US vice president saves Trump's ‘big, beautiful’ bill in Senate

0:04Hello and welcome to Business Matters. I'm Roger Hearing. On the programme today, Donald Trump's huge tax and spending bill has been narrowly passed by the Senate, but it now has to go back to the House of Representatives. Opposition is concentrated on claims it's going to harm healthcare for the lower paid, or that it will increase the huge national debt. Meanwhile, the bill's reignited the row between the President and his erstwhile friend and advisor, Elon Musk. Could that harm the prospect of Musk's company, Tesla? Also today, the new way of blocking AI crawler bots from stealing content from websites.

0:40And we visit Europe's longest road and rail bridge on its 25th birthday. And I'll be joined throughout the programme by two guests on opposite sides of the world, or at least they normally are. In fact, they're on the same side of the world this time. Maymal Safraz, the Pakistani journalist and analyst, who's currently in Sunnyvale, California. So Maymal, I'll have to say, I think, good afternoon to you. Yes, good afternoon or even good evening all the afternoon. But anyway, you're there, which is wonderful. So thanks for being with us. And well, not that far away. I suppose it is a lot of way away, actually.

1:12Of course, over in Washington is Dante Disparte, Chief Strategy Officer at the Financial Technology Company Circle. So Dante, certainly a very good evening to you. Thank you so much, Roger. Great to be back on. Well, good to have you both there. We'll start, as we always do, by getting a sense of what's going on where you are. So, well, Dante, let me ask you, what's caught your eye in Washington at the moment? Well, there is a lot of legislative developments, many of which we will cover, of course, in the program tonight. The big, beautiful bill is one of them. Directly in my industry, there's also a new bill that has come out of the Senate called the Genius Act, which would regulate dollar-denominated stablecoins.

1:50A bit esoteric for the global audience of BBC, but nonetheless an important piece of legislation. Oh, I think we know what stable coins are, pretty much. I've tried. I've been explaining them to the world for years now. And then last but not least, of course, we're keeping an eye on July 4th, marking our independence. Indeed so. Well, let me talk to Meymar, who will also be, I guess, probably there for Independence Day in California. But Meymar, I mean, being out of Lahore, where you normally are, what's caught your eye in California in news terms? In California. So, I mean, whenever I turn on the news, of course, it's the big, beautiful bill and, you know, other things going on in the US.

2:27But, you know, I'm not really, I'm actually following a lot of news back home as well, which is, as you know, always, there's always something happening in Pakistan when it comes to politics, whether it's the judiciary, whether, you know, there's a new case or whether it's, you know, political dialogue. So I'm following both countries at the moment. Right. Well, what's caught your eye in Pakistan then that you're so far away from? But what's a big story there right now? So the big story over there, one is a political dialogue between the opposition, PTI, Imran Khan's former prime minister, Imran Khan's party, and the government, the PMLN-led coalition government, you know, whether there are any chances or not.

3:08There's that. Then, of course, a big case regarding reserves, The judgment came a couple of days ago, sorry, last week, which was, you know, very controversial in nature. And there's also, you know, a lot of controversy regarding the judiciary. So this is what's going on. Plenty going on, even though you're not there. Indeed. Right. Well, let's actually touch on the thing that both of you have mentioned, of course, and is very much dominating the politics in the US at the moment. Indeed, the economics, too. And I'm talking about Donald Trump's big, beautiful, but highly controversial finance bill that has got through the US Senate in the last few hours, but only by the casting vote of the vice president, J.D.

3:47Vance. Next, the House of Representatives has to reconsider the bill with its amendments. And there is still great misgiving among legislators, both about the impact on the Medicaid program providing health care services to lower paid people and also on the extent to which the bill will increase the US national debt. Well, Rayma Rahman is White House and legal editor at The Hill. She told me what happens next. Right now, the bill is beginning its procedural steps through the House. Right now, according to reporting from The Hill, they are looking at a procedural vote starting tomorrow morning, Wednesday, here in Washington.

4:27Now, that procedural vote already is looking to be in jeopardy, as you indicated, because there are several House Republican lawmakers who are opposed to the Senate version of the bill, which has added and subtracted several things that the House did not pass when they considered this bill last week. So the opposition is not just coming then from the Democrats, but actually members of the GOP, the Republicans as well. Yes, that's correct. You know, right now the Democrats are a united front. There isn't anyone who is considering crossing over to join the Republicans. The issue right now is with six or eight House Republicans right now who have differing issues with the bill.

5:12You have some Republican moderates who have issues with the Medicaid provisions and the risk of people losing health insurance. There's some matters involving funding for rural hospitals. And then you have the conservatives, as you indicated, who have issues with the spending cuts in the bill and how much that will add to the national debt. Now, the Republicans can only afford to lose three votes in the chamber. And right now we're hearing from roughly about eight or 10 House Republicans who have indicated that they are not only going to vote for the bill, but they also may even stop the procedural vote that comes before that.

5:51So the upshot of all this, and it's obviously pretty technical, it doesn't look likely it's going to get through, and certainly not ahead of the date that Donald Trump wants it past, which, of course, 4th of July, a major event in the U.S. calendar. Well, anything is possible. You know, one minute in Washington can change everything. So there's still a good amount of time for the House leadership to speak to those members who are opposed to the bill and give them, you know, something to negotiate on that they could possibly take back home and sell to their constituents. So, you know, this bill did not look like it was going to pass the Senate over the last three or four days until suddenly it did today.

6:34So this is very typical of how the House and Senate work. Things look like they're not going to pass until, you know, a half a day or a day passes by and suddenly they have just enough votes for it to squeak by. So you're not going to call it on this one, I'm guessing. Entirely reasonably, right? Not just yet. I don't know about July 4th, but even the president has given the lawmakers a little bit of wiggle room in terms of that being an exact date. And briefly, this does indicate that Donald Trump may be very successful in his own terms in the first few months of his presidency. but when it comes to sorting out what goes on on Capitol Hill, he doesn't always get his way necessarily.

7:15I mean, I think with this one, I think this bill has so much in it that it was just inevitable for this to be quite a messy process. This is sort of messier than usual. But, you know, there's a political component to this that people who are going to, Republicans who are opposing the bill are not going to run for re-election. And going up against the president still is sort of a political dead end for many of these lawmakers. So a little bit of a different dynamic there. Raymar Rahman there of The Hill. Dante, what's your take? Do you think this is going to get through? I do, in part because, you know, obviously the country in some ways and our politicians are used to games of political brinksmanship like this.

8:02And candidly, I think just the fact that it got through, you know, this this vote that was just described as an important milestone along the way. I think the more important set of questions is, you know, what are all of the sub points in it? For example, there's something that's caused some consternation among the payments and fintech companies in the U.S. around a proposal to tax remittances in order to fund the border wall, for example. And so that has, you know, generated some backlash and some reactions from payments companies and others that are dealing with cross-border payments. But my estimation is that it seems likely that it will pass.

8:38And, you know, of course, like anything, there might be some political remorse and some political victory lapse. Yeah, and, Memo, I mean, obviously it's not happening in your country, but I mean, there are echoes all the time, I suppose, of what extent government takes on more debt, to what extent government pays out to help the lowest paid in society. Well, you know, I mean, even in this bill, there's this concern globally and also in my part of the world that, you know, when the debt ceiling increases like this, there's obviously a potential of devaluation of dollar, which will then affect the price of petrol and other commodities.

9:12So, of course, there's a risk of inflation across the globe due to this. And so what will people do? There's that. And of course, you know, if you talk to the South Asian community here about the bill and, you know, will it affect them? How will it affect them? You know, a lot of these people basically say that, you know, their purchasing power will reduce to fund the interest rates. And then there's, of course, this, as Dante was talking about, the taxing the remittances. and there have been many surveys, Roger, which basically, before the bill, they basically said that people were not in favour of this bill.

9:54They were sceptical of it, how they viewed it, whether it was Pew or KFFF. Yeah, I mean, you're right, there is a lot of scepticism. And actually, let me pick up on one point you mentioned about the debt because that is something that clearly is causing some concern. I mean, the US debt is pretty dramatic. I mean, let me give you some figures on that. currently$36.21 trillion. And the, well, certainly the right-wing House Freedom Caucus group of politicians on Capitol Hill are saying that this particular bill could add$650 billion to that deficit each year. And to put it in context, the$36.21 trillion is around 120 to 124 % of US GDP.

10:36Well, I've been talking about all this with the Bloomberg opinion colonist Clive Crook, And I suggested to him, given the US global economic dominance, does it actually matter? Well, I think, you know, we're testing the limits of that theory right now. It is true for sure that, you know, the US has a much, much bigger borrowing capacity in relation to its GDP than other countries, partly because of the dollars standing in global financial markets and partly because the US economy has a very impressive track record of growth. But these debt numbers are pretty startling. And I think what's most important, my own view of it, is that the trajectory of future debt is so bad if this measure passes.

11:23We were already on a seriously bad debt trajectory. But this measure, if it passes in anything like its present form, will make that much worse. And I do think in due course, financial markets are going to look at these numbers and say, this just isn't going to work. And then the US will be in the kind of problem, facing the kind of problem that other countries from time to time, not least Britain recently, have faced when markets think that the debt numbers are out of control. Yeah, but they look, I mean, the people you're talking about look very often at this percentage of GDP. And I mean, it's a vast number, obviously, 36.21 trillion.

12:02It's between 120, 124 % of GDP. Italy has a worse record on that front in terms of percentage. Britain's around about in the 90s percent. I mean, these are not absolutely way out there figures in terms of the normal way amongst, say, the G7 countries. No, but I mean, I don't want to get too technical here, but first of all, you have to make a correction. That 120-something is... The number that you should be looking at is public debt held, debt held by the public, which at the moment is about 100%, roughly speaking 100 % for the US. And that is on a trajectory to rise something like to 130 % within 10 years.

12:43Now, as I say, it's the path. That's the problem. If you say right now, at around 100 % of GDP, the debt is affordable and the financial markets certainly aren't panicking yet. That's one thing. I think that number is actually pretty disturbingly high because you've got to ask what happens to that number when we next encounter recession, right? It goes up. So that's a problem. You need the fiscal capacity to deal with a recession. But let's assume everything goes well and we stay at full employment. This number is on a trajectory to just keep on rising as far as the eye can see. I mean, it is in that sense literally unsustainable.

13:26The only question is, When does this process come to an end? Clive Crook, the Bloomberg opinion columnist. Well, someone else who's exercised by the US debt is Elon Musk. Now, he's been a harsh critic of this bill, largely because of what he says it will do to the debt. He described the bill as insane. He said any member of Congress who voted for it should hang their heads in shame. And we should remember this is a man who was a supporter and close assistant to Donald Trump only a few brief weeks ago or months ago. and he's now threatened, in fact, to launch a new political party to campaign against the bill.

14:01In reply, the US president suggested Doge, which was the government's cost-cutting agency Elon Musk himself set up, could now be turned against the world's richest man. We might have to put Doge on Elon. You know what Doge is? Doge is the monster that might have to go back and eat Elon. Wouldn't that be terrible? He gets a lot of subsidies. Donald Trump blew other threats to Elon Musk and his companies, including to the electric car maker Tesla as well, even suggestions that Musk might be deported to South Africa. Well, Tesla shares dropped up to 6 % in response to all this. So could this be damaging for Tesla?

14:40I asked Karl Brower, an executive analyst at IC Cars. Absolutely. Tesla will suffer financially from this bill because without the incentives to purchase EVs, their sales and their volume will go down. And I'm sure that's a leading cause of why Elon is not a fan of the bill. And also, I guess the fact that Donald Trump is clearly signaling that he's not very pleased with Elon Musk, is there a risk that other things that the US government could do might actually go against Tesla? One of the reasons Tesla stock went up so rapidly after the election was because there was an assumption that Elon and Donald Trump were aligned and that Tesla would benefit in areas related to everything from autonomous driving regulation to government incentives.

15:29Now that it's looking almost like the opposite and the world's most powerful man could leverage the government forces against Elon and Tesla, it's having the opposite effect, obviously, on a lot of people's assumption about Tesla's future. How vulnerable is Tesla to all this? Because, I mean, it's a company that's been making a decent amount of money. It's been pretty popular up to now, although there have been issues, I suppose, about the popularity of Elon Musk and whether people will buy Teslas. But what is its financial health right now? Well, it's tough for Tesla because for the first 10 to 12 years that that company existed, really 15 years, they had almost no competition.

16:06They were a premium electric car maker in a world with no other premium electric cars. And now the reverse has happened. A lot of traditional automakers and a lot of pure electric car makers that have started out from scratch have entered the scene. More troubling is the competition from China, which seems to be able to do everything cheaper, faster, and better. So Tesla's revenue potential as an electric car maker has already kind of peaked by all indications. And he's now down to trying to get autonomous driving and the robo-taxi system to work. and a lot of people aren't necessarily convinced he can make that happen any faster than someone like Waymo or Zooks and some of the other players in Baidu or in China.

16:45Some of the other players out there look to be as far or further ahead than Tesla on the self-driving. And the self-driving robo-taxis you talked about there, I mean, they're pretty dependent on state and federal regulation going the way they want. And if the federal government is inclined to, that could cause major problems. The assumption was that if he was aligned with Trump, Elon would have the ability to push his autonomous technology as fast or faster than any of the other brands. And now again, that the opposite looks like it's true, that could put a real damper on his ability to launch a robotaxi.

17:18And that's really his best and almost last hope for increased revenue and profits and viability going forward. What about shareholders then? Because are they beginning to feel that perhaps Elon Musk isn't leading the company in the right direction if it's having this kind of effect? You know, we've seen a lot of whipsawing. There's just been a lot of turbulence with Elon in terms of his being in with Trump, being out with Trump, him being, you know, a fan of the Republican Party and then against the Republican Party. As an investor, you kind of want a solid, progressive, consistent forward movement.

17:53And I think a lot of investors are feeling increasingly that that's not what they're going to be getting from Tesla and Elon. Carl Brower there of IC Cars. Meymar, it's interesting that what seems to be a very personal dispute is having these kind of big business implications. If Tesla gets into some trouble as a result, really, what seems to be a falling out between two former friends? Yes, I mean, Roger, look, when this big, ugly breakup happened. I saw what you You know, then we actually saw that there was, you know, there was friction, of course, and there was a lot of tension. But then, you know, there were rumors or news that, you know, there's going to be a makeup and, you know, they'll finally figure it out.

18:36But now it's out there again. So, of course, when you have a falling out with the most powerful man in the world, which the U.S. president is, then, of course, there will be repercussions as, you know, there were benefits when there was an alliance, as your guest just put it. a few minutes ago. Yeah. And Dante, what do you feel about this? I mean, you're in Washington, you're picking up some of the vibes. Is this now a friendship that has gone beyond any hope of recovery, do you think? Well, I mean, look, the interesting thing about this timeline that we're all living in right now is that there is no guessing, at least.

19:10And I think the American public, the media, and obviously the whole world can see this dissolving friendship and relationship in real time. I would say take people at face value when they describe the animus that they have for policy positions, whether that also is a personal issue. Who knows? Time will tell. And if anything, political expediency is not a particularly great strategy if you're in the business community trying to shape Washington policy. It turns out Washington may have prevailed. Well, it must be a nightmare for people like yourself trying to work out what things are going on because well it changes i mean we know tariffs change but also just who who is who is actually friendly to who and on what basis seems to change very quickly this is you know look i mean part of my job is commercial diplomacy not just here in washington but around the world and i've always advised number one of a couple of things first personhood uh there is no substitute for personhood in dealing with policy making the second is be careful just describe what you mean by personhood in that yeah meaning meaning walk through the front door and establish a relationship with people on a non-partisan basis can be a really, really powerful thing.

20:16And the other point, more generally, though, is be careful with a scorched earth public policy strategy. Because invariably, people will remember. And then secondarily, you have to build on the ground that you've just burned. And I think this is a part of the problem that we see playing out between the bromance breaking up. Yeah. Mehmel, does this remind you of Pakistani politics in any way? Well, you know, actually, there have been incidents when, you know, businessmen who were close to the government have had a falling out with the same government over some policy or over some issues and then their businesses have suffered they're like i mean in of course you know things work a lot differently than here in this part of the world and uh but there have been instances of people's accounts being frozen or you know their businesses really suffering because of the falling out with the government or the state policy so yes that's something that, you know, we are actually seeing.

21:10And it's actually very interesting, as Dante put it. I mean, the thing is that, you know, we just saw the entire thing happening on X in real time. And, you know, everybody was... So what happened that day, it was like, everybody was like, we can't believe this is happening, you know. So, I mean, there were expectations that something would happen, but nothing like that. No, it is strange. And I suppose the point about this, Dante, is that, you know, the business questions that have to be raised in this, normally, well normally, in previous US administrations, it wasn't that often that personal relationships would come over into things like business in this way, or not as overtly with government power.

21:49Well, so look, many years ago, I wrote an article titled The Whole World is an Emerging Market, because the classical definition of an emerging market is a place where politics matters more than economics. And I think what we have, not just in the United States, but in many, many other countries around the world, is people ignoring that this otherwise invisible hand of politics and policymaking is a very real, very visceral, very tangible force that business leaders now have to contemplate. The personal becomes political. I think it's a very interesting moment, and it may well play out more, I think, in the next few days.

22:23Certainly the vitriol hasn't died down at all. Anyway, in a moment, we're going to come back with more business matters. We're going to be talking about AI crawler bots. Now, they, if you don't know what they are, They are things that go around and get stuff out of websites and take it away and use it without permission. And now there's a way of stopping them, apparently. We'll talk to the CEO of the operation that's putting that out there. That's all to come in Business Matters in just a moment.

23:02Welcome back to Business Matters with me, Roger Hearing, and my guest today, Dante Desparte and Mimal Safras. Now, one of the biggest complaints from online content providers is that what they produce is constantly being copied and stolen by artificial intelligence bots. These are known as crawlers, and they scour the web for data which they use without authorization for operating and training AI systems. Well, now there's a bit of an answer to this. It's a system that blocks these AI bots, and it's been introduced by Cloudflare, a leading internet infrastructure firm. Well, I asked Cloudflare's co-founder and CEO, Matthew Prince, how it worked.

23:42Cloudflare, first of all, runs one of the world's largest networks, where we have data centers in 330 cities worldwide, 120 countries, and about 20 % of the web already sits behind us. And so if you want to access that 20 % of the web, you have to pass through us. In that sense, we can then be a bouncer. Oftentimes that's to stop things like Chinese hackers, Iranian hackers, Russian hackers. but increasingly what our media company partners and customers want is to make sure that we can also make sure that AI bots that are taking their content and not compensating them for it are stopped at the door and not allowed to have that content and so that's what we announced we were doing by default starting on July 1st and it's been extremely well received across the content creator universe.

24:28Now you say by default so that it applies to all sites that use Cloudflare? Is that what happens? That's correct. And so it applies on pages that have some indication that there's an intent to monetize them. So if they have an advertisement on them, if they're behind a paywall, then by default, we will block that. Now, a publisher, if they decide they want to allow AI bots, they can obviously turn that off and allow them in. But we believe that having now worked with publishers all the way from Adweek to Ziff Davis and everyone in between, including the BBC, that they are tired of AI bots taking their content and not compensating them for that content.

25:06I mean, there are certainly some sites that are happy for content to be taken. Access, I guess, to search engines like Google actually helps them. So is this AI bot, is what you're developing going to prevent that? Absolutely not. And again, we've been very careful to make sure that we are only blocking those pages that either a site or has told us to, or that has some indication that is being monetized. AI bots don't click on ads. And so if they are taking your content from an ad-generated page, what it means is that it's less likely that a human will see that page because it's more likely that we will read the derivative rather than that original.

25:43And so in this case, we're only blocking those places where either the publishers have asked us to do it, or it's a page that is specifically monetized in that way. And we're doing it very carefully across just the AI bot so it doesn't affect your Google search results or anything else like that. OK. Now, you said that you've been asked about this. Are you actually doing this because you're coming under pressure from big news websites, Sky News, people like that, BBC, I guess, as well, to do this? Is that why you're responding? I think we're doing what our customers ask us to do. And so I don't think it's that we were coming under pressure.

26:16But instead, that as we talked to people who were in the content creation space, they said that this was one of the biggest threats that they were facing, where more and more of their content was being taken and they weren't being compensated for it in any way. And then that meant that when people would interact with AIs, that content would effectively be reconstituted and displayed, and the original content creator wouldn't get any credit for it. They couldn't sell ads against it. They couldn't sell subscriptions against it. They couldn't even get the ego of knowing that they had created something that the world was using.