both.
He is trying to rally them, get them on the same page, have them spend time together doing fun activities like we already mentioned and playing some golf. But there is a lot of business that's being discussed as well. You know, the one bill they need to budget wrecked. I mean they need to get all these things done by the end of February and then go into the hopefully the one bill.
I'm really I've I.
Wasn't sure about one bill or two, but now I'm convinced it's one bill because I think we are going to have to have some Democratic help. So one bill it's a little bit easier for the Democrats to swallow.
Well, so does John Thune need to be part of this retreat as well. It's one thing for House Republicans and the President to be on the same page, but the senate's the other factor here.
It certainly is, And I know the Speaker is very much in touch with a Senator, so I know he's not there, but I would be surprised if the Speaker's not on the phone with him occasionally this weekend.
Interesting. You just mentioned some of the ingredients here, not the least of which assaults were pun intended. But you've got no tax on tips. We talked to Kevin Brady about this at the end of last week. No tax on overtime. So many different things that would be put into one bill that you start wondering what gets left out. Are we going to have a debt ceiling as part of this? Will emergency funding for wildfires and hurricanes be part of this? Because now we're in a world where there's something for everyone and no one can say no, that's true.
I definitely think the emergency funding will be put into it, not sure, but other things. But this is going to be a massive bill. I mean, there's no doubt about that.
It's going to encompass a lot of things that the House, frankly has needed and needs to get done. So hopefully the Senate, fingers crossed, will go along with some of these initiatives are in this bill. But the other reason they want it in one bill is because we all know there's some Republicans that do not vote like Republicans, don't really care about what the leadership thinks, and they have to pick some of the Democrats off to get it through, which means you have to put things in the bill that the Democrats want, like the funding for California fire in North Carolina, and we already talked about salt. So it's an interesting play here, but it's going to be a huge bill and there's really nothing you can do about it.
Well, and huge in terms of potential price tag as well when we're thinking of dollar figures. And some of those members you're referring to are people who are very fiscally conservative and want to see requisite spending cuts along with this. What give us an idea of the pay fors that are actually going to be discussed over the next few days in these rooms.
So the pay fors they're going to go through with Elon mus help go through every single division in the government and see where they can cut Medicare, Medicaid. I know they've talked about that social Security. I don't really see that being viable down at the end. I don't think the members of the republic Community Partnership would vote for cut in those three areas. But there is a lot of waste in the federal government. I mean, let's be honest here, So if we can find some of that for offsets, that's where they'd prefer to go. But we also do know Donald Trump. President Trump does not mind debt. I mean he has in his personal business. I mean he doesn't mind debt. I realized there's some Democrats or some Republicans that are really opposed to it, but the President really is not opposed to it. So I think that he'll be comfortable with not finding total offsets.
Called himself the King of debt, if you remember that a couple of years, so he did. Why not get a little more With that said, then you start wondering about the calendar and a very ambitious approach. At one point by Mike Johnson, he said he wanted a budget bill up for a vote the end of February. That would require a small mirror. At this point, I assume, what's the realistic timetable here? They have a few months to play.
With, they do they really have them till the end of the year, so but please let's not go to the end of the year, please. I think March, probably March into April is a realistic in the first half, hopefully in the first stelf because there is other business that they need to get onto, so they're hoping by the holiday break in April, they hope to have something done. That song is going to have to be. We're running out of money. So I'm fortunate to get taken care of last year. I understand that I actually agreed with President Trump that he wanted to get it done then, so that that needs to get done again the first first quarter of this year. So a lot on the table that needs to get done before April.
Well, especially when you consider the Treasury Department already for the last week has been implementing extraordinary extraordinary measures that I only can go so far potentially to the summer if we're lucky. I do wonder though, and you refer to what Donald Trump was asking for at the end of last year, if it's going to be just a temporary extension of the debt ceiling for some period of time, or if his suggestion that should be done away with entirely is something that can become reality.
I know that the Republic Mainstreat Partnership members would pretty much like it done entirely.
I actually Elizabeth.
Warren, Senator Warren agrees with us on that, which I don't think has ever happened before. But it would be better for the country than we wouldn't have to go through this exercise. We always end up increasing it anyway, so it'd be nice to get it off the table. But that's going to have to get done in the next few weeks.
We talk about spending cuts, there are some areas that you've isolated where spending increases could in fact be the case, and the Pentagon is going to be one of them. Rick Davis was the first to mention the first trillion dollar defense budget. Will that be the story in this bill, that we're talking about a trillion dollars on the Pentagon?
I think it will be. It's going to be.
Main Street would be behind that.
I think so at least most of the members obviously one of our members, Ken Calvert, is the appropriator over the Defense Department. But we've given a lot to Ukraine.
We have to.
Rebuild what we've given to Ukraine, so that's part of this as well. Plus we need new technology. I don't know if if we're going to fight any more ground wars, it's probably going to be Intelligence Awards AI type wars.
So we need to upper a game in that area.
And then, of course, I know he wants to spend some of the money on the border for the immigration problem.
To that point, how does the mainstream partnership? But how do the members feel about the way in which the border crackdown is going so far? The deportations. We've seen a very small trade war that started and ended, it seemed over the weekend over the deportation of migrants. Are they happy with everything they're seeing?
They're absolutely happy with it. I mean, immigration is number one issue. I think that's probably why President Trump was able to be elected again, and they want the border cleaned up, and the people in their districts want this border cleaned up. So I think he had a very successful so far, so good on that. And it was kind of interesting to see how he dealt with the President. President kind of caved. President Trump said, Okay, we won't send them on military plans, we send them on commercial So I think there's some negotiation there. It worked out, and we'll continue to send them home.
So that's the playbook that he prove that tariff's work.
I think you did.
I think it's no doubt about it. I mean they came to the table pretty quickly on that.
Just the threat of a tariff just exactly interesting. Here we are again, Sarah Chamberlin. Great to see you. Seems unfair somehow, seventy five degrees in Miami, but there's still snow on the ground, but you're here with us. We're lucky for that. My apologies, although we do want pictures of the slide from the Republican Main Street Partnership, Sarah Chamberlain, one of the most connected Republican voices that will bring you here on this program. When they come back, they're gonna have a lot of work to do.
Killie.
Yeah, and they're going to have to do it in pretty short order, do you hear, Sarah, Just a matter of weeks to deal with the debt ceiling. Maybe we're not going to push it so close to the X state.
You said the two words extraordinary measures. That's our reality right now. We'll have a lot more with our panel coming up next. Rick Davis and Genie Shanzano are with us on the Monday edition to Balance and Power. We're glad you are too.
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Rest assured that Washington is taking note of what we're seeing in financial markets today, all of it, of course precipitated by deep seek and concerns over potential cheaper but just as capable technology coming from China, something that the US has been trying to prevent through export controls and other means, and certainly something that is likely to get the attention of this income or just brand new Trump administration one week in keeping in mind that the President has signed executive orders within the last few days pertaining to artificial intelligence and announced a near half a trillion dollar AI infrastructure development deal between Oracle and SoftBank and Open Ai, who may now find themselves having to compete with Deep Seek. All of it, of course, in the midst of what has been a flurry of other executive action unrelated to artificial intelligence, but some of it related to new generation technology of another type. Joe as Bloomberg has learned that today Donald Trump is preparing an executive order to create a next generation defense shield to protect the US against ballistic missiles. This is the US iron Dome. We've long heard him teasing.
Yeah, he talked about this on the campaign, t really talked about it in his first term. I'm not sure how that would work. We're talking about a much larger area we would need to defense where Yeah, you know, this isn't they Actually it's not a real dome. We actually need to send missiles up. You've seen this in use in the skies over Israel. Would require uncounted numbers of ground to air missiles interceptors essentially, and would be a boon for defense contractors like Raytheon if it were to happen.
Well and the newly minted Defense Secretary Pete Hegseth seems on board. When he arrived at the Pentagon for his first real day of work in that job, he talked about this idea as well as some other initiatives. Now that he thinks to jd Vance casting the tie breaking vote has.
Been able to take over as the helm of that department.
That was the moment late Friday, jd Vance in the motorcade to cast the deciding vote that made indeed Pete Hegseth the new Secretary of Defense. If you're with us on Bloomberg TV or on YouTube, you see his arrival there at the Pentagon a bit earlier today at Chile Monday morning in Washington in January. And that's where we start with our signature panel. Bloomberg Politics contributors Rick Davis and Genie Shanzino are with us. She is Democratic analyst and political science professor at Iona University. Rick is Republican strategist and partner at Stone Court Capital. Genie, what does it tell you when jd Vance has to cast the deciding vote on such an important appointment?
It tells us that, you know, the margin that they're working with in the Senate is very slim, and I think many of us thought that perhaps McConnell would go no only if there was a fourth no, but that's not what he did. He went no regardless of that. And so that means that in my mind at least, questions not only about Trump's upcoming nominations who are controversial like Gabbard and RFK Junior this week and cash Ptel, but also Trump's agenda. Does Mitch McConnell turn out to be, I don't know, the new Lisa Murkowski or Susan Collins or Joe Manchin on the Democratic side who's willing to stand up and say no to Donald Trump. And that is going to mean that Donald Trump's either going to have to pull some Democrats, which is unlikely if he's lost Murkowski, Collins and of course McConnell, or is he going to play ball with McConnell on things he cares about, like national security and also Senate rules. So there is a lot that this portends that we just don't know how it's going to play out.
Well, and we also don't know how things will go down in committee on Thursday, when Tulsi Gabbard, who Genie just mentioned, rick will have her confirmation hearing, knowing she's faced a great deal of scrutiny for past behaviors, including a visit to Syria some years ago. This is actually something that Senator Lindsay Graham, Republican Senator I would add, spoke about on Meet the Press yesterday.
I tend to vote for almost everybody at both parties, but I want to see how the hearing goes. Why didn't you go to Syria? What did you do regarding the side. Why do you think Edward Snowden should be haill as a hero? I certainly don't. We'll see how the hearing goes. But in her favor, Richard Burr is going to introduce her, and he's one of my dearest friends.
So we'll see.
Rick. There's a few questions I could ask you around this, one being just how you view Tulsi Gabbert's prospects right now ahead of this hearing. The other being what impact will the shepherding of Richard Burr have for her?
Yeah?
I think, first of all, you know, you've got a pretty compliant Republican caucus. Someone told me over the weekend when these votes were being taken that there are a lot of senators Republican senators think they're John McCain, but they act like Tom Tillis, and that is kind of a you know, way to think about it. You know, they think they're going to be tough, they think they're going to run these people through their marks, and then what they wind up doing is going along with the president. In some cases it's re election fear. Some cases, it's not worth the agony to be set up. In some cases they have other priorities that they want to get done. I mean, the Lindsay Graham comments are really instructive. Lindsay Graham does usually vote favorably for both Republican and Democratic senators, judges, you name it. He thinks that's the president's prerogative, and a lot of senators feel that way. They would have to have something extraordinary and to march in a former senator who was the chairman of the Intelligence Committee and who was well liked amongst the caucus members to introduce Tulsea Gabbert, you know, smart move, and he's got nothing to lose.
He could do whatever he wants to do this.
Free time, and he chooses to come back to DC in front for her nomination. Look, I mean I think, as we've just recounted, there are three consistent votes against people who probably shouldn't be in these jobs. The question is who's that fourth person? And that I think is really hard to figure out.
Interesting we weren't supposed to know about Richard Burr. I guess Lindsey Graham let that slip. So that must have been an interesting moment for Richard Burr, who will be you know, not only walking her around and doing the meetings and so forth. I guess introducing her before the confirmation hearing, Genie. But Richard Burr, of course, this is a former chair of the Intelligence Committee, has been offering advice and counsel in recent weeks. Here will he improve her chances of being confirmed?
I think he will. Certainly. He knows how this is going to play out for her in the hearing. He knows what to tell her to watch out for. And we heard Tom Caughton on Fox News over the weekend saying essentially that she is going to have a fair hearing. But it interesting when you hear that because what he is saying is I'll guarantee the process, but not the outcome, which suggests that there may be a fourth no out there somewhere, if not more, Tulca Gabbard is the one who's most likely to go down, although historically once you get to the hearing, that's a you know, that's not something that usually happens. And it's all the issues that Kaylie mentioned, and then it's her flip flopping on seven oh two, which has been troubling to many on the particularly the Republican side. So this is somebody who we're going to have to watch for, along with of course Cash Battel this week, and of course there's other hearings as well, including RFK Junior, and those are the three sort of most controversial that Trump has nominated.
Well, but when we consider the president Genie fresh off what ultimately, though hard fought, was a victory in getting Pete Hegseth confirmed then maybe the shortest ever trade war in the US and Colombia to make sure that migrants could be deported back to that country on military aircraft through threat of tariffs, and the Colombian president quickly agreed to Trump's terms. We understand, is this not a lesson that Donald Trump by and large is getting what he.
Wants, at least for now.
Why would we believe that there is going to be an exception to that rule so early in this term.
Yeah, I wouldn't suggest that we know she's going to go down. I think the thinking is she's the most vulnerable of those left. That doesn't mean by any stretch of the imagination, she goes down. And Donald Trump is having a very good first week. But let's not forget what just happened. And you were just talking about the Chinese came out and they shot the gun over the bow. There is no question on the timing here of the Chinese coming out with all of this information on Deep Seek, not just how much it cost, but what was involved in the creation. That is a warning that Donald Trump's smooth sailing may not be so smooth around the world, that this competition is very real. So, yes, He's got some important short term wins here, but it is not going to be smooth sailing. It never is for the president.
I keep asking Rick on this Deep Seek matter, why not if you're Donald Trump, why not just ban it if it's scooping up a Gmail accounts and phone numbers of Americans? Or would that make it more difficult for him to rationalize keeping TikTok around. Yeah, well he.
Could always flip flop on TikTok again, right, I mean, like, why don't we just come to agreement that these pernicious kind of businesses that are really sponsored by the Chinese Communist Party and are collecting enormous amount of data on everything we do in our lives should not be allowed to prosper in the United States.
It's not.
And I think that if you have consistency in the administration, you'd look at this and many of these other apps that are people flocking to outside of TikTok and you'd shut them down immediately. And why I give access to our data and our information when we don't have reciprocity in China? Simply put, forget all the national security implications, which are not insignificant.
You know, Donald Trump.
Wants to make it tough for countries that don't allow our businesses to prosper in their markets. China is the worst offender, go after them first.
Well, Rick, when we look at what's happening in the markets today, an Aztec one hundred now down three point three percent in video obviously is creating a massive drag over the implications for that company. But are you surprised, because I'm a little surprised that we haven't heard from Donald Trump about this yet, knowing how he likes to use the stock market as a barometer for how he himself is doing as president.
Well, he hasn't put it out yet, so I mean, maybe we'll hear from him later this afternoon. But yeah, I wouldn't be surprised that we get a you know, true social post even while he's still on the golf course before the dinner tonight with Republican leadership. It says something gives the country some indication of where his mind is because it has been doing the wander a little bit on this issue, and we'd like to see it wander back to someplace that has strategic value to the United States.
All right, Rick Davis and Jeanie Shanzino, our signature political panel, Thank.
You so much, thanks for listening to the Balance of Power Podcasts. Make sure to subscribe if you haven't already, at Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com.
