AI Standards & Health Care on Capitol Hill 12/12/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, President Trump has signed an executive order to impose one national standard for AI regulation and it limits state power. We'll hear from senior White House policy advisor on AI, Sriram Krishnan. So we'll be working with Congress in the coming weeks and months to make sure there is a single national framework which makes sure we can win this race. Republican Senator Dave McCormick of Pennsylvania is also on board with limiting patchwork regulation, but he's focused on another policy battle brewing, one for health care.

0:45Our longevity, our lifespan, infant mortality is terrible relative to other developed countries. And still, 25 million people don't have access to health care. Plus, a bright day for marijuana might be coming and a look at investor sentiment heading into the new year. We're gone from the AI trade to the GDP trade. It's Friday, December 12th, 2025, and SquawkPod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good morning, everybody. Welcome to SquawkBox right here on CNBC. I'm Becky Quick along with Andrew Ross Sorkin and Mike Santoli. Antoli. Joe is off today. It's Friday, guys. We made it.

1:28Yay for us. Almost. Almost. You'll see right now that the Dow futures are higher. This comes after the Dow set a record level yesterday at the close. We should point out that the S &P 500 also hit a new high in yesterday's session. The Nasdaq was down slightly yesterday because of that drop in AI-related stocks. Yesterday, it was led by Oracle. Today, it's a different story, a new stock that's dragging those stocks We'll talk more about that in just a moment. And, Mike, some of the interesting things here, just the talk of the change in leadership, potentially. I mean, a week doesn't make a trend.

2:01But the Russell 2000, which we didn't have stacked here, set another record yesterday. It's up by about 2.75 % for the week today. We're gone from the AI trade to the GDP trade. So basically, real economy, things that have torque to a re-accelerating economy, have been working pretty. I mean, the Dow is beating the NASDAQ on a quarter-to-date basis. So that's a lot longer than a week yesterday. And it's been banks. It's been transports. So there has been something behind this. The market has been eager to price in a quicker pace of growth into next year. We have some policy tailwinds kicking in.

2:34The question is whether that, again, is more just kind of like picking up some of the laggards, letting the big tech trade rest for a little while. Because you remember last year at this time, the story was exactly the same. I know. I feel like this is a story we've been talking about for such a long time for waiting for this, waiting for Godot for the technology sector to no longer be the leaders. That's right. And, you know, it's sort of a be careful what you wish for, because if the 35 % of the S &P 500, that is the MAG-7, really starts to underperform, it's hard for the overall market to kind of stay in gear.

3:03But so far, I think it's been pretty constructive. The S &P made a new high, but only by a few points. So we're basically flat from October 29th on the S &P. And I think you have banks up 11%, you have transports up 7%, and MAG-7 is down a couple percent. So it's proven that the market can do this when conditions are right, as we got that relatively dovish takeaway from the Fed. All right. Well, this is what's weighing on the Nasdaq this morning. Broadcom earnings and revenue beat estimates, and the company's current quarter forecast came in above expectations. The stock initially rose after the report, but fell during the call.

3:35That was after the CFO said margins will fall by about 100 basis points due to a higher mix of AI revenue. Also of note, Broadcom said it has acquired a fifth customer for its custom chips, and it revealed that Anthropic was the previously unnamed customer that had placed a$10 billion order. I think there was some handicapping that that might be exactly who that customer was. This was just so interesting, Andrew, too. The idea that they came in with strong numbers. It's just expectations are so high at this point, and I think that's the biggest part of the issue with this. It's hard to impress the street.

4:11There's been so much good news that's been baked in. Broadcom shares, I think, before this were even more expensive than Nvidia shares. Well more expensive. Yeah. So it's just hard to beat super high expectations. And that's that's been the but that's been the story the whole time. And we're going to be living through this for some period of time. And we'll see. I don't know what you think of what happened to Oracle shares yesterday, Mike. But you saw it happen again. Yeah, it's fascinating. So it's been kind of the theme has been Broadcom Alphabet outperforming the companies to open AI, which is, in fact, Oracle.

4:48So we are still watching those shares this morning. They look like they're going to be down another one percent or so. That was after yesterday's decline of nearly 11 percent. Stock fell after revenue and earnings missed analyst estimates and raised questions about its aggressive AI spending plans. So it did weigh on other AI related companies, including NVIDIA, Micron, CoreWeave. So the whole food chain is in this little bit of a mini panic about exactly how we're going to capitalize the build out of this boom. And as a result of the decline in Oracle, Executive Chairman Larry Ellison's net worth fell by about$25 billion on paper.

5:21But, of course, despite the slide, Ellison's Oracle stake is still worth more than$200 billion, that is, according to Bloomberg. And by the way, I mean, this is a separate, separate issue. Warner Brothers Discovery. The Warner Brothers Discovery deal, I think one of the reasons that we've heard, at least around the hoop on the Warner Brothers side, is why they went ultimately with the Netflix deal was they were actually somewhat concerned, not that Oracle was going to disappear because it's not going to disappear, but just that the Ellison family's wealth and whatever is going to be used to pay for this deal is ultimately probably going to come in large part from Oracle.

6:00So, yeah, they have their own views about AI bubbles and things. The Ellisons have made the point that the money's in the trust. Yes. Well, the shares are in the trust, right? The shares are in the trust to be able to cash in to pay for some of this stuff. But, you know, we all have kind of felt a little bit the wealth effect when it takes you down. How much are you willing to spend? It's also, as you know, Andrew, about what WBD can plausibly say to persuade its shareholders and justify the Netflix deal. I mean, obviously there is a concern. I mean, Ellison's net worth in like a couple of months went down from almost 400 billion to where it is right now.

6:36So it's obviously shows you that it's not money in the bank, so to speak. Right. Meanwhile, let's get you up to date on what's going on in Washington, because we've got an update on efforts in Congress to try to tackle a looming rise in insurance costs. We've been talking a lot about this on the broadcast. The Democratic plan now to extend expiring health subsidies, winning some Republican votes, but fail to advance in the Senate. Now, a Republican proposal also failed. It would not have extended the subsidies, though, but would have offered federal funds to some households to help cover out-of-pocket health expenses.

7:10Now, Senate Leader Thune and Schumer playing the blame game after the votes failed. Take a look. Apparently, they think that a three-year extension with no reforms to try and disguise the real impact of Obamacare's spiraling costs is actually a plan. I don't know how you can call it a plan. Senate Republicans just shoved the American people off the side of a cliff with no parachute and with an anchor tied to their feet. Now, open enrollment generally closes on Monday for plans to start January 1st. That means that many American households are signing up literally right now for coverage with much higher costs and no relief from Congress in sight.

7:59This is crazy. I mean, this is politics at play. Nobody put up any bill that was expected to pass on this. Nobody tried working to bring together any sort of bipartisan issues on this. you know, I don't know how you can do it without extending it for some period of time. I think the Democrats bill to extend it for three years was lunacy. That wasn't going anywhere. You could have extended for one or two years and you probably could have gotten some bipartisan support, particularly if you would have put in some sort of potential for change or reform. I think it's impossible to do that either way.

8:33You know, the Republicans bill didn't take into an account anything that was going to give any sort of extension to that. And both sides knew that. Both sides walked into this knowing that neither bill would pass with the 60 it needed. Well, this is going to, I'm sad to say I think this is going to drag on for some time. And this next story I think may drag on for some time as well. We'll see what ultimately happens. President Trump separately is a totally other issue now. Signing an executive order on artificial intelligence looking to curtail states' ability to enact piecemeal regulations. Amy Javers is in Washington this morning with more.

9:08It's a big story for us. Yeah, good morning, Andrew. President Trump signed the executive order last night. It's going to attempt to preempt state-level efforts to pass laws of their own regarding AI. Now, the move represents a big win for tech and AI companies that worried about facing a patchwork of possibly contradictory regulations across the country. The president's executive order will create an AI task force that's going to challenge and try to strike down any state laws in court, arguing, at least in part, that they are in an unconstitutional attempt by the states to regulate interstate commerce.

9:43Now, the Trump administration will also threaten to withhold certain federal funding for states that pass their own AI laws. The president says that's going to make it easier for AI companies. If they had to get 50 different approvals from 50 different states, you could forget it because it's not possible to do, especially if you have some hostile. All you need is one hostile actor and you wouldn't be able to do it. So it doesn't make sense. I didn't have to be briefed on this, by the way. This is real easy business. Now, the move puts the president on the side of the large tech companies and against some of the most visible figures in his own MAGA political movement.

10:19Former Trump adviser Steve Bannon, Congresswoman Marjorie Taylor Greene and Florida Governor Ron DeSantis have all opposed the idea, saying it's a gift to big tech that ties the hands of states that want to protect their own citizens. And The Wall Street Journal reported this week that President Trump solidified his position against state level regulation after an Oval Office meeting in November with NVIDIA CEO Jensen Wong, who argued for this national standard. Now, a law passed by Congress, remember, that could supersede state level bills, but supporters of the state ban tried and failed to get that idea passed on Capitol Hill earlier this year.

10:57So that left this less powerful executive order as their best option. And the president took it last night, guys. Back over to you. So, Eamon, Eamon, here's the question on something like this. Are there examples, similar examples of things where executive orders have been used in such a way? Because invariably, they're going to be lawsuits that could be brought by consumer groups, could be brought by others. I just don't know where this goes and whether you think it ultimately gets upheld. And if it doesn't get upheld, what then? Yeah, I think a lot of these challenges are going to end up in the Supreme Court because you're going to see the Trump DOJ challenging.

11:34You know, if California has an AI law, Colorado has an AI law, the Trump DOJ will try to challenge those in court on these constitutional grounds. Anything that's a constitutional dispute ends up in the Supreme Court, especially when the stakes are this high. So we'll see what the court does with it. This is, as I said, this is a fallback position for the people who want this national regulatory standard. The ideal thing for them would be to get Congress to pass it. If Congress passes a national law, that supersedes state laws, and that's the law of the land. But they don't have the votes in Congress, or they didn't this year, to do that.

12:09So you might see them make another run at it next year, but next year is an election year, and that gets tougher and tougher as we move closer to Election Day to really do anything at all, particularly with the slim margins up there. So this executive order might be the AI company's sort of best hope now, but it's not a perfect tool from their perspective. And, Eamon, finally, what do you think the biggest sticking point is around not just, I mean, there's the issue of just state law versus federal. Like, that's a thing. But then there's issues about protecting children that some of the state laws include.

12:40The president's suggested he's not going to go after at least those portions of the law. That's what I was trying to understand, sort of where you see the fault line in all of this, on the merits, on the issues in each state. Yeah, it's an interesting question. So the president's going to have to make a political determination of what it is that he wants to challenge and which states he wants to challenge. You can imagine that this task force is going to be challenging a lot more state regulation in blue states than it will in red states. So there's going to be a political element overlay to this as well.

13:15As people across the country, you know, watch their kids holding these devices and producing all kinds of results, they might say, hey, wait a second. I don't want that in my kids' hands. That can become a political issue. And I think you're going to see this task force really tightly controlled by the White House in terms of what the political priorities are. OK, Eamon Javers, thank you. Multiple reports say President Trump is preparing to order his administration to reclassify marijuana as a less dangerous drug. A Washington Post report said Trump held a meeting at the White House on Wednesday with marijuana industry executives, along with HHS Secretary Robert F.

13:51Kennedy Jr. and CMS Administrator Dr. Mehmet Oz. They were joined on the phone by Speaker Mike Johnson, who cited studies arguing against the move. The executives reportedly rebutted Speaker Johnson's arguments, and Trump left the conversation prepared to move forward with the reclassification. Reports say nothing is final, and President Trump could still change his mind on this. Cannabis is currently labeled a Schedule I drug in the same category as heroin and LSD. Reclassifying it as a Schedule III would put it at the same level as steroids and Tylenol with codeine. So you see the reflex move in a lot of these cannabis stocks, which really do always trade.

14:28Telluride's up 30 % on this? They always trade as just kind of lottery tickets on policy changes. Look at the price levels, right? Right, okay. And Telluride just did a reverse split to get it to 10. Look, the only thing I will say is it's coming on the same week as the New York Post and others writing about this scrommeting issue where people who have smoked marijuana wind up with screaming, vomiting cases in the hospital. It's not the same stuff it used to be. Maybe these companies are dealing with much different, more closely monitored versions of that stuff. But, you know, there's still some scary stuff happening in the drug trade.

15:08Cheese will be next. Still to come on Squawk Pod, Obamacare subsidies expire in just a few weeks. We're diving into the health care battle in the Senate with Pennsylvania Senator Dave McCormick. We pay three times per person for health care than any other country in the world. Plus how he views state and federal AI regulation. We'll be right back.

15:35This is Squawk Pod. Up in Andrew, Q. You're watching Squawk Box right here on CNBC. I'm Andrew Osorkin, along with Becky Quick and Mike Santoli this morning. Joe is off. We got a lot going on, though, on this Friday. Dueling health care bills failing to pass in the Senate as the Obamacare subsidy's expiration date inches closer. And joining us right now to talk about this and much more is Republican Senator Dave McCormick from the state of Pennsylvania. And Senator, thank you for being here today. Good morning. I'm actually a little shocked that we are getting this close to the deadline for the subsidies being renewed, where most people have to have the deadline for signing up is Monday.

16:13Yeah. And nothing's been done to this point. It seems like a bit of a cliff to fall off. And I realize full well that you and a lot of other people would like to see some reforms done to this. But we came so close to the end. It seems like it's hard to believe there's not going to be an extension while that reform is taking place. Yeah, it's a scary thing, I think, for a lot of Pennsylvanians, a lot of Americans, because a lot of working families, their premiums are going to go up pretty dramatically. If you make$50 ,000 a year and you have a$200 a month premium, it could be$400. And that pressure is going to be a real problem.

16:48And you've got to start by saying, where are we? I mean, we've had Obamacare for 15 years. It promised lower cost, improved quality, better access. It's failed on all fronts. And what this subsidy is, is an extension from COVID subsidies. And these gave subsidies to people that are making$500 ,000 or$600 ,000 a year. I understand all of that. Look, Obamacare did do one thing very well, and that's got a lot more Americans insured, people who had been uninsured before. I understand that these are subsidies from COVID era that are extended and going through. But it's also so abrupt and seems like it's yanking the rug out from under 22 to 24 million Americans.

17:27Well, first, I say two things. One, part of the reason we're in this mess is we had a 42-day shutdown that didn't resolve anything. So we're getting pressed at the end. The Democratic proposal was essentially a three-year extension. Oh, I looked at it. Both of these bills, it was very clear that neither of these bills would get anywhere near the 60 votes they needed to pass. What I don't understand is why there doesn't seem to be any sort of bipartisan work or talk across the table where you get something that maybe extends it for a year instead of two or three years. Three years was what they were asking for.

17:58They were asking for three years without any reforms. Without any reforms, right, which was a non-starter, clearly. The Republican alternative was putting money in the pockets through the HSAs. But it just seems like neither one of these took into account reality. Well, there's, you know, listen, I'm hopeful. I agree with you on the crunch of time. You see Senator Shaheen and some others on the Democratic side that appear to be recognizing that the current subsidies in their form cannot be extended without reform. And so I'm hopeful we'll get some form. For me, I think the Republican proposal was a good proposal.

18:29But I also I'm worried about the working families in Pennsylvania who are really having the pressure on it. I've been reading some of the town halls that you've been having and what people have been saying to you. You're going to face a lot of pressure. Yeah, listen, I do town halls every two weeks, tele-town halls. I get 10 ,000 people that show up. The questions are totally unscripted. And health care, you know, housing health care, energy prices are the big things. We're making progress on energy prices. We're making progress on housing. But the health care is a real challenge. And listen, here's the reality of it.

19:01We pay three times per person for health care than any other country in the world. Our health statistics, our longevity, our lifespan, infant mortality is terrible relative to other developed countries. And still, 25 million people don't have access to health care. So Obamacare has been an abysmal failure. We can't go forward without real reform. So there's sort of two agendas. One is near term. How do you deal with working families that are going to be crunched? And then longer term, we've got to do reform that gets cost under control. Is there a movement afoot? Do you think that there will be something that comes through or do you think this is it?

19:41What do you tell your constituents? I think there'll be something. I hope. I'm certainly going to be advocating we've got to do something to help working families. The current subsidies cannot be extended in their current form. We've got to do something. I hear your point about not wanting it to go to families that are making half a million or more, that this should be really helping out the people who need it. Yeah. And listen, this is whatever we do. And I really hope we do something. It's going to be a bridge to a much broader conversation about health care reform. And even if you're a Republican like I am and think Obamacare was catastrophic and a real failure of the Democratic Party, We now have to deal with that problem together as Republicans and Democrats.

20:24What specifically falls under the heading of reform that you actually think is, practically speaking, something that could be implemented? Do you mean in the near term? Yeah. Yeah. In the near term, I think you've got to bring down the income caps very significantly. I think you can't have an automatic extension on an individual basis without rooting out the fraud, probably some minimum payment. So somebody's got to have skin in the game,$5,$10,$15. Just a tiny amount. The key for that is it guards against fraud. And then you can't have a three-year extension. So it's got to be a less extension.

20:58It's got to cap incomes. And it's got to deal with it. And I love the idea that the president put forward and Cassidy Crapo put forward, which is ideally you want to have consumers have choice with some sort of health savings account that's going to help fund part of this. So those are the parameters. That might just illuminate how much of people's health care, though, is actually covered by somebody else. I mean, in other words, the overall cost, it can't come out of people's pockets directly, even if you give them a check, right? I mean, the whole thing of risk pooling is kind of— It's coming out of their pockets in two ways.

21:31It's coming out in premium. It's coming out of what payment they have to make up front as part of the first time. So the health savings account to mitigate that payment, where for most people it's$6 ,000 before the insurance kicks in. that$1 ,500 in their pockets is going to take a lot of pressure. And remember, what we're talking about here is, you know, in Pennsylvania, at least, median income outside the Philadelphia counties is$52 ,000 a year. So if somebody has to pay$6 ,000, or if somebody's premium goes from $200 to$400 a month, this is a huge deal. And so that's the segment of our population that I'm most worried about.

22:11Senator, let's talk a little bit about AI. You've been looking through some of the implications on a societal basis for an ethical basis for what AI is going to be happening. Overnight, the White House, the president putting out an executive order saying this is what we want. We want AI to be regulated by this policy that they couldn't get passed through Congress and directing the attorney general, Pam Bondi, to go after and sue states that are trying to put their own regulations and frameworks in place. I understand that federal law should absolutely supersede state law when it comes to interstate commerce.

22:47But this is not federal law. This is a White House executive action. Well, I thought the executive order was trying to thread the needle and hit the sweet spot very well in the following sense. So first of all, we're in an existential battle for leadership in the world. If you believe the stakes are as high as I do, we have to have an innovation policy and national posture that's going to allow us to maintain the lead. So a patchwork. But we haven't been able to get something like that through Congress. A patchwork of state regulation is very, very significant in terms of putting us behind in terms of China.

23:23So what the executive order says is that we want to have a national innovation strategy. It says that the states can move forward, as I agree with, on potential cases of copyright or protecting children. It also encourages and asks the David Sachs to move forward and work with Congress on a national standard. And then it has enforcement with broadband funding. And it also has, as you note, the attorney general essentially being able to take action against overly restrictive. That balance of things, I think, is trying to do the things you said, which states need to have some freedom to deal with the issues that matter most to them.