Housing Affordability & House Speaker Mike Johnson 7/18/25

0:00Bring in show music please. Today on Squawk Pod Late night votes in the House Speaker Mike Johnson What I wanted everybody to know about the One Big Beautiful Bill is it wasn't a magic trick this was, I think it was Vince Lombardi that said victory loves preparation And his comments on the Epstein files Freeze the rent? An affordability focus boosted New York mayoral candidate Zoran Mamdani But the soaring cost of living hits beyond the Big Apple. Former New York Housing Commissioner and former HUD Secretary Sean Donovan. Rents are rising the fastest in Idaho, in Wyoming, in red states. And we're seeing more and more Republican governors, Democratic governors come together to say, we need to build more housing.

0:50Plus, the rest of today's news with Joe Kernan and Melissa Lee sitting in again. trading calls for cuts at the Fed, axing the Late Show, and Netflix getting a revenue boost. But still, content is king. No Squid Games, no Happy Gilmore 2, no Adolescence. No, no, no, no, no, no, no, no. You don't want any of that. No. It's Friday, July 18th, 2025. Squawk Pod begins right now. Stand by Joe in 3, 2, 1. There's Mike here. Good morning and welcome to Squawk Box here on CNBC. Yeah, you're looking at me, which means that the person, usually I do that cold part where they're showing the pictures and stuff.

1:36And then Becky or Andrew will. But when it's me, people at home are like, oh, God. I'm Joe Curtin, along with Melissa Lee, Becky and Andrew. As you can see, we're off today. Melissa's, what, a loyal, hardworking. It is Friday. It's Friday. It's Friday. And you know what? I've decided take the night off for Fast Money. Thank you, Joe. You're welcome. I was really hoping you'd say that. Go ahead. We'll get by. I mean, I don't know. It's a royal week. Yes, sir. It's not going to be me. I did earlier this week. You did. You did. You did a commendable job. Those guys. The only problem is, and just bear with me for a second.

2:17We'll look at the future. Some people on Twitter said, you know, without Melissa, I said, there's really no governor on these wacko, like, bros. It's like investing. I was saying to my traders before, they said that, Joe, you didn't know what to do with them. I said, because Joe is usually the one to make other people uncomfortable. Right. Now the tables have turned. You saw the stuff Adami. And so you didn't know what to do. Right. You had no idea what to do. But there was no rate limit. Like, you know, Adami's insane. Tim's insane. But it was fun. I'll be back. You just let me know. We are watching Shares of Netflix.

2:51Speaking of, the streaming giant beating both profit and revenue estimates in the second quarter. Sales were 16 percent. Netflix also raising its full year revenue forecast. It says that reflects the weakened U.S. dollar against other currencies and also healthy member growth and ad sales. Netflix does not give subscriber numbers anymore, but it did say member growth was ahead of internal forecasts and that the growth happened late in the second quarter. That likely means more of a revenue impact in the third quarter. On the company's earnings call last night, Netflix co-CEO Ted Sarando spoke about the need for more than an occasional breakout title.

3:24It's not about the single head. So what it is is about a steady drumbeat of shows and films and soon enough games that our members really love and continue to expect from us. Netflix also warning its operating margin in the second half of the year will be lower than in the first half because of what it said was higher content amortization and sales and marketing costs associated with our larger second half slate. But what a quarter for Netflix in terms of. Look at that thing. This is I mean, we have to remember that just on June 30th, Netflix is an all time high. So this is just, you know, 7 percent or so off of that all time high right now.

3:59Netflix delivered was the consensus on Wall Street was pretty much in line. They boost guidance in line with what was expected. And now the question is, can they keep that content slate up in order to keep that membership and the engagement, more importantly, up? I will say this, and we're not allowed to buy stocks, but I said it was 2022 in March. Remember where Netflix was? $178. Yeah. I said, I know that I would mortgage my house and buy. But they said we need a steady drumbeat of, like, really great things to watch. Yes. You're not there yet. I'm sorry. I'm looking for one, just like a symbol.

4:40Just give me one drumbeat. No, I don't. No, I don't. No, Happy Gilmore 2. No, no, no, no, no. Adolescence. No, no, no, no, no, no, no, no, no. You don't want any of that? No. I've tried. They've got international programming, which they say resonates. Do you remember 1 ,500 cable channels and nothing to watch? There's probably 10 ,000 things Netflix is trying to get me to watch. And you've got to quit throwing the low quality stuff against the wall because not much of it is sticking. But they're doing fine. Federal Reserve Governor Christopher Wall are calling for the Fed to cut interest rates when it meets in about a week and a half.

5:16This is a clip of him speaking to New York University Group last night. I believe that the Federal Open Market Committee, or FOMC, should reduce our policy rate by 25 basis points at our next meeting. Tariffs are one-off increases in the price level and do not cause inflation beyond a temporary surge. With inflation near target and upside risk to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate. Waller, one of two Fed officials who have expressed interest in cutting rates this month. That's something President Trump has been angling for. That's one word for it.

5:54Waller is thought of as a possible candidate to succeed current Fed Chair Jerome Powell at last night's gathering. Waller was asked whether the Trump administration had approached him about taking the top job at the Fed, to which he replied no. When I said earlier that, yeah, pick me, pick me. I mean, Kevin Walsh is a brilliant, amazing guy. guy. But yesterday, somehow, when he came on, we were wondering, how is he going to maybe advocate for lower rates without looking like it was a sort of an inner job interview? And he walked the line. He hit the perfect, for me anyway, so perfectly for a 20-year synopsis of why, where we are right now, what's happened to the Fed, why we need a regime change.

6:47There's nothing to do with, but he made a very compelling case, I thought. And I thought after watching yesterday, if the president was watching, which he does, I was thinking he would have been very impressed. I think the markets would applaud Kevin Warsh because of that track record. He made a clear case for Fed independence, which is what the markets are concerned about. And I think what was also interesting was the mention of the Fed Treasury Accord, which would effectively, let these two government agencies work hand in hand in terms of managing the treasury market, which has been a concern.

7:20The threat against Fed independence was thought to possibly spur investors leaving the long end of the treasury curve, right? And so here they are saying, we can manage this. And so could we be in a regime where we can actually lower the long end of the curve in terms of yields. Can we manage that? Because he pointed out yesterday that with the 50 basis point cut, the long end went up. Exactly. And that's always the knock. But when they do this, that's interesting. It is. And yet a lot of other, I mean, he was, it was like Kevin Warsh on Hinge. It was a really interesting interview. It was, but he's been on many times, but he was more forthcoming and just gloves off about the whole issue.

8:05It was actually fascinating. You know, I need a life because it was like riveting TV talking to like a former Fed guy. Yeah. I mean, that's weird. Half the world is like, what are you talking about? Now half the world is watching. Yeah. This was something yesterday. CBS announcing that The Late Show with Stephen Colbert will end its run next May. It's going to be on until May. What is he going to be saying between now and May? Colbert shared the news with his audience yesterday. I want to let you know something that I found out just last night. Next year will be our last season. The network will be ending The Late Show in May.

8:52And.

9:00Yeah, I share your feelings. It's not just the end of our show, but it's the end of The Late Show on CBS. I'm not being replaced. This is all just going away. The Late Show debuted in 1993 with David Letterman hosting. Colbert's iteration of the show is the most watched late night program on the U.S., but it's like a it's a fraction of what late night used to do. He's a frequent critic of President Trump. In a statement, CBS executives said the decision to shutter the show is purely financial and not related in any way to the show's performance or content or other matters happening at Paramount.

9:41Paramount Global is the parent company of CBS. It's currently seeking federal approval for an$8.4 billion merger with Skydance Media. Do you have any? Shadenford is a horrible. I don't like the feeling of it and I'm not going to allow it. I'm just not. I'm going to allow it. Hard be it for me to to take any type of satisfaction in this. Although, you know, if you have Adam Schiff and Jasmine Crockett as contributors to the show, that might be your first clue that maybe. Right. And if it's totally unwatchable, probably not good for... Ultimately, the audience is the boss. I haven't seen it because I'm never up that late.

10:25So I shouldn't really cast this version. Cheese will be next. Coming up on Squawk Pod, tackling the housing affordability crisis with President Obama's Housing and Urban Development Secretary, Sean Donovan. His take on what the city needs to do to spark development. Part of that is getting government out of the way. We've got to have less regulation. We've got to allow bigger buildings. We've got to go faster. We got to have fewer ways to stop things getting built. He went from government to a nonprofit devoted to this problem, and we'll discuss it right after the break.

11:08This is Squawk Pod. Stand by, Joe. His mic to you. You're watching Squawk Box on CNBC. I'm Joe Kerner, along with Melissa Lee. New York City Mayor of candidate Zoran Mamdani He is campaigning on a promise to improve the housing affordability crisis in the city. But the methodology is up for debate. Someone who knows a lot about this here now, Sean Donovan, CEO of Enterprise Community Partners, a nonprofit aimed at increasing housing supply and advancing equity. He also served as HUD secretary under President Obama. I knew him then. And the commissioner of the New York City Department of Housing and Preservation and Development.

11:46I didn't realize you did that prior to being HUD secretary, 2009 to 2014. Welcome, Sean. I still could call you that, I guess, Mr. Secretary. Sean is just great. Thank you. It's great to be back. Good to see you. It's tough. Housing affordability, housing supply. I'm not going to say that, wow, you've had, you know, 16 years of being intimately involved and we're no better off. It's not your fault. You're still plugging away. Are you not? We absolutely are. But the problem is, and I think that's true of this election in New York, we call it an affordability election. It was a housing election.

12:23I think it's true of our election. Donald Trump was elected because we had an inflation problem. That was a housing problem. Our inflation problem was a housing problem the last few years. And so this is a problem that is driving elections. I would even argue it's the number one issue, housing affordability in America. And then you take Manhattan. There's no solution to affordable housing. Well, here's what's interesting is we're now seeing bipartisan at a time of hyper partisanship. We are seeing more and more bipartisanship around building more housing. We are seven million units short in housing in this country and places are starting to build more.

13:04You even saw California recently say they're going to wipe out the Environmental Quality Act if you're building affordable housing. So that is starting to make a real difference. Prices are coming down in places that are building more housing. And that's what we need to do here in New York and across the country. I want you to tell me what enterprise, because you work in three different areas. Is this low-income housing tax credit program key, in your view? Absolutely. And in fact, one of the things we don't talk enough about in the bill that just went through Congress, the reconciliation bill, the one big beautiful bill, as people call it, there was the biggest increase we've ever seen in the low-income housing tax credit.

13:48Democrats never say that. Well. So it was a good thing. You're happy about that. On housing, it was a really important step, and it was highly bipartisan. And here's the thing. How was it bipartisan when they didn't get a single Democrat vote? Well, there were a few other things in the bill you might have noticed that weren't so popular. I understand, but don't be throwing that bipartisan word around when they didn't. Right. But here's the interesting thing, that we talk about this problem in New York. We talk about it in the big cities. Rents are rising the fastest in Idaho, in Wyoming, in red states.

14:22And we're seeing more and more Republican governors, Democratic governors come together to say, we need to build more housing. Part of that is getting government out of the way. We've got to have less regulation. We've got to allow bigger buildings. We've got to go faster. We've got to have fewer ways to stop things getting built. We just had a city of yes proposal in New York that went through last year that's going to make a big difference. We have to do that. We also have to invest more. And the low-income housing tax credit is the single most successful way to do that we've seen. That's a good way.

14:56And it's a public-private thing. It can lead to that anyway. I said to you, this makes my head explode, freeze the rent. So that is a slogan that we're hearing and maybe what got Mamdani elected. What when you freeze the rent, if the rent doesn't pay for the upkeep of the building, it invariably happens that either there's no supply left or it's just run down and can't be maintained. What did you tell me? It's not a solution. It's a slogan. It's a slogan. It's not a solution. But let's be clear. we have over half of New Yorkers paying more than they can afford when they're renting. And on average, those renters are paying a thousand bucks a month more than they can afford.

15:42No wonder they're angry. And in the short run, freezing the rent might help a few folks. But what it doesn't do is solve the bigger problem, right? We need to build hundreds of thousands more units in New York. We need seven million more units nationally. And so we have to find ways to build more and invest more. And that's really what's going to solve the problem. Enterprise is totally a 501c3? Well, you know, we're a very interesting organization. We're the largest nonprofit in the country working on housing. We helped create the low-income housing tax credit. We invest about$10 billion a year.

16:18And I want to be clear, for your audience, this is a huge opportunity. If we can build these 7 million more units, investors can get significant tax breaks through the low-income housing tax credit. They can meet ways to invest in their communities to meet their social goals. So it's a very big opportunity for the private sector as well. And we should be clear, Freeze the Rent is specifically for a rent-stabilized apartment. So it does, it helps us a small, it would help in theory, a small fraction of New Yorkers. Have you talked to Momdani? I've had a brief conversation with him during the campaign about it.

16:54And look, as you said, I ran housing in the city under Mayor Bloomberg. I think all New Yorkers need to come together and solve this problem. And we need to work together on bipartisan solutions that can get it done. Would you would you and you don't endorse people? Do you don't? Look in absolute horror at the possibility of a of a moving of New York moving into a socialist I run a 501c3 that is not part of it. You're going to punt on that? Look. But again, the big picture point here, Joe, is if we don't solve this housing problem, we are going to keep having... Donald Trump was elected on housing.

17:39I understand. Zoran Mamdani will probably be elected on housing. When we've tried to pin down Senator Elizabeth Warren was on... And even when we try and turn down, they give me these these feel good platitudes about empathy for people. And they don't connect the dots to what normally happens when the the answer is socialism or the things that he's proposing. Not only does it not help the people normally that you're trying to help, it makes it much worse for everyone. And no one will say that because they're all worried he's going to win and they'll be on his bad side. Well, let me be very specific.

18:14The inflation that is hurting renters and homeowners alike is also hurting the people who own and manage housing. We were founded, Enterprise, to help local community-based nonprofits. We have hundreds of thousands of affordable units in this city that are owned and managed by great groups that are interested in just housing more people, right? Guess what? Their insurance has gone up. Their costs are going up. And so we have to recognize that we have to invest in this housing and we have to be able to pay for those expenses. And so that's why I say freezing the rent is a slogan. It's not a solution.

18:52There are other things we should be focused on. Freezing the rent is just a slogan. There's lots of other things we need to do. We'll end on at least your LHTC. It got increased in this most recent bill. It got increased, and it's been an incredibly effective public-private partnership for decades now that actually gets things done. Would you help the new mayor if asked? I am a lifelong New Yorker who wants to see this city succeed, and we know how to solve this housing problem. It's not easy, but we should come together and do that. All right. John Donovan. Mr. Secretary, thank you. How long does that last?

19:31Is it ever in? Forever. For life. I think it, lifetime. Lifetime. Lifetime appointment. Exactly. Like the Supreme Court or something. Thank you. Next on Squawk Pod, House Speaker Mike Johnson, fresh off a victory lap for the 4th of July passage of the one big, beautiful bill. He says there is no daylight between his leadership and the president's priorities, especially when it comes to interest rates and the current economy. We should reduce interest rates. The American economy is hot and we have so many good things going on. We're delivering over and over the Republican majority here. If it's too hot, you don't want to cut rates.

20:14We'll be right back.

20:20You're listening to Squawk Pod today with Joe Kernan and Melissa Lee. Here's Joe. Well, let's talk about President Trump's economic agenda, crypto regulation, the Fed and more with us now. To our delight, House Speaker Mike Johnson, Mr. Speaker, thanks for joining us this morning. Good morning. Glad to be with you, as always. I don't think we've talked since the I'm just it's the OBBB. I, you know, I can't explain it every time, but I don't think we've talked to you since the OBBB. I don't know whether you saw earlier. I had to laugh because we had President Obama's HUD secretary on, Sean Donovan, who is, you know, in charge of a 5013C now to try to help with the affordability crisis in housing and the shortage of housing.

21:10And he was like singing the praises of one of the provisions in the OBBB. And I said, you know, you're a Democrat and you're saying some really positive things about the low income housing tax credit provision in the new bill. It expanded it. And he goes, well, that was a bipartisan move. And I go, there were zero Democrats. What does that mean? it was bipartisan. But he couldn't help himself. He said that's the answer. Not freezing rent, like the candidates in New York for the mayoral race are talking about, but what's in the bill? Did you tell people that was in there, Mr. Speaker, or the media just doesn't say what's in there?

21:54Well, the reason we named it the one big, beautiful bill is because there's so much in it for everyone. And I'm delighted to hear the former HUD secretary sing the praises of the bill. there are a lot of praises to sing, and everyone will be singing that tune, and certainly the voters will when you come to the midterms in 2026. And the reason for that is because we wrote this bill for the lower and middle class earners in America. We're the working class party. The Republican Party is, and we delivered for them. And it's important to point out all the Democrats in Congress voted against all those great provisions.

22:25You're talking about historic tax cuts, historic savings at the same time. But what it means for the typical family in America, an additional average$13 ,000 in their pocket at the end of the year in take-home pay. You're talking about the child tax credit. Ninety-one percent of Americans will benefit from the increase that we did there. Seniors got tax relief. No tax on tips and overtime and things that are really going to mean a lot to people. And it's going to be jet-fueled to the U.S. economy. You're beginning to see just the enthusiasm that the passage of the bill has sparked. This is the beginning of a great run for America.

23:02President Trump called me earlier this morning. We were doing a victory lap together on the phone about the passage of the rescission bill late here last night. And he said, Mike, we're just winning. We're going to continue to win. This is a great moment for America. I said, sir, it's historic and there's much more to come. You've said many, many times that it is what it is. The margin you have in the House, what we have, what the Republicans have in the Senate. that$9 billion was that hard? And for some of the other, what was the nine-hour whatever that was? The Votorama? Yeah, I called it a kabuki dance.

23:39So the guys that are holding out, do they eventually get something for their own districts? What is the, what's going on? It's making sausage, but can you explain? I don't know how you deal with it, your patients, But what do they want? What's it all about? I mean, if they're going to eventually do it, why is it so hard? Well, I wish I could answer that question. Some people just have a lot to emote about before they finally vote. And when you have a margin as small as we do, both Leader Thune and the Senate and I in the House, we have a three vote margin in each chamber. And so we have to allow that process to play out.

24:20And sometimes it takes longer. I mean, I sit in rooms late at night with small subgroups of members who are working through all their questions and concerns. And I try to convince everybody here every day we're almost never going to get 100 percent of what we want individually in a piece of legislation. This is a deliberative body. We have hundreds of colleagues here. No one gets everything they want. But the objective here, as the founders designed it, is to work through this deliberative process, build consensus, and present the greatest possible product for the American people, for the most people, for the most good.

24:52And that's what we do here. And, you know, people say you're pulling rabbits out of hats. These are magic tricks. It's really not. I mean, what I wanted everybody to know about the One Big Beautiful Bill is it wasn't a magic trick. This was, I think it was Vince Lombardi that said victory loves preparation. We prepared for that outcome a year and a half before we crossed the goal line. I mean, we deliberately, methodically developed a playbook, put together all the pieces of the reconciliation package, countless hours of deliberation, negotiation, conversation. That led to that ultimate goal. We kept our eye on that goal line, and we delivered it before, by the way, before our self-imposed deadline.