Bloomberg Talks
00:05:44 · Dani Burger, Ralph Schlosstein
[00:05:44] S2: When it comes to the fiscal trajectory of this United States, it's something you've long spoken out against and you're concerned there. That's one of the things that notably wasn't on the ballot, deficit spending. Maybe the bond market has fits and starts about what it cares. If it cares about that bond market notably rallying today. Is there anything that puts a brake on this Congress? Again, especially because that was not on the ballot. They came in with no one talking about deficit spending in the United States. [00:06:09] S0: Well, if I have a concern about the next couple of years, I think our fiscal trajectory is totally unsustainable. It will end. I've often said this. It will end. When it ends, it will end badly. I just don't know what will precipitate that and when it will happen. If you look back historically at periods of divided government, particularly centered around the fiscal policy and budgets, the method of compromise between the Democrats and the Republicans has very often been no new taxes for the Republicans and some more spending for the Democrats. That would obviously exacerbate the concern that I already have. I think it's a very low probability, but what would be a remarkable thing would be if we actually had something along the lines of, I don't think you could do a real Simpson-Bowles, but a mini Simpson-Bowles where there's an acknowledgement on both sides of the aisle that we have to start bending the curve on our fiscal trajectory.
00:06:09 · Ralph Schlosstein, Dani Burger
[00:06:09] S0: Well, if I have a concern about the next couple of years, I think our fiscal trajectory is totally unsustainable. It will end. I've often said this. It will end. When it ends, it will end badly. I just don't know what will precipitate that and when it will happen. If you look back historically at periods of divided government, particularly centered around the fiscal policy and budgets, the method of compromise between the Democrats and the Republicans has very often been no new taxes for the Republicans and some more spending for the Democrats. That would obviously exacerbate the concern that I already have. I think it's a very low probability, but what would be a remarkable thing would be if we actually had something along the lines of, I don't think you could do a real Simpson-Bowles, but a mini Simpson-Bowles where there's an acknowledgement on both sides of the aisle that we have to start bending the curve on our fiscal trajectory. [00:07:20] S2: Do you think the bond market could force markets to do that? Again, notably not reacting today, but it has this year had past episodes that has gotten the attention of this government. [00:07:28] S0: Yeah, I ultimately believe it will be the bond market that is the trigger but it will be something else that triggers the bond market. It won't be the bond market alone.
00:07:28 · Ralph Schlosstein, Dani Burger
[00:07:28] S0: Yeah, I ultimately believe it will be the bond market that is the trigger but it will be something else that triggers the bond market. It won't be the bond market alone. [00:07:39] S2: You were getting into this before. Part of the reason that a lot of corporate America has said we are going all out with M & A is because it's a more friendly regulatory environment. You were saying that you expect companies, basically, they're now having a two-year ticking clock. Is that fair to say that we don't know what's going to happen in 2028? This is still favorable. Let's get deals done.
00:07:39 · Dani Burger, Ralph Schlosstein
[00:07:39] S2: You were getting into this before. Part of the reason that a lot of corporate America has said we are going all out with M & A is because it's a more friendly regulatory environment. You were saying that you expect companies, basically, they're now having a two-year ticking clock. Is that fair to say that we don't know what's going to happen in 2028? This is still favorable. Let's get deals done. [00:07:57] S0: Yeah, I think you have to look at the fact that a huge amount of what business deals with is not adjudicated in the legislative world. It's adjudicated in the regulatory world, which is controlled by the executive branch. So if you look, if you're sitting here today as a business person, you're going to say, well, the political world has gone a fair amount more democratic, which traditionally has involved more regulation, more antitrust oversight. But the executive world still has two years to go. And I basically, even before this, nobody would have anticipated the degree of the blue victory here. But even before that, and it's not clear to me that this changes what I said earlier, which is if you look at what Trump has done in his first two years, there's only one piece of meaningful legislation, the big, beautiful bill. Everything else he has done by executive order, by fiat, and the really only check and balance on him has been the courts. And in some cases, he's ignored that.
00:07:57 · Ralph Schlosstein, Dani Burger
[00:07:57] S0: Yeah, I think you have to look at the fact that a huge amount of what business deals with is not adjudicated in the legislative world. It's adjudicated in the regulatory world, which is controlled by the executive branch. So if you look, if you're sitting here today as a business person, you're going to say, well, the political world has gone a fair amount more democratic, which traditionally has involved more regulation, more antitrust oversight. But the executive world still has two years to go. And I basically, even before this, nobody would have anticipated the degree of the blue victory here. But even before that, and it's not clear to me that this changes what I said earlier, which is if you look at what Trump has done in his first two years, there's only one piece of meaningful legislation, the big, beautiful bill. Everything else he has done by executive order, by fiat, and the really only check and balance on him has been the courts. And in some cases, he's ignored that. [00:09:14] S2: What do you then make of the incoming overhouse committee chairman saying two words, lawyer up? I mean, for companies, is this just more investigations, especially Trump-aligned ones? [00:09:24] S0: In the world I live in, that's a very disappointing statement. [00:09:27] S2: Do you want to say anything more about that, Ralph, or do you want to just leave that there? [00:09:31] S0: You know, I think disappointing is a very strong word.
00:09:31 · Ralph Schlosstein, Dani Burger, Isabelle Lee
[00:09:31] S0: You know, I think disappointing is a very strong word. [00:09:33] S2: Okay, it is a very strong word. Okay, but not just that, because again, this idea that you get pushback. The states have been quite active as well. I mean, all you need to look at is the Paramount deal and what California did. Excuse me, considering some of the local elections, do you expect states also to continue to push back against various deals that get done? [00:09:51] S0: Well, in these areas, states have de minimis standing in reality. [00:09:58] S1: And. [00:09:58] S2: you. [00:10:00] S0: Know, I think I was not involved in the Paramount discussions or the transaction. But my guess is that Paramount, even though they probably would have won in court, made a decision. We want to get on with this and let's make a, you know, a set of milk, which was of modest proportions. And that California probably agreed to that because they knew their legal case was not as strong as they would want. So I don't, you know, in a lot of areas, the states and the localities have huge influence, including over elections, but in antitrust, not really. [00:10:43] S1: If we choose to stay local, let's go to Texas, because that saw the first Democratic win since 1990s, and Bloomberg Invest had a conference there. Danny was the headline for much of that. And entangled with Texas is data centers, and roughly a third of the data centers that are set to be built are in Texas. What do you make of that? Do you think that we will see more roadblocks ahead?