>> THIS IS BALANCE OF POWER ONBLOOMBERG TV AND RADIO.

 ALONGSIDE JOE MATHIEU, I'MKAILEY LEINZ IN WASHINGTON.

 MOODY'S ANNOUNCING IT ISDOWNGRADING THE U.

S.

 TO A AA ONE CREDIT RATING FROMAAA, CITING WHAT WE HAVE BEEN SEEN PLAYING OUT BETWEENCONGRESS AND THE WHITE HOUSE.

 MOODY'S NOTING SUCCESSIVE U.

S.

ADMINISTRATIONS AND CONGRESS FAILING TO REVERSE DEBTS.

 THEY DO NOT BELIEVETHE CURRENT FISCAL PROPOSALS WILL RESULT IN SOLVING THAT.

JOE: HOURS AFTER THE BUDGET COMMITTEE FAILED TO CLEAR THEONE BIG, BEAUTIFUL BILL PRESIDENT TRUMP SPEAKS ABOUT.

 PAYING FOR THEM HAS BEEN AMAJOR QUESTION ABOUT THAT.

 THIS IS WHY WE SAW MEMBERS OFTHE FREEDOM CAUCUS VOTING AGAINST THAT WAY.

 KAILEY: WE SHOULD ALL KEEP IN MINDMOODY'S WAS THE LAST ONE STANDING.

 OTHERS HAD ALREADY DOWNGRADEDIN THE DEBT CEILING FIGHT.

 THAT IS THE CONTEXT WITH WHICHWE TURN TO BLOOMBERG'S EDITOR MICHAEL MCKEE AS WELL ASROMAINE BOSTICK JOINING US FROM NEW YORK.

ROMAIN, JUST TO BEGIN WITH YOU, WHILE THE REASONING MIGHT BEUNEXPECTED, TIMING IS CERTAINLY A SURPRISE.

WHAT IMPACT SHOULD WE EXPECT ACROSS ASSET CLASSES? ROMAINE: MY FIRST THOUGHT WAS GOING BACKTO 2011 WHEN WE TALK ABOUT THIS IDEA OF THE S&P, WHEN THEY MADETHAT BIG DOWNGRADE AND THIS OF YOUR MARKET REACTION WE SAW.

WE SHOULD POINT OUT RIGHT NOW MOST OF THE MARKETS WERE CLOSED.

YOU DID SEE A BIG LEG DOWN IN TREASURY FUTURES AND THE TLTWHICH PRIMARILY TRACKS LONGER DATA TREASURY PRICES.

 YOU ARE ALSO SEEING EQUITYMARKETS STILL TRADING.

 ALSO MOVING SLIGHTLY LOWER.

THE DECLINES ARE FRACTIONAL, TO BE SURE.

BUT AGAIN, IT IS LATE ON A FRIDAY.

WE COULD SEE MUCH MORE OF A REACTION MONDAY MORNING.

 THIS GETS TO THIS IDEA OFSOMETHING THE MARKET HAS BEEN PUSHING BACK ON.

 DEBT SERVICING COST LEVELS.

WITH THIS BILL, THERE WOULD POTENTIALLY BE PUSHED BACK THEMARKET.

 I WAS A LITTLE SURPRISED THATWE GOT THE PUSHBACK FROM ONE OF THE RATINGS COMPANIES.

 JOE:THIS COMES MORE THAN A YEAR AFTER MOODY'S CHANGED ITSOUTLOOK TO NEGATIVE.

 WHAT HAS HAPPENED IN THATPERIOD OF TIME TO LEAD TO THE ACTUAL DOWNGRADE.

 MICHAEL:I SUPPOSE I COULD SHORTHANDED BY SAYING NOTHING.

 MOODY'S AND OTHERS HAVE BEENCONCERNED BY THE U.

S.

 DEBT PROFILE THERE WERESUGGESTIONS IT COULD BE COMING FOR -- FROM QUITE SOME TIME.

 THE ISSUE MAY BE THE BIG,BEAUTIFUL BILL.

 MOODY'S LOOKING AT THAT.

THEY SAY THEY DON'T THINK IT IS GOING TO DO ANYTHING TO LOWERTHE U.

S.

 DEBT SITUATION SO THEY FEELLIKE THEY COULD CUT US ONE NOTCH.

 IT MEANS THE U.

S.

HAS BEEN DOWNGRADED BY ALL THREE AGENCIES.

THAT PUTS US BELOW, THERE ARE 10 COUNTRIES LEFT THAT HAVE AAARATINGS.

 THE U.

S.

 IS NO LONGER A AAA RATEDCOUNTRY EVEN THOUGH IT IS THE LARGEST ECONOMY IN THE WORLD.

KAILEY: WHEN WE CONSIDER AS I SIT HEREON BALANCE OF ABOUT THE RESPONSE WE MIGHT SEE FROM ANADMINISTRATION THAT HAS ARGUED SUGGESTING IT IS NOT ACTUALLYTHE DEFICIT LEVEL THAT MATTERS, IT IS ALL ABOUT DEBT TO GDP ANDTHAT IS NOT THAT BAD.

 IS THIS MOODY'S SAYING THATARGUMENT DOES NOT HOLD WATER IN THE CURRENT INTEREST-RATEENVIRONMENT? MICHAEL: ABSOLUTELY.

MOODY'S IS LOOKING AT PROJECTIONS THAT THE U.

S.

DEBT TO GDP RATIO IS GOING TO RISE OVER THE NEXT FEW YEARS,MAYBE AS HIGH AS 140, 150% ON THE PATH WE ARE ON.

THEY SAY THAT SUGGESTS A LEVEL OF FISCAL YOUR RESPONSIBILITYTHAT JUSTIFIES THE DOWNGRADE.

 THE QUESTION IS HOW DOES THATIMPACT THE U.

S.

 ITSELF BECAUSE IT WILL LIKELYRAISE INTEREST COSTS WHICH YOU'LL -- WHICH WILL INCREASETHE DEBT BECAUSE THE GOVERNMENT WILL HAVE TO PAY MORE FOR ITSBORROWING.

 MARKETS ARE LARGELY CLOSED.

 WE WILL SEE SUNDAY NIGHT,MONDAY MORNING WHAT THIS LIKELY MEANS.

IT DOESN'T MEAN FORCED SELLING.

 A LOT OF BOND CONTRACTS WERECHANGED, THEY TOOK OUT REFERENCE TO THE AAA RATING ANDTHEY PUT IN U.

S.

 GOVERNMENT DEBT.

BECAUSE OF THE SIZE OF THE TREASURY MARKET THAT HASGENERALLY BEEN CONSIDERED A REFERENCE TO THE DATA AND ITMEANS THAT JUST BECAUSE THERE IS A DOWNGRADE DOESN'T MEAN ALOT OF PEOPLE HAVE TO SELL, BUT IT CERTAINLY MEANS HIGHERINTEREST RATES.

 JOE: MIKE MCKEE AND THE CLOSECOANCHOR ROMAINE BOSTICK WITH REACTION TO THIS IMPORTANTHEADLINE.

 WE TURN TO THE CHIEF U.

S.

ECONOMIST, A VETERAN OF THE FIRST TRUMP ADMINISTRATION.

JOE, GREAT TO HAVE YOU BACK.

 WAS THIS DESERVED? >> NO, I DON'T THINK IT WASDESERVED.

 YOU SAID IT.

 THE TIMING IS VERY STRANGE.

THE BILL IS WORKING ITSELF THROUGH THE CONGRESS.

WE HAVE TO SEE WHAT IT LOOKS LIKE.

THE CBO ESTIMATES OF HOW THEY SCORE I HAVE REAL PROBLEMS WITH.

THEY ARE ASSUMING GDP OF LESS THAN 2%.

I DON'T KNOW WHAT MOODY'S IS ASSUMING.

WE HAVE 100% DEBT TO GDP.

 THAT IS NOT UNUSUAL ESPECIALLYAFTER A PERIOD OF VERY LOW RATES.

 DEAR YOU ARE, YOU AREDOWNGRADING THE COUNTRY THAT HAS THE RESERVE CURRENCY, DOWNGRADING THE COUNTRY THATHAS THE BEST PRODUCTIVITY PER CAPITA OF ANY COUNTRY.

TO DO THIS, I'M COMPLETELY NONPLUSSED BY IT.

AND TO DO IT ON A FRIDAY BEFORE EVEN SEEING A BILL WHICH ITHINK, I'M AN OPTIMIST, DO SOME GOOD STUFF ON THE SPENDING ANDCERTAINLY RAISE REVENUES.

 I'M GUESSING THIS IS BEHINDMOODY'S ANALYSIS.

 WHEN YOU ASSUME THAT THIS ISSOMEHOW GOING TO ADD TO THE DEFICIT, IT IS FUNDAMENTALLYWRONG IN MY OPINION.

 IT IS VERY POOR FORECASTING SOI HAVE A BIG PROBLEM WITH WHAT MOODY'S DID.

 KAILEY:I WILL GIVE YOU SOME OF THEIR REASONING DIRECTLY FROM THESTATEMENT, OVER THE NEXT DECADE WE EXPECT LARGE DEFICITS AFTERENTITLEMENT SPENDING RISE AS WELL GOVERNMENT SPENDINGREMAINS LARGELY FLAT.

 WHAT PART OF THAT THINKING DOTHEY HAVE WRONG? IS IT THE REVENUE SIDE ORENTITLEMENTS GOING UP? JOSEPH:IF YOU LOOK AT THE CBO SCORING, IT IS ACTUALLY BEYOND THE NEXT10 YEARS WHERE MEDICARE AND MEDICAID ARE DRIVING IT, BUTTHAT IS WAY FAR OUT.

 THE REVENUE SHARE OF GDP, WEHAVE RECENTLY HAD A REALLY EXCESSIVE SPENDING.

 WE HAVE TO SEE WHAT THESPENDING LOOKS LIKE.

 CONGRESS IS WORKING TO PASS ABUDGET.

 WE DON'T KNOW WHAT THE SPENDINGIS GOING TO LOOK LIKE.

 WE KNEW THIS WAS GOING TOHAPPEN, THE LONG-TERM TRENDS LOOK FOR BY SOME ESTIMATES.

 WHY WOULD YOU DO IT NOW WITHOUTEVEN KNOWING WHAT THE BUDGET LOOKS LIKE?BY THE WAY, 10 YEAR YIELDS WERE RECENTLY UNDER 4% AND THEY HAVE RISEN UP TO THE 4.

45% TO 4.

5PERCENT RANGE BECAUSE THE U.

S.

 ECONOMY LOOKS HEALTHY.

HIGHER IS STILL LOWER THAN WHAT IT WAS IN JANUARY.

WITHOUT GOING INTO ALL THE DETAILS MOODY'S CAME UP WITH,THEIR ASSUMPTIONS TO ME I DON'T AGREE WITH.

I DON'T AGREE WITH THEM.

 JOE: IT IS REALLY INTERESTING.

 WHEN THEY POINT TO $4 TRILLIONBEING ADDED TO THE FEDERAL DEFICIT, ARE YOU TAKING ISSUEWITH THE REASONING OR THE TIMING? JOSEPH: THE REASONING.

I'M ASSUMING THEY ARE USING CBO ANALYSIS.

 THAT IS RIDICULOUSLY LOW.

 THE DIFFERENCE BETWEEN 1.

8%GROWTH, I THINK WE COULD BE A THREE.

THE REVENUE DIFFERENCE ON THAT ALONE.

 THAT IS $4 TRILLION IN WHAT WEWOULD GET BASED ON JUST THE GROWTH.

 THEY ARE ECONOMICALLY DOOM ANDGLOOM.

 KAILEY:YES, THERE ARE NEGOTIATIONS HAPPENING ON CAPITOL HILL, BUTTHERE ARE NEGOTIATIONS HAPPENING TRYING TO SET NEWRATES OF TARIFFS.

 THEY ARE GOING TO BE AT LEAST10% THE BASELINE.

 THAT BRINGS US TO THE HIGHESTLEVEL WE HAVE SEEN IN DECADES.

 DOES THAT NOT HAVE SOMEBEARINGS? JOSEPH: YOU WERE DOING -- I ALMOSTAGREED WITH YOU ALL THE WAY.

 CERTAINLY ON THE REVENUE SIDE.

 IT HAS YET TO SHOW UP IN THEINFLATION DATA.

 THE PROBLEM IS WHEN CBO DOESITS ANALYSIS BECAUSE IT ASSUMES IT HAS TO BE LEGISLATED.

 LET'S SAY IT IS THE BOTTOM END.

 I HAVE TO BELIEVE THAT WHEN THEBUDGET COMES DOWN.

 $100 BILLION TIMES 10 GIVES YOU2 TRILLION.

 JOE:DOES THIS NOT STRENGTHEN THE HAND OF MEMBERS OF THE FREEDOMCAUCUS WHO HAVE EXPRESSED CONCERN ABOUT RISING DEBT ANDDEFICIT.

 THEY JUST GOT AN INTERESTINGBIT OF COMPANY IN THIS ARGUMENT.

 JOSEPH:CERTAINLY THE FISCAL HAWKS WILL USE THIS AS A REASON TO BE MORECAREFUL ON THE OUTLOOK.

 AS IT RELATES, WE NEED TO SLOWTHE PACE OF SPENDING.

 THESE ARE NOT CUTS.

 JOE:I'M JUST ANOTHER JOE, JOE.

 [LAUGHTER] JOSEPH:IF WE GO FROM 6% NOMINAL SPENDING TO 5%, I THINK WEDESPERATELY NEED TO SLOW THE PACE OF SPENDING.

 BECAUSE THE DEFICIT LONG-TERMIS ON THE REVENUE SIDE, THEY ARE ASSUMING THAT IF WE HAVEMASSIVE TAX INCREASES NEXT YEAR, THE LARGEST EVER, THATWILL RAISE REVENUE.

 IT WON'T WORK THAT WAY BUT ONTHE SPENDING SIDE, THERE IS ROOM TO CUT OR SLOW THESPENDING.

 KAILEY:IF YOU WOULD EXPECT KNOWING THE PRESIDENT AS YOU DO FOR HIM TOBE PUSHING FOR THE ACTUAL RATES SET BY THE FEDERAL RESERVE TOBE LOWER IN THE NAME OF LONG-TERM PHYSICAL HEALTH,WOULD YOU BE SURPRISED IF HE STEPS IN WITH THAT ARGUMENT?JOSEPH: MAYBE, BUT HERE IS WHAT I WANTTO SAY.

 IF YOU LOOK AT THE YIELD CURVE,IT IS STILL VERY FLAT AND RECENTLY, THE TWO YEAR YIELDWAS ABOVE THE FED FUNDS RATE.

 SO THE INTEREST COSTS ARESIGNIFICANTLY HIGH.

 IF WE HAVE LOWER RATES AND THECURVE NORMALIZES, THIS WILL LOOK A LOT LOWER.

 BY JAY POWELL ZONE INFLATIONMETRIC, THE SERVICES ECONOMY, EXCLUDING ENERGY AND HOUSING.

IT HAS NO IMPACT.

 THERE IS A VERY POWERFULARGUMENTS THAT THE FED SHOULD AND COULD BE CUTTING.

INTEREST COSTS ARE GOING TO COME DOWN A LOT.

I DOUBT THAT IS IN MOODY'S ESTIMATES EITHER.

 JOE: THANKS FOR BEING WITH US HEREMOMENTS AFTER THIS NEWS BROKE.

 UP NEXT A LOT MORE ON THEBREAKING NEWS COME ALIVE ON CAPITOL HILL FOR REACTION ASWELL.

 THIS IS BALANCE OF POWER ONBLOOMBERG TV AND RADIO.

 KAILEY:MOODY'S HAS DOWNGRADED THE U.

S.

'S CREDIT RATING FROM AAADOWN TO AA ONE.

 THEY CITEDECISIONS ON CAPITOL HILL, PUTTING A SPOTLIGHT ON THEM.

THE HOUSE BUDGET COMMITTEE AFTER CONSERVATIVE REVOLT SHOTDOWN ITS ADVANCEMENT, THE TAX PACKAGE, THROUGH THE BUDGETCOMMITTEE.

 WE WANT TO GET MORE FROM JACKFITZPATRICK FROM BLOOMBERG GOVERNMENT.

WE KNOW CONVERSATIONS ARE GOING TO CONTINUE WITH THESECONSERVATIVE MEMBERS THIS WEEKEND.

 HOW MUCH FUEL DOES THISDOWNGRADE GIVE TO THEIR ARGUMENTS WHEN WE CONSIDERTHOSE FISCAL HAWKS? JACK: IT ADDS A LOT OF FUEL.

YOU HAD FOUR CONSERVATIVE HOLDOUTS IN THE BUDGETCOMMITTEE ALONE.

 ON THE OTHER HAND, I WOULDPOINT OUT THE SALT REPUBLICANS WHO WANT A MORE GENERALLYGENEROUS BILL FOR THEIR CONSTITUENTS HAVE THREATENED TOHOLD OUT.

 THERE IS A RISK THAT IF YOUGIVE MORE IN MEDICAID SPENDING REDUCTIONS AND MORE FISCALLYCONSERVATIVE MEASURES TO THE CONSERVATIVES IT MAY JUST BEREDIRECTED TO A MORE GENEROUS SALT DEDUCTION.

THERE IS NOT NECESSARILY A FAIR TAKEAWAY TODAY THAT THIS WILLBE A FAR MORE CONSERVATIVE BILL EVEN AS A FEW CONSERVATIVESREALLY AT THEIR FOOT DOWN AND DEMAND ADDITIONAL CONCESSIONS.

JOE: WE UNDERSTAND THERE IS A 10:00P.

M.

 HEARING SET FOR SUNDAY TO TRYTO DO THIS ALL OVER AGAIN.

 YOU CAN LET US KNOW IF THAT ISTHE CASE.

 WHAT CHANGES BETWEEN NOW ANDTHEN FOR THESE FREEDOM CAUCUS MEMBERS? JACK: ROY AND NORMAN ONE AND EARLIERPHASE-IN .

 THEY WANT AN EARLIER ATTEMPT TOPULL BACK THE CLEAN ENERGY TAX CREDIT.

 YOU COULD COME UP WITH SOMECOMBINATION OF OFFER.

 YOU NEED AT LEAST TWO OF THEMTO GET ON BOARD IN THE BUDGET COMMITTEE, BUT YOU ALSO NEEDEITHER ROY OR NORMAN SPECIFICALLY TO GET ON BOARD TOGET THEM THROUGH THE RULES COMMITTEE BECAUSE YOU CAN ONLYLOSE TWO VOTES ARE THERE.

 THEY NEED SOME SIGNIFICANTCOMBINATION, POTENTIALLY RE-OUT OF THE FOUR FUNCTIONALLY TO GETTHIS TO THE HOUSE FLOOR SOMETIME NEXT WEEK.

 JOE:IT IS GOING TO HAVE TO BE A PRODUCTIVE WEEKEND FOR THAT TOHAPPEN.

 JACK FITZPATRICK FROM CAPITOLHILL, THANKS FOR THE REPORTING AS WE ADD THE VOICE OFCONGRESSMAN ROGER CHRISTER MURPHY.

QUITE THE AFTERNOON AND EVENING WE HAVE FOUND OURSELVES HERE.

WE HAVE SEEN THE BILL FAIL IN THE BUDGET COMMITTEE AND HOURSLATER, THE CREDIT DOWNGRADE WE JUST RECEIVED FROM MOODY'S.

IS MOODY'S TELLING US SOMETHING THAT OTHER LAWMAKERS OUGHT TOBE LISTENING TO? WHAT ARE WE LEARNING ABOUT THEFISCAL HEALTH OF OUR NATION? >> WELL, IT IS PRECARIOUS INTHIS PARTICULAR BILL, THEY CALL IT THE BIG, BEAUTIFUL BILL, ITIS A LARGE LOUSY LAW PUTTING TRILLIONS OF DOLLARS.

 THIS THING PILING UP DEBT FORFUTURE GENERATIONS AND IT IS SENDING A SIGNAL TO THEM NOT TOPASS THE BILL.

 KAILEY: AND YET THEY ARE GOING TOCONTINUE TO TRY OVER THE WEEKEND, CONGRESSMAN.

THERE ARE MANY QUESTIONS ABOUT THE TIMELINE.

EMBEDDED IN THE BILL IS A LIFT TO THE DEBT CEILING THAT HASTHEM PART CAUSED THE DOWNGRADE FROM THE OTHER CREDIT -- CREDITAGENCIES, FITCH AND S&P HAVE WARNED ABOUT THIS.

DO YOU THINK THERE MAY BE A POSSIBILITY DEMOCRATS IN THENAME OF THE FULL FAITH AND CREDIT OF THE UNITED STATES AREGOING TO HAVE TO STEP IN AND WORK REPUBLICANS TO MAKE SURETHE DEBT CEILING GETS RAISED IN A TIMELY MANNER.

REP.

 KRISHNAMOORTHI: POSSIBLY, BUT ONLY IF THEREPUBLICANS DON'T SHRED THE SOCIAL SAFETY NET IN THE NAMEOF FUNDING TAX CUTS FOR THE WEALTHIEST AMONG US.

 THIS SAME BILL BASICALLY TAKESMEDICAID AWAY FROM UPWARDS OF 10 MILLION AMERICANS.

THEIR SOLE SOURCE OF HEALTH CARE.

IT BASICALLY LEAVES THEM MORE DESTITUTE, SICKER, AND UNABLETO WORK, MAKING THEM MORE RELIANT ON THE SOCIAL SAFETYNET.

 I MAY PRODUCT MYSELF A PUBLICHOUSING AND FOOD STAMPS.

 I WOULD NOT BE HERE BUT FOR THEFACT THAT THE GOVERNMENT STEPPED IN THE BREACH.

 AND YET WE ARE HERE TALKINGABOUT DOING THE SAME TO MILLIONS OF OTHER PEOPLE.

DEMOCRATS ARE NOT GOING TO STAND FOR THAT.

THEY ARE NOT GOING TO SUPPORT THAT TYPE OF APPROACH TO OURBUDGET THE WAY THE REPUBLICANS ARE RIGHT NOW.

 JOE:CONGRESSMAN, CONSIDERING THE FACT DEMOCRATS DO NOT HAVE ASEAT AT THE TABLE FOR THIS DEBATE IN THE RECONCILIATIONPROCESS BY DESIGN ARE YOU QUIETLY HOPING THE FREEDOMCAUCUS DERAILS THIS WHOLE THING? REP.

 KRISHNAMOORTHI:I THINK WHETHER I DO OR NOT, I THINK THAT IS WHAT THEY AREDOING RIGHT NOW AND WE HAVE SEEN THE INFIGHTING.

 I THINK PARTICULARLY BECAUSECONSTITUENTS ARE KIND OF RAISING THE ALARM.

DEMOCRATS ARE SHINING A LIGHT ON THE HARM THAT IS BEING DONETO THESE PROPOSED CUTS.

 I'M GETTING CALLS CONSTANTLY,JOE, FROM PEOPLE WHO ARE BASICALLY FEARFUL THAT NOT ONLYIS MEDICAID GOING TO BE CUT, BUT THE SOCIAL SECURITY ANDMEDICARE ARE GOING TO BE AFFECTED.

 I'VE GOT TO BELIEVE THAT THEYARE GETTING THE SAME TYPES OF CALLS.

 DO THEY CHOOSE THEIRCONSTITUENTS OR DONALD TRUMP? IF THEY CHOOSE THE LATTER, THEYWILL BE HELD ACCOUNTABLE.

 KAILEY:YOU ARE IN THE MIDDLE 11 ACTIVE RUN FOR A SENATE SEAT BEINGVACATED BY DICK DURBIN.

 I WONDER WHAT YOU EXPECT FROMTHE UNITED STATES SENATE AS THERE ARE SENATORS WHO HAVEMADE SIMILAR SUGGESTIONS TO YOU EVEN IN OF THE REPUBLICAN SIDEABOUT CONCERNS OVER MEDICAID, OVER THE TYPE OF SPENDING CUTSWE ARE LOOKING AT HERE.

 ARE WE ASSUMING THE HOUSE CANPASS ONE IN THE FIRST PLACE? REP.

 KRISHNAMOORTHI:I THINK THEY WILL.

 BASED ON WHAT I HAVE HEARD, ITIS VERY POSSIBLE THEY ARE NOT GOING TO GO ALONG WITH THESETYPES OF CUTS.

 AT THE END OF THE DAY, DONALDTRUMP IS TRYING TO FUND THE TAX CUTS ON THE BACK OF WORKINGFAMILIES AND THE POOR.

 THAT IS SOMETHING THAT DOESN'TGO OVER WELL AND NOT ONLY IS MOODY'S, THIS IS THE FIRST TIMEALL THREE RATINGS AGENCIES HAVE DOWNGRADED AMERICA'S DEBT ATTHE SAME TIME.

 NOT ONLY IS THIS BILL HORRIBLEFROM A FISCAL STANDPOINT, BUT IT IS MORALLY WRONG.

I THINK THAT IS SOMETHING WEIGHING ON A LOT OF PEOPLE ASWELL.

 JOE: WHEN YOU HEAR ABOUT A BUDGETCOMMITTEE MEETING 10:00 P.

M.

 ON A SUNDAY, DOES THAT TELL YOUTHE CHAIRMAN THINKS HE HAS THE VOTES OR NOT?REP.

 KRISHNAMOORTHI: IT SIGNALS TO ME THAT PERHAPSHE IS HOPING THAT SOME MEMBERS DON'T SHOW UP.

 I THINK THAT IT IS A DESPERATEATTEMPT TO TRY TO RESCUE THAT PARTICULAR BILL, BUT REGARDLESSOF WHAT HAPPENS SUNDAY NIGHT, I GUARANTEE YOU THAT CONSTITUENTSARE GOING TO BE PAYING ATTENTION NOT ONLY SUNDAYNIGHT, BUT THE NEXT WEEK AS WELL.

 KAILEY:OF COURSE THIS WEEKEND IN WASHINGTON IS GOING TO BE AVERY BUSY ONE FOR THAT REASON.

 THAT IS WHAT PRESIDENT TRUMP ISRETURNING TO AS HE MAKES HIS JOURNEY BACK TO THE MIDDLEEAST.

 I DO WANT TO ASK YOU ABOUT THE DEALS PRESIDENT TRUMPSTRUCK WITH THE MOVES THE U.

S.

 IS MAKING WHEN IT COMES TOCHIPS AND TECHNOLOGY THAT SAUDI ARABIA AND THE UAE ARE GOING TOHAVE ACCESS TO.

 ARE YOU WORRIED ABOUT THEMARKET BEING CHINA? REP.

 KRISHNAMOORTHI:YES, I THINK IT IS A HORRIBLE DEAL.

 FIRST OF ALL, RECISION ORENDING OF WHAT IS CALLED THE AI DIFFUSION, BASICALLY THIS RULEPREVENTS US FROM SELLING TO INDIVIDUALS OR ENTITIES INCOUNTRIES THAT MIGHT END UP SHARING WITH THE CHINESECOMMUNIST PARTY AND THAT IS WHAT IS GOING TO HAPPEN HERE.

IF WE ALLOW AMERICAN CHIP COMPANIES TO SELL THE HIGHESTAND SEMI CONDUCTORS TO COMPANIES LIKE G 42 IN THEUNITED ARAB EMIRATES, THAT TECHNOLOGY IS GOING TO END UPIN THE HANDS OF THE CHINESE GOVERNMENT AND IT IS GOING TOBE USED AGAINST US.

 IT IS GOING TO BE USED IN THEIRMILITARY SYSTEMS AND TO PERPETRATE HUMAN RIGHTS ABUSESSUCH AS IN THE UIGHUR GENOCIDE.

 JOE:SOMETHING TELLS ME THAT CHINA SELECT COMMITTEE WILL NOT BEHOLDING A HEARING ON THAT.

 IS THAT IS SOMETHING YOU WILLPUSH FOR? REP.

 KRISHNAMOORTHI: I WILL BE PUSHING TO SHINE ALIGHT ON THIS AS MUCH AS I POSSIBLY CAN BECAUSE IT IS ONEOF THOSE ISSUES WHERE I THINK THESE EXPORT CONTROLS REALLYHAVE MADE A CRITICAL DIFFERENCE.

 WE HAVE TO KEEP THE CCP AWAYFROM THESE HIGHEST AND SEMI CONDUCTOR CHIPS.

THEY WILL USE THOSE CHIPS AGAINST US MILITARILY, WHETHERIT IS IN HYPERSONIC SOULS OR OTHER WEAPONS AND THEY WILL USEIT TO PERFECT THEIR SURVEILLANCE STATE, THEIRTECHNO-AUTHORITARIAN SURVEILLANCE STATE AGAINST UIGHURS, TIBETANS, AND OTHERS.

 GOOD TO HAVE YOU BACK.

THANK YOU AS ALWAYS FOR THE INSIGHTS HERE ON BLOOMBERG TVAND RADIO.

 IF YOU CAN BELIEVE IT, WE HAVEMORE BREAKING NEWS TO TALK ABOUT THIS EVEN IN THIS TIME ITIS COMING FROM THIS COURT.

 -- FROM THE SUPREME COURT.

THEY HAVE TEMPORARILY BLOCKED THE USE OF A WARTIME LAW BY THETRUMP ADMINISTRATION TO DEPORT VENEZUELANS, SAYING THEADMINISTRATION DID NOT PROVIDE SIGNIFICANT ENOUGH NOTICE.

CAN YOU PUT INTO PERSPECTIVE HOW MUCH IMPACT THIS WILL HAVE? >> THIS RULING IS ALL ABOUT DUEPROCESS.

 THEY ARE SAYING THE GOVERNMENTCANNOT JUST PORT THESE PEOPLE -- DEPORT THESE PEOPLE WITHOUTGIVING THEM DUE NOTICE, WHICH MEANS MORE THAN 24 HOURS ANDTHE ABILITY TO NOTIFY THEIR LAWYERS AND FILE AN APPEAL.

THEY ARE SAYING THESE PEOPLE NEED TO BE ABLE TO FILE HABEASPETITIONS TO PROTECT THEIR DEPORTATION TO SEEK THEIRRELEASE.

 THIS IS AN EXTENSION OF THEEARLIER ORDER WE SAW APRIL 19 1:00 IN THE MORNING WHEN THEYWERE ACTING UNDER EXTREME URGENCY BECAUSE THEY HADREPORTS OF THESE MEN BEING PUT ON BUSES AND TAKING AIR --TAKING TO AIRPORTS.

 KAILEY: ALL CAPS ON TRUTH SOCIAL, THESUPREME COURT WON'T ALLOW US TO GET CRIMINALS OUT OF OURCOUNTRY.

 MY UNDERSTANDING OF WHAT YOUSAID IS NOT THAT THE SUPREME COURT IS SAYING YOU CAN'T GETTHEM OUT, YOU JUST HAVE TO GO THROUGH DUE PROCESS.

 >> THIS IS EXACTLY RIGHT.

THEY HAVE NOT WEIGHED IN AT ALL IN OF THE USE OF THE ALIENENEMIES ACT.

 THEY ARE ALSO POINTING TOANOTHER CASE, THE ABREGO GARCIA CASE.

THE OTHER ISSUE IS THAT THE GOVERNMENT HAS NOT INVITED ANYEVIDENCE ABOUT ANY OF THESE DETAINEES TO SHOW THAT THEY ARECRIMINALS.

 WE JUST HAVE THE GOVERNMENT'SWORD, BUT THERE WAS A LOT OF BACK-AND-FORTH BETWEEN JUDGESAND THE ADMINISTRATION OVER WHETHER OR NOT THESE PEOPLE CANBE DETAINED AND DEPORTED AND WHY.

 THE JUDGE TODAY WAS VERYFRUSTRATED BECAUSE THE GOVERNMENT HAS NOT ANSWERED ANYQUESTIONS ABOUT ABREGO GARCIA AND WHY HE WAS DEPORTED AND THEGOVERNMENT HAS ALREADY ADMITTED THAT HE WAS MISTAKENLY DEPORTED.

THE JUDGE SAID IN THAT CASE SHE DOESN'T HAVE ENOUGH INFORMATIONTO EVALUATE WHETHER THAT WAS CORRECTLY APPLIED.

 JOE: WHAT RULING MIGHT -- IMPACTMIGHT THIS RULING HAVE? >> IT WILL CLEARLY BE APPLIEDTO OTHER CASES.

 THERE ARE TWO FILING A CASE OFTHE VENEZUELANS, BUT THERE ARE NEARLY 200 IN DETENTION CENTERSAROUND THE COUNTRY THAT WILL BE AFFECTED BY THIS ORDER ANDPOTENTIALLY OTHERS.

 KAILEY: ALL RIGHT, THANK YOU SO MUCHFOR JOINING US AS WE DEAL WITH ONE PIECE OF BREAKING NEWS U.

S.

RATINGS DOWNGRADED FROM MOODY'S.

 ROMAINE BOSTICK HAS AN UPDATEON THE MARKET REACTION.

 THIS DROPPED AFTER HOURS ON AFRIDAY SO WE HAVE TO CONSIDER THE TIMING, BUT WHAT ARE YOUTRACKING? ROMAINE: WE SHOULD POINT OUT, THE FIRSTBIG DOWNGRADE WE GOT OF THE TRIPOLI RATING WAS AUGUST OF2011, IT WAS ALSO ON A FRIDAY AFTER THE MARKET HAD CLOSED SOWE HEADED TO WAIT A FEW DAYS TO SEE HOW INVESTORS WOULD TAKE ITAND THEY DID NOT TAKE IT WELL.

 THAT MORNING, THE DOW JONESPILLAGED -- PLUNGED 50%.

 THE RUSSELL 2000 PLUNGED ABOUT9%.

 LOOKING AT TREASURY FUTURES ONTHE SCREEN, THIS IS INTERESTING BECAUSE IN 2011, TREASURYYIELDS FELL AFTER THAT AND IT WAS KIND OF COUNTERINTUITIVEBECAUSE EFFECTIVELY WHAT HAPPENED IS PEOPLE TOOK A SIGNWHEN THEY SAW THE DOWNGRADE, THEY SOUGHT AS A SIGN THEREWERE BROADER ECONOMIC ISSUES GLOBALLY.

WHERE DO YOU RUN IN TIMES OF TROUBLE BUT TO THEM WORLD'SMOST LIQUID BOND MARKET? IT HAVE THE OPPOSITE EFFECT.

THAT'S WHAT WE HAVE TO CONTEND WITH MONDAY MORNING, HOWINVESTORS WILL PARSE THIS.

 IN 2023, WHEN FITCH DOWNGRADEDTHE U.

S.

 FROM ITS AAA RATING, IT WASKIND OF A MARKET SHRUG.

 ALL LOSSES WERE RECOUPED INSHORT ORDER.

 JOE:WE ARE IN A DIFFERENT PERIOD OF TIME, THE PAST COUPLE OF WEEKS WE'VE WATCHED A REMARKABLEROUND-TRIP FROM INAUGURATION AND LIBERATION DAY.

YOU'VE HAD CONCERN WE HAVE RUN UP TO FAR TOO FAST WITHOUT AGREAT CHANGE IN NEWS, INDICATIONS OF TRADE DEALS FORTHE MOST PART.

 IS THIS A PERIOD IN WHICH THEMARKET IS AT MORE RISK WHEN WE REOPEN MONDAY MORNING? ROMAINE:THAT'S WHAT WE'RE HEARING FROM A LOT OF FOLKS.

 WE HAD A GUEST FROM MORGANSTANLEY THIS MORNING SAYING THAT, ADVISING HER CLIENTS TOTAKE PROFITS SPECIFICALLY FROM TEXTURES TO THINGS MOREDEFENSIVE, AND MIGHT BENEFIT FROM DEREGULATION.

 A LOT OF PEOPLE ARE SAYING THEOTHER LEG OF THE STOOL, THE HOLISTIC APPROACH THE TRUMPADMINISTRATION HAS BEEN TRYING TO MAKE WITH FISCAL POLICIES,THE OTHER LEG OF THE STOOL LOOKS LIKE IT MIGHT GIVEINVESTORS MORE TROUBLE TO WRAP THEIR HEADS AROUND,PARTICULARLY NOW THAT MOODY'S HAS DECIDED TO WEIGH IN BEFOREWE GOT AN ACTUAL VOTE ON THE BILL.

 JOE: ANOTHER REMARKABLE MOMENT WITHHELP OF ROMAINE BOSTICK.

 NEXT, MORE REACTION TO THERATINGS DOWNGRADED AS WE ARE LIVE WITH CONGRESSMAN TIMBURCHETT OF TENNESSEE.

 "BALANCE OF POWER"BALANCE OFPOWERMUCH MORE TO COME ON.

" JOE: WELCOME BACK TO "BALANCE OFPOWER.

" TONIGHT WE ARE COMING TO YOUWITH BREAKING NEWS AFTER MOODY'S DOWNGRADED THE U.

S.

CREDIT RATING, THE AGENCY DELIVERING A HARD FOR U.

S.

LEGISLATORS.

 "WHILE WE RECOGNIZE SIGNIFICANTECONOMIC AND FINANCIAL STRINGS, WE BELIEVE IT HAS NO LONGERFULLY COUNTERBALANCE THE DECLINE.

" THE U.

S.

 TO A AA1 RATING FROM A AAA.

FOR BACKGROUND, WE HAVE A REPUBLICAN CONGRESSMAN WITH US.

GOOD TO SEE YOU, THANKS FOR JOINING US.

 MOODY'S SEES IS DIRECTLYCONNECTED, THE DOWNGRADED TODAY WITH THE DEBATE TAKING PLACE ONCAPITOL HILL, THE TAX AND SPEND A BILL THAT IS SUPPOSED TO LENDITSELF TO A RECONCILIATION PROJECT.

THEY'RE ARE GREAT CONCERNS ABOUT ADDED TO THE DEBT ANDDEFICIT.

 DO YOU SHARE THOSE WORRIES? >> I DO 100%.

I COME FROM TENNESSEE AND WE HAVE ZERO DEBT, WE ARE AAA+,THE AGENCIES ALL GIVE US THAT BECAUSE WE DON'T BORROW AND WEPAY DOWN EVERYTHING.

 THE FEDERAL GOVERNMENT JUSTPRINTS MORE MONEY AND PEOPLE ARE LOOKING TO GET THROUGH THENEXT ELECTION.

 KAILEY: IF YOU DO AGREE, DO YOURCOLLEAGUES CHIP ROY, RALPH NORMAN, THOSE THAT SHOT THEPACKAGE DOWN HAVE A POINT THAT THE BILL AS IT STANDS RIGHT NOWSHOULD NOT PASS? REP.

 BURCHETT: THAT'S WHAT MOODY'S HAS SAIDAND EVERYONE AGREES WITH IT.

 THE PROBLEM IS FOLKS BACK HOMEARE NOT GRASPING THE SERIOUSNESS OF $36 TRILLION INDEBT AND RUN AWAY INFLATION.

 THE LARGEST SINGLE ITEM WE WILLPAY WILL JUST BE INTEREST ON OUR LOAN.

I'M WORRIED ABOUT LOSING OUR MAJORITY BUT I'M WORRIED MOREABOUT LOSING OUR COUNTRY BECAUSE WHAT WE KNOW TODAY, THEECONOMIC FREEDOMS WE ENJOY WILL NOT BE ENJOYED MUCH LONGER IFWE CONTINUE DOWN THIS PATH.

 JOE: PRESIDENT TRUMP WOULD SAY IF WEDON'T PASS THIS BILL IT WILL RESULT IN THE BIGGEST TAX HIKEIN RECENT HISTORY, 65% HIGHER FOR SOME FOLKS.

 WHAT IS WORSE FOR THE FISCALHEALTH OF OUR COUNTRY, A TAX HIKE OR MORE DEFICIT SPENDING?REP.

 BURCHETT: I THINK WE CAN GET BY POSITIVEON BOTH, WE CAN REDUCE SPENDING AND KEEP REDUCING TAXES, ALL WEARE DOING IS CONTINUING THE TAX CREDITS PRESIDENT TRUMP PUT ININ HIS FIRST TERM.

 IT'S NOT GOING TO INCREASE ONANYONE.

 IF WE WOULD JUST DO SOME FISCALLY RESPONSIBLE PROGRAMSAND STOP WORRYING ABOUT ELECTIONS I THINK WE COULD ALLGET THERE.

 BUT WE ARE NOT.

 PEOPLE IN WASHINGTON OVERWORRIED ABOUT BEING IN LEADERSHIP OR THE MAJORITY, NOTPUTTING AMERICA FIRST, AND TRUMP ACTUALLY IS.

I BELIEVE HE WILL GET ENGAGED AND THERE WILL BE SOME THINGS,CHIP ROY AND MY FRIEND CONGRESSMAN NORMAN, THEYUNDERSTAND THAT.

 THEY ARE WORRIED ABOUT OURFISCAL RESPONSIBILITY MORE THAN POLITICAL FUTURES AND I BELIEVEPRESIDENT TRUMP BELIEVES THAT AS WELL.

THIS IS LIKE A BASKETBALL GAME, DON'T WATCH THE WHOLE GAME,JUST WATCH THE LAST TWO MINUTES AND WE WILL GET IT WORKED OUT.

KAILEY: AS WE CONSIDER PRESIDENT TRUMP,WHO YOU THINK SHARES SOME OF THESE BELIEFS, IS HE ASKING FORTOO MUCH THAT WOULD ADD TO THE BURDEN?SHOULD HE NOT BE GETTING EVERY THING HE WANTS WHEN IT COMES TONO TAX ON TIPS OR OVERTIME FOR EXAMPLE? REP.

 BURCHETT: IF YOU THINK PEOPLE AREHONESTLY PAYING FULL TEXT ON TIPS NOW, NO.

 HE IS A BUSINESSMAN, HEUNDERSTANDS JUST BECAUSE HE HAS MONEY DOESN'T MEAN HE SHOULDSPEND IT AND IF HE DOESN'T, HE KNOWS HE CAN'T SPEND IT.

OUR SIDE OF THE AISLE, THE CONSERVATIVE SUCH AS MYSELF,BECAUSE I HAVEN'T CHECKED OFF ON THIS LAN EITHER MYSELF ANDTHEY KNOW IT BUT THEY WILL BE VOTING ON IT IN THE COMMITTEE.

I THINK THERE'S ROOM FOR BOTH.

 I THINK WE CAN REDUCE TAXES --WHY DON'T WE REDUCE THE SIZE OF GOVERNMENT?IF WE COULD GO TO UNDER PRE-COVID SPENDING LEVELS WECOULD WORK THIS OUT.

 YOU CAN'T NAME ME ONE PROGRAM-- AND I'M NOT POINTING YOU OUT, I'M SAYING AMERICA, CAN'TNAME ONE PROGRAM ADDED SINCE COVID YOU CAN'T LIVE WITHOUT,YET IF WE WENT BACK UNDER THAT, WE COULD WORK THIS THING OUT.

BUT WE DON'T HAVE THE MATURITY TO DO THAT.

WE ARE ADDICTED TO OUR GRANDCHILDREN'S MONEY ANDTHAT'S GOT TO CHANGE, BOTH PARTIES.

 JOE: THAT SAID, WHAT IS YOUR MESSAGETO REPUBLICANS, MANY OF THEM FROM THE NORTHEAST, LOOKING FORA HIGHER SALT CAP? CAN YOU AFFORD IT?REP.

 BURCHETT: I DON'T THINK IT'S FISCALLYRESPONSIBLE.

 I THINK WE CAN PROBABLY AFFORDSOMETHING.

 STATE AND LOCAL TAXES -- THESEDEMOCRAT-CONTROLLED STATES, ALL THEY ARE ASKING THEREPUBLICAN-CONTROLLED STATES ACTING RESPONSIBLY, IS TOSUPPLANT THEIR LACK OF TAX DOLLARS.

THEY WILL PUT ANOTHER RADICAL PROGRAM IN THAT COSTS MONEY ANDTHEY WILL TAX BUSINESSES AND DRIVE THEM OFF AND THEY WILLASK THEIR RESPONSIBLE REPUBLICAN-CONTROLLED STATES TOBAIL THEM OUT AND THAT'S ALL THE SALT TAX DOES GOOD THEYSHOULD BE FORCED TO FIX THEIR OWN PROBLEM IN THEIR STATES ANDKEEP THEIR HANDS OFF OF TENNESSEE'S MONEY PIT BUT ISUSPECT IT WILL BE A COMPROMISE.

 WE USED TO SAY IN THE TENNESSEELEGISLATURE, EVERYBODY WILL BE A LITTLE UNHAPPY BUT IN THE ENDIT WILL BE OK.

 IF YOU GET 95% OF WHAT YOU WANTTHAT'S A VICTORY AND I THINK WE ARE ON THAT PATH.

I THINK PRESIDENT TRUMP IS ENGAGED WITH THIS AND HEUSUALLY WAITS UNTIL THE END TO SEE WHAT EVERYBODY WANTS ANDTHEN HE TRIES TO FIGURE SOME THING OUT.

THAT'S THE ART OF THE DEAL AND WHY HE IS SUCCESSFUL.

 KAILEY: IT DOES RAISE THE QUESTION OFTIMING, KNOWING TREASURY HAS WARNED CONGRESS NEEDS TO PASS ADEBT CEILING INCREASE BY MID JULY OR WE RISK RUNNING UPAGAINST THE X DATE THAT COULD CREATE A HOST OF PROBLEMS WITHRATING AGENCIES THE ON WHAT THEY ARE ALREADY WARNING ABOUT.

 DOES THAT POTENTIALLY, THEDOWNGRADE, ADD FUEL TO THOSE WHO DON'T WANT TO SEE THE DEBTLIMIT INCREASED IN THE NAME OF FISCAL RESPONSIBILITY?WHAT DOES THAT DO TO THIS ARGUMENT? REP.

 BURCHETT:WE NEED TO BE MORE FISCALLY RESPONSIBLE.

IN THE LONG RUN WE WON'T.

 A LOT OF THESE TAX PLANS WE HADIN PLACE WERE 5, 6, 10 YEARS DOWN THE ROAD BEFORE THEY WEREIMPLEMENTED AND THAT'S HOW THEY BALANCED THE BUDGET.

YOU KNOW DONALD TRUMP WILL NOT BE THE PRESIDENT IN FIVE OR 10YEARS AND UNFORTUNATELY WE MIGHT HAVE A DEMOCRAT AND THEYWILL DO AWAY WITH EVERY THING WE TRIED TO PUT IN.

THAT'S WHITE'S OPPONENT TO MAKE THESE THINGS PERMANENT AND QUITWITH THE DOUBLETALK.

 WE CANNOT SPEND MORE MONEY THANWE TAKE IN, THAT'S THE BOTTOM LINE.

IF WE COULD GET BACK TO FISCAL RESPONSIBILITY WE COULD DO THAT.

ALL OF THE RATING AGENCIES WOULD LOVE THAT AND AMERICAWOULD LOVE IT BECAUSE THERE DOLLARS WOULD GO FATHER ANDTHEY COULD SAVE UP.

 JOE: BRING US BEHIND THE SCENES,WHAT ARE YOU HEARING FROM CALLINGS ABOUT THE BUDGETCOMMITTEE HEARING SET FOR SUNDAY NIGHT?WILL THIS ACTUALLY PASS AND CAN WE GET TO RULES NEXT WEEK?REP.

 BURCHETT: I THINK IF WE GET SOMEAGREEMENT LIKE I SAID, HOLD YOUR NOSE ON THE SALT THING ANDGET THE MEDICAID STUFF WORKED OUT TO COME UP THE WASTE ABUSEAND QUIT LISTENING -- I'M GLAD YOU HAVEN'T JOINED IN, BUT WHENYOU ARE CUTTING WASTE, ABUSE AND FRAUD IN THINGS LIKEMEDICAID, THAT PROVIDES MORE MONEY FOR THE LEAST AMONGST USAND THEY SHOULD BE FOR THAT BUT THEY ARE NOT BECAUSE IT PAYSFOR BONUS PROGRAMS ON THE LEFT AND THEY KNOW IT AND IT PAYSTHOSE PEOPLE TO COME TO THE POLLS THAT WILL NOT WORK ANDAMERICA IS SICK OF IT.

 IF YOU HAVE KIDS OR AREDISABLED AND YOU CAN'T WORK, THE PROGRAM IS FOR YOU.

IF YOU ARE ABLE BODIED AND SITTING ON THE COUCH ANDWATCHING THE VIEW ALL DAY, YOU OUGHT TO BE OUT GETTING A JOBAND AT LEAST QUALIFY FOR JOB TRAINING.

THAT'S ALL WE ARE TRYING TO DO, TAKING ILLEGALS OFF OF THISSTUFF.

 WE CAN DO THAT AND AGREE TO HOLD OUR NOSE ON SALT AND WEWILL SEE WHERE WE CAN GET.

 JOE: WE WILL SEE WHAT THE VIEW HASTO DO WITH THAT.

 THANK YOU.

 OUR POLITICAL PANEL IS NEXT ONBALANCE OF POWER.

 >> COMMITTEE STANDS IN RECESS,SUBJECT TO THE CALL OF THE CHAIR.

I WANT TO THANK EVERYBODY FOR THEIR TIME AND PATIENCE ANDGODSPEED AND SAFE TRAVELS.

 KAILEY:THAT WAS THE CHAIR OF THE HOUSE BUDGET COMMITTEE, SEEMINGLYDEFEATED EARLIER TODAY AFTER HIS COMMITTEE FAILED TO MOVETHE REPUBLICAN TAX BILL FORWARD.

 THIS EVENING, A DOWNGRADE FROMMOODY'S AND THE BILL MIGHT BE IN MORE TROUBLE THAN IT ALREADYWAS.

 JOINING US FOR MORE REACTION ISTHIS EVENING'S POLITICAL PANEL.

 WELCOME TO YOU BOTH.

MAURA, YOU SPENT PLENTY OF TIME IN THE HOUSE, I CAN'T IMAGINEMIKE JOHNSON IS FEELING VERY GOOD ABOUT WHAT MOODY'S ISSAYING, TALKING ABOUT FISCAL POLICY PROPOSALS UNDERCONSIDERATION.

 DID HE LOSE CHANCE OF BEINGABLE TO NEGOTIATE HIS WAY TO THE SPILL PASSING THIS WEEKEND?MOIRA: IT MADE THINGS A LOT HARDER FORSPEAKER JOHNSON.

 I REMEMBER WHEN SPEAKER BOEHNERWASN'T WORKING WITH A FORMER PRESIDENT OBAMA TRYING TO HASHOUT BUDGET CONVERSATIONS, WHICH WILL KEEP COMING UP IN THE NEXTDAYS, WEEKS, MONTHS.

 BUDGET THINK ABOUT THE DEBT NOWVERSUS THEN, IT'S MORE THAN DOUBLE.

MOODY'S IS NOT HELPING SPEAKER JOHNSON OR THE BUDGET COMMITTEEAS THEY TRY TO MOVE THE BILL FORWARD.

I THINK IT ADDS FUEL TO THE FIRE FOR THE STRONGHOLD WHOFELT VERY PASSIONATELY ABOUT NOT ENOUGH CUTS MADE.

THIS WILL BOLSTER THEIR POSITION I THINK AND KEEP THEMFROM FULLY SUPPORTING IT AS IT CURRENTLY IS.

 JOE:JIM, DID THE EARTH JUST SHIFT UNDER SPEAKER JOHNSON'S FEET?JIM: IT DID.

 THE BILL WAS IN TROUBLE AND NOWIT SERIOUS TROUBLE.

 MOODY'S DOWNGRADED, THE CREDITDOWNGRADE GIVES IMPETUS TO THE HARDLINERS THAT REALLY WANT ADRAMATICALLY MORE HARSH BILL.

 IT HURTS THE SALT CAUCUS FOLKSTHAT WANT BIGGER DEDUCTIONS FOR SALTS.

WILL THEY GET TO SOMETHING IN THE END? YOU HAVE TO.

BUT THIS BILL HAS TO RADICALLY CHANGE.

THE RADICALS ON THE RIGHT JUST GOT A BIG WIN.

 KAILEY:THE RADICALS ON THE RIGHT, AT LEAST SOME OF THEM, HAVE AHISTORY OF CHANGING VOTES WHEN THE PRESIDENT CALLED.

DO YOU THINK THAT WILL BE THE CASE THIS TIME? JIM:I THINK SENSED -- SINCE LIBERATION DAY AND APRIL 9, WESEEN A DIMINISHED PRESIDENT WHERE PEOPLE ARE MUCH MOREWILLING ABROAD AND AT HOME IN THE GOP CAUCUS, TO STAND UP TOTHE PRESIDENT.

 I DON'T THINK HE HAS THE POWERHE DID SIX WEEKS AGO.

 JOE: WHAT OF THE SPEAKERS OPTIONS?AS A VETERAN OF ANOTHER REPUBLICAN SPEAKER'S OFFICE,WHAT IS THE MENU OF OPTIONS FOR MIKE JOHNSON?THERE ARE STILL 11 SPENDING BILLS OUT THERE AND THEY COULDBE COMBINED IN MANY DIFFERENT FORMS OVER THE NEXT COUPLE OFWEEKS.

 MOIRA: ABSOLUTELY.

 ONE OF THE THINGS THAT HASN'TBEEN EXPLORED IN MY KNOWLEDGE IS WE KNOW THE BILL WILL CHANGENO MATTER WHAT HAPPENS, IT GOES TO THE SENATE SIDE AND MANYSENATORS HAVE SAID IT WON'T PASS THE SENATE AS IT IS.

 JOHNSON MIGHT WANT TO REACH OUT.

IF YOU'RE GOING TO ASK THE PRESIDENT TO STRONG-ARM THOSEMEMBERS TO PASS HIS AGENDA -- BECAUSE THAT'S WHAT THIS BILLIS, IT IS TRUMP'S AGENDA, IT'S WHAT THE PRESIDENT WANTS.

SPEAKER JOHNSON MIGHT WANT TO TALK TO JOHN THUNE AND ASK HOWWE GET IT ACROSS THE FINISH LINE FOR THE PRESIDENT? I THINK UNTIL THIS POINT, THECONVERSATIONS HAVEN'T HAPPENED BECAUSE THE HOUSE FELT STRONGLYABOUT TAKING IT ON THEIR OWN BUT I THINK IT'S TIME THEY MAKEOUTREACH EFFORTS.

 I ALSO THINK THE PRESIDENT ISTALKING ABOUT THINGS THAT COULD BE SO COSTLY.

ALCATRAZ IS MAYBE NOT THE BEST IDEA, SPENDING MILLIONS.

 YOU DON'T NEED A FOREIGN GIFTOF A PLANE THAT WILL HAVE TO BE TAKEN APART PIECE BY PIECE.

THERE ARE CONVERSATIONS THAT NEED TO BE HAD IN THEREPUBLICAN PLANK ABOUT COST SAVINGS.

 KAILEY:I'VE BEEN CHECKING TWITTER SINCE THE DOWNGRADE HIT,WAITING FOR REPUBLICANS WHO SHOT THIS DOWN TO CHIME IN ANDMAKE THE POINT THAT MOODY'S IS MAKING THEIR ARGUMENT IN THEFIRST JUST HIT FROM RALPH MORGAN, MOODY'S STRIPPEDAMERICA OF ITS LAST TOP CREDIT RATING.

THIS IS WHY WE NEED CHANGE IN CONGRESS.

STAY TUNED TO SEE IF CHIP ROY AND OTHERS FOLLOW.

TO THE POINT JUST MADE ABOUT HOW IT COULD CHANGE IN THESENATE, WHERE YOU HAVE EXPERIENCE, JIM, DOES THIS MAKEIT LESS LIKELY THAT THE SENATE IS GOING TO TRY TO ROLL BACKDRAMATIC CUTS TO MEDICAID OR THE ROLLBACK OF SUBSIDIES INTHE INFLATION REDUCTION ACT BECAUSE THE NEED TO MAKE SURETHE PRICE TAG IS NOT TWO HIGH? DOES MOODY'S MAKE THIS HARDERFOR THE SENATE? MAURA: DO YOU WANT -- JIM:DO YOU WANT TO GIVE A TAX BREAK THROUGH SALT DEDUCTION SO YOUCAN HURT RED STATE WORKING-CLASS PEOPLE BY TAKINGAWAY THEIR MEDICAID? IT MAKES THE SITUATION THATMUCH HARDER.

 THIS HAPPENED IN 1993 WITH BILLCLINTON, WHEN HE RADICALLY CHANGED THE RECONCILIATION BILLBECAUSE THE BOND TRADERS WERE SAYING WE'VE GOT A PROBLEM ANDYOU NEED A VERY DIFFERENT BILL.

 JOE: WHAT CHANGE CAN YOU MAKE? IS THERE ANYTHING SPEAKERJOHNSON COULD MAKE THAT WOULD BE PALATABLE FOR THISCONFERENCE? JIM: I'M GOING TO TAKE ONE OF DONALDTRUMP'S IDEAS AND SAY THEY SHOULD DO IT.

 PEOPLE WITH INCOMES OVER$400,000, 500,000 DOLLARS SHOULD NOT CONTINUE TO GET THETAX BREAK.

 PROBABLY DOWN TO $400,000.

IT IS RIDICULOUS WE ARE DOING THIS.

 I DISAGREE WITH A LOT OF REPUBLICANS ON HOW TO GET THEBUDGET CLOSER BUT WE HAVE A MASSIVE MISMATCH BETWEEN REVENUE AND SPENDING AND ITHINK MORE PROBLEMS ON THE REVENUE SIDE BUT SOME ON THESPENDING SIDE.

 WE'VE GOT TO RAISE MORE REVENUEAND DO SOMETHING ON SPENDING.

 KAILEY:DOES RAISING MORE REVENUE PERHAPS SHINE A MORE POSITIVELIGHT ON THE PRESIDENT'S CURRENT TARIFF POLICY HE'SARGUING IS BRINGING MORE MONEY INTO U.

S.

 COFFERS?I WONDER HOW YOU VIEW THE OTHER PURSUITS OF THE ADMINISTRATIONFACTORING IN.

 MAURA: IF I WERE IN THE TRUMP WHITEHOUSE, I WOULD POINT OUT HOW THEY ARE TRYING TO BRING INMORE REVENUE FOR THE UNITED STATES AND AMERICAN COMPANIESAND OUR GDP.

 LOOKING AT THE TARIFF POLICIESAND TALKING ABOUT HOW THEY ARE TRYING TO MAKE THINGS MORE FAIRAND THAT AMERICA IS NOT AT A DISADVANTAGE WITH TRADINGPARTNERS.

 I'VE SAID SEVERAL TIMES FROMTHE GET-GO, I THINK THERE WAS A DIPLOMACY ELEMENT SEVERELYLACKING.

 AT THIS CURRENT STAGE IT'S ANOPPORTUNITY TO LEVERAGE THOSE THAT HAVE ALREADY BEEN SECURED.

IT CAN ALSO CALL INTO JEOPARDY SOME OF THE ONES OUTSTANDING.

THIS DECISION AND THE BUDGET DEAL FALTERING.

THEY MAY BE IN A LESS STRONG POSITION TO NEGOTIATE WITHALLIES AND TRADING PARTNERS.

 I WOULD CERTAINLY BRING THIS UPIF I WERE ON THE TRUMP TEAM BUT HIS ECONOMIC ADVISERS NEED TOBE THINKING THROUGH WHAT OUR PLANS B, C, D.

 JOE:WE JUST HEARD FROM CHUCK SCHUMER, MOODY'S DOWNGRADE OFTHE U.

S.

 CREDIT RATING SHOULD BE AWAKE-UP CALL HE SAYS, TO TRUMP AND REPUBLICANS TO END THEIRDEFICIT BUSTING TAX GIVEAWAY.

 ALL OF A SUDDEN CHUCK SCHUMERHAS MOODY'S BEHIND HIM.

 DOES HE ENGAGE WITH SPEAKERJOHNSON OR POP THE CORN AND WATCH? JIM:I THINK THEY WILL WATCH.

 A RECONCILIATION BILL IS THEREFOR A REASON, SO YOU DON'T NEED DEMOCRATS IN THE SITUATION.

 YOU ARE WATCHING THE PRESIDENT,HE HAS RETREATED ON TARIFFS, HE HAS RETREATED WITH UKRAINE.

YOU CAN SEE SOME RETREATING HERE.

THIS IS A PLACE WHERE HE IS SCALING BACK AND I THINK THAT'SA GOOD THING, FRANKLY BUT THIS IS A WAKE-UP CALL AND YOU'RENOT GOING TO GET IT BY TAXING PEOPLE GOING TO WALMART.

THAT'S NOT HOW WE MAKE UP THE DEFICIT.

 JOE:GREAT CONVERSATION.

 THANK YOU BOTH SO MUCH FOR AGREAT PANEL ON A BREAKING NEWS EVENING HERE IN WASHINGTON.

KAILEY: IT'S GOING TO BE A WORKINGWEEKEND IN WASHINGTON AS WELL AS REPUBLICANS TRY TO GET THEIRHEADS TOGETHER ON THE BUDGET RECONCILIATION PACKAGE, THEMOODY'S DOWNGRADE MAKING IT MORE COMPLICATED.