Ro Khanna on the Megabill & OpenAI Warns ‘Token’ Investors 7/3/25

0:00Bring in show music please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, the House of Representatives poised to vote on President Trump's mega bill. It's likely to pass, but not before the Democrats speak their piece. California Congressman Ro Khanna joins us. The reality is you have to raise taxes on the wealthy. You can't be cutting taxes on the wealthy if you want to do anything to lower the deficit. And Microsoft cutting 4 % of its workforce. Is AI to blame, really? Our own Steve Kovacs says, eh. I think it's an excuse, maybe not a reason. It was mostly just getting rid of middle managers.

0:45AI can't replace that. Fellow tech journalist Mikhail Evram says it's all part of a cycle. This is kind of a natural thing that happens with Silicon Valley companies when we're going through one of these big technological transformations and reallocations. Those stories plus the jobs report for June. What a better-than-expected metric from the Labor Department means for Fed Chair Jay Powell. It's Thursday, July 3rd, 2025, and Squawk Pod begins right now. Stand, Andrew, bye. In three, two, one, cue Andrew. Good morning and welcome to Squawk Box right here on CNBC. We are live at the Nasdaq market set in Times Square.

1:27I'm Andrew Ross Sorkin, along with Melissa Lee. Joe and Becky are off today ahead of July 4th, but ahead of a very, whether it's a big, beautiful bill or not, a bill nonetheless, and the jobs report. It's a half day for the U.S. markets. The closing bill coming at 1 p.m. Eastern time today. U.S. equity futures right this morning. First up today, as Andrew mentioned, the June jobs report. Some data heading into the holiday weekend. U.S. payrolls for June increased by 147 ,000 jobs. Definitely a bit better than expected, no matter what your range was. Our own Rick Santelli read out the numbers as they broke this morning, including the unemployment rate, which ticked down to 4.1%.

2:13But while jobless rates fell, the labor force participation rate fell to its lowest since late 2022, which means we saw a decrease in those working or looking for jobs. Now, important to note, a lot of the job growth this month came from state and local government hiring. But overall, as one of our guests put it, a check plus. A good report that leaves us wondering, what does it all mean for the Fed's monetary policy? Amid pressure from President Trump, Fed Chair Jay Powell has remained cautious on his next move on interest rates. But the pressure is still on. And as CNBC's Steve As Leisman knows, the markets are watching.

2:53I wouldn't cut Rach right away, but I'd have my finger near the trigger. Let's get back to Andrew Ross-Orkin and Melissa Lee. President Trump calling on Fed Chair Powell to resign. That came in a post on Truth Social. The president used his derogatory nickname for Powell too late and linked to an article that detailed a call yesterday by Federal Housing Finance Agency head Bill Pulte for Congress to investigate Powell. Palti had issued a press release in which he asked lawmakers to look into what he called Powell's, quote, deceptive testimony to the Senate, that is, although Palti did not provide any evidence for his claim that Powell made inaccurate statements.

3:32Part of this concerns renovations, really, to the headquarters of the Federal Reserve. I've been following this story. Recent reports have made the case that the project has seen rising costs. Interestingly, the Fed technically pays for itself, but you could also say the Fed arguably prints the money. So it's a complicated one. But again, the question is, you know, we keep talking about the independence of the Fed. Investors say we care deeply about the independence of the Fed. And yet then the president says these things and the market doesn't seem to care. Or is it just because this is all just like a social media spat?

4:11or is it real or is it because we know that come May anyway, there's somebody else in that role? Well, there's somebody else in the Fed chair role, but there is some question as to whether or not Powell will actually relinquish his role as a Fed governor. Fed governor at all, right. Would you handcuff President Trump's ability to appoint a whole new member to the committee that would be presumably more inclined to cut rates? You know what we haven't talked about? So many things. I mean, it's only 609, Andrew. I know, but what would it feel like? Beginning of the show. What do you think it feels like to go from being the chair to being a governor.

4:44You run the place. Right. It would be like you're the president of something. And then you're... And then you're... Like vice president. Yeah, then you're like the deputy. Not even the deputy. You're like just another... Maybe it would be a relief. Maybe it would be a relief. I don't know. I mean, it's quite a weight to bear to be the Federal Reserve chairman, I would think. I'm sure it is. I'm just saying that if you were President Trump or you were President Obama, and then somebody said, well, actually, we'd like you to be the uh secretary of transportation yeah right would you take that job i don't know you you might you might but for powell if he were to stay on as governor it would not only be you know obviously he probably loves being you know part of the oh no he would stay in because because the independence exactly because it's important to the sanctity of u.s assets, especially treasuries, in the eyes of foreign markets to have an independent Fed.

5:40So it's a greater sort of burden. That's the conventional wisdom. This president, by the way, has, I don't know if it's proven it or not, but increasingly sometimes does seem to be proving it that sometimes the conventional wisdom is not right. That's true.

5:57Open AI distancing itself now from Robinhood's latest push into crypto after the trading platforms started offering what they're calling tokenized shares of SpaceX, which, of course, is a private company, to users, though the users, and I should say, are only in Europe. So this is not available to customers of Robinhood here in the United States. In a post on X, though, OpenAI saying the following, he says, these OpenAI tokens are not OpenAI equity. We did not partner with Robinhood. We're not involved in this. We do not endorse this. Told users, please be careful. Now, in response to OpenAI's post, a Robinhood spokesperson saying, quote, these tokens give retail investors indirect exposure to private markets.

6:39Opening up access are enabled by Robinhood's ownership stake in a special purpose vehicle. We'll explain how this works in a moment. Robinhood stock hitting a new high on Monday when it made that new token and blockchain announcement. U.S. users, as we mentioned, cannot access these tokens because of regulatory restrictions. We talked to Paul Atkins, the new chair of the SEC, a little bit about this token issue. And so what's really happening, and you can speak to it probably even better than I can, is there's private companies, SpaceX, OpenAI, what have you. Those are not available. Those shares are technically not available to the public because they're private.

7:18They don't have the same disclosure as a public company. What a whole number of companies are doing, including Robinhood, is effectively trying to create almost like a derivative. Yes. Of the underlying asset. They own the underlying asset through oftentimes a special purpose vehicle or some other kind of mechanism. And they're saying we're going to basically break that special purpose vehicle up and then we're going to into pieces. But not really because we're going to keep it. We're going to create sort of derivative pieces that track. It's almost like a tracking stock of that. And OpenAI is saying this is not our thing.

7:53The other piece. So there's two pieces to this that I'm very curious about. I don't know what you think. One is, clearly these are private companies that shouldn't be in the public. This is a mechanism to get around the law. And by the way, only happening in Europe through Robinhood. Others are doing it in the United States, by the way. So they're going straight at it and saying they're going to even do it here. And the question is, should they be allowed to do that? The other question is, the open AIs and SpaceX's of the world, in some cases don't even want these guys to have the shares, meaning they don't want Robinhood to own the shares.

8:29They don't want anybody owning these shares. They don't actually want a liquid market because typically the way these kind of shares work, they come usually from employees, honestly. And they don't want the, usually you have to sell it back to the company. Like they get the first look. Right. They don't want the employees, they want the employees to have some liquidity, but not too much liquidity. Right. Because the truth is, if all the employees are able to sell today, it changes the whole culture. This goes back to Sam Altman saying, you know, if Mark Zuckerberg's paying everybody$100 million, it's going to create a culture of mercenaries.

9:04So they don't want everybody to become bajillionaires yet. I think that there are a lot of different issues and potential problems with this whole notion of tokenizing security. I mean, I think for individuals, I think the marketing of this product is going to be very telling because you do not own. And I don't think people understand that you don't actually own the shares because they think that they're owning tokens, which represent shares. They represent them the way an option represents a stock. You don't actually own the stock. You own an option. I mean, it's, it's, it is a derivative. It is not the underlying asset.

9:37You might as well be on FanDuel. Yeah. Yeah. On the direction of the value, the valuation. That's what it is. It's a bet. So the question is whether you think, I mean, we just talked to Paul Atkins. I don't think that he is prepared to regulate this market in a meaningful way. I think what he would like to do is try to make being a public company more attractive so that he can sort of edge out and make it less attractive so there's no need for this kind of thing. But he doesn't seem to be saying this over here is no good and we're going to stop it. It sounds like he's reluctant to say that yet.

10:13But I think that, I mean, maybe we're putting words in his mouth, but there are disclosure issues, right? There's a reason why retail investors don't have access to this. There's a reason why these companies are private. They have less disclosure. And retail investors need to, you need to have that disclosure. Fidelity might have more access. Here's the thing that I don't know about. All of these things are pitched as democratizing investing. And by the way, we would like to democratize investing. I think you want more people. That's what we are all about, right? I'm not disputing that. And so then the question becomes, people who are watching are saying, Melissa, Andrew, I want access to this stuff, and I can't get access to it currently.

10:50Why are you trying to stop me from having the same opportunity that Marc Andreessen and Peter Thiel have? But that is part of this issue, and we haven't really grappled with that from a policy perspective. Then you could make the argument the entire other way, that is, investors should have access to anything they want. So that guardrails. Correct. And there's some fraud laws, anti-fraud laws to protect you. I mean, all I'm suggesting is there are people out there who say, look, you're not protecting me. You're protecting the man. I get that argument. Cheese will be next. Up next on Squawk Pod, what a Democrat is saying about the mega bill poised to pass in Congress.

11:37California Representative Ro Khanna direct from the Cannon House building. Are there aspects of the bill in isolation that I could support? Things like the no tax on tips, things like the making child tax credit permanent, no tax on overtime. Absolutely. But overall, the bill is skewed to people who are extremely wealthy. About 60 % of the benefits are going to go to people over$220 ,000.

12:12Welcome back to Squawk Pod from CNBC. Today, while we aired, the House of Representatives was poised to pass President Trump's megabill. But ahead of the final vote, Minority Leader Hakeem Jeffries spoke for hours on the House floor, starting just before 5 a.m., aiming to delay the vote and thus the passage. But I'm here today to make it clear that I'm going to take my time and ensure that the American people fully understand how damaging this bill will be to their quality of life. Democrat lawmaker Ro Khanna was there and joined us on TV directly from the cannon rotunda in the House building.

12:55Here's Andrew Ross Sorkin, who's in New York. Ahead of July 4th, we are waiting on a House vote now on President Trump's tax and spending bill. Hakeem Jeffries is continuing to speak. As we keep saying, pulling a bit of a Cory Booker the last couple of hours. We'll see when that finishes. Congressman Ro Khanna of California has been listening to Hakeem Jeffries, the minority leader, but just popped out for Squawk Box. Good morning to you, sir. Good morning. It's been a long night. It's been a long night. You're on the losing end of this situation. What do you think the implication is here? There are two major problems I have with the bill.

13:32One that Larry Summers and Bob Rubin pointed out. This bill is going to add$4 trillion to the national debt, and it's going to take deficits to 8 % of GDP, almost unprecedented in peacetime when there's no external shock like COVID or the Great Recession. And the second is the distribution. I mean, even Bush's tax cuts and Trump's tax cuts helped everyone. They disproportionately helped the rich, but they gave a break to everyone. These tax breaks actually make poor working class Americans poorer while giving the rich tax breaks. They take away Medicaid. They take away food assistance. And that's pretty unprecedented in modern history.

14:14We talked to a congressman on the Republican side of things who actually had a negative view of this bill last night and a positive view of it this morning. And one of the things he said was that he got assurances effectively from President Trump that certain parts of the bill may be slow walked or other things might happen as it relates to a whole number of things. Have you heard that in terms of in terms of those holdouts who've come come along, why they've come across? Well, one, they don't want a 20 million dollar super PAC coming after them at a in a primary. I mean, look at what happened to Thomas Massey when he spoke out against the Iran strikes and the war powers resolution.

14:53So Donald Trump has a lot of power in the Republican Party. But on the substantive thing, I've been told that they've been promised future reconciliations that are going to make more cuts. The question is, though, how are they going to pay for them? The reality is you have to raise taxes on the wealthy. You can't be cutting taxes on the wealthy if you want to do anything to lower the deficits. It's not just me. That's what Rubin and Summers say. That's what economists look at the mat say. And so they're being promised future reconciliation packages to cut the deficit. But it's unclear where those cuts are going to come from if they're not willing to increase taxes on the wealthy.

15:33Congressman, I'm waiting to weigh in on this. We've been watching the bond market, which you would think would not like a bill like this. Just the conventional wisdom would be that the market is not moving. It is not the bond market is not acting in a way that's suggestive that they have a problem with this bill. Now, on the other side of it, we talked to Steve Leisman recently. One of the interesting things that may be part of the calculus is there's an expectation even already that a year from now, Jay Powell will not be in this job and maybe you'll have a Fed chair that's going to start lowering interest rates.

16:05And if that's the case, maybe that's offsetting whatever anxiety there would be. But then you'd probably have even more anxiety about the dollar, frankly. So how do you reconcile all of that? Well, it's surprising to me. I mean, obviously, the bond markets moved a month or so ago, and maybe they've already factored in that this bill was going to pass. But you've got tariff policy that, in my view, is slowing the economy. And we're going to see, perhaps in this jobs report or in Q3, combined with now massive deficit spending that's going to put pressure on our interest rates. And that's the concern, that you have a slowing economy and, at the same time, higher interest rates.

16:46But, you know, obviously, I don't have a crystal ball in terms of what the bond market is going to do. I just think that we don't have smart economic policy right now. Can you at least do you acknowledge that this bill, though, could improve the economy or help businesses, which will then improve the economy overall? I mean, permanent expensing, that's that's a very, you know, that's very attractive and could be very good for businesses to spur investment in in equipment as well as as facilities. ways, you know, making the tax cuts permanent. That is a very, you know, that's key to stabilizing the outlook of the economy.

17:22I mean, there are offsets here, Congressman, to this, aren't there, in terms of, you know, your concerns about the deficit? It could ignite some growth here. Well, are there aspects of the bill in isolation that I could support? Things like the no tax on tips, things like the making child tax credit permanent, no tax on overtime. Absolutely. But overall, the bill is skewed to people who are extremely wealthy. About 60 % of the benefits are going to go to people over 220 ,000. This is not the kind of bill you would pass if you wanted to have more consumer spending. You would do what Josh Hawley was saying, double the child tax credit.

18:04you would skew most of the tax credits and tax breaks to the working and middle class. And we saw with the previous Trump tax bill that it didn't lead to higher investment, that it was basically distributionally skewed towards the wealthy, and it didn't lead to more manufacturing or domestic investment. And there's no reason to think that this is going to lead to that kind of productive investment now. Congressman Ro Khanna, thank you for joining us this morning. It's good to see you. We wish you a very happy fourth, and we'll see when this bill gets passed, what happens next. Thank you. Coming up on SquawkPod, Microsoft is laying off about 4 % of its workforce while it's doubling down on AI.

18:48The question is, are the layoffs because of the AI? CNBC contributor Mikhail Evram on the future of tech at Tech. I absolutely don't think that we're going to be, you know, getting like 360 performance reviews from an AI bot anytime soon. Probably never. Our own Steve Kovach isn't so sure, but we'll get to all things tech right after this break.

19:14This is Squawk Pod. You're watching Squawk Box right here on CNBC. I'm Andrew Ross Sorkin along with Melissa Lee hanging out with us ahead of the holiday. It's kind of like a half-day holiday, but not in the news business today. It's still a three-hour show, Andrew. No, a three-hour show, but the markets closed at 1 p.m. today. Having said that, a lot of news. This week, Microsoft announcing it is laying off nearly 4 % of its workforce as it tries to refocus more on AI. CNBC contributor Mikhail Livram is a Silicon Valley-based journalist. She joins us live this morning. We've also got CNBC's Steve Kovak here at the NASDAQ.

19:51Do we believe that AI is the reason? I think it's an excuse, maybe not a reason. I look at like what Mark Benioff said the other day, and he said 50 percent of our work right now is being done by artificial intelligence. If that was true, we'd be hearing about massive layoffs at Salesforce. We'd be hearing about huge improvements to margins and so forth. But we're hearing it increasingly. The journal did a story on this yesterday, guys. They said, you know, saying the quiet part out loud. Ford CEO is talking about it now. We had Andy Jassy from Amazon talking about it. Those Microsoft layoffs, though, yesterday, no word of AI.

20:28They did talk about efficiencies and things like that, leveraging technology, presumably AI. But it was mostly just getting rid of middle managers. AI can't replace that. Mikal, what do you think? So I agree, but I don't think the only options are AI or BS. You know, I think there's there's a truth somewhere in the middle, too. So while I don't believe that these are job losses due to AI, that AI is taking over jobs, and yes, totally agree that we would see a bloodbath if that was really starting to happen, I do think it's the result of the company reorganizing itself around AI. And we saw the same phenomenon in other technological transformations.

21:032014, you know, Microsoft shed 18 ,000 jobs as they were making the transition to really focus on mobile and cloud. And so this is kind of a natural thing that happens with Silicon Valley companies when we're going through one of these big technological transformations and reallocations. But if we were having this conversation 12 months from now, do you think we're going to see a lot more of this? And will it be much more severe? I think so. I don't know about more severe, but I think, you know, Microsoft has now gone through several waves. You know, maybe there'll be more, maybe not. By the way, the cuts are really across the board, both geographically and across different divisions.

21:43Definitely hearing about some cuts on the Xbox side, various gaming studios. So they're across the board. I do think we'll see more of them. But, you know, that said, again, I don't know a single software engineer out here who has actually lost their job to AI. And even if 20 to 30 percent of the code is being generated at Microsoft now by AI, you know, software engineers do a lot of things. They're not just constantly writing code nonstop. I asked a friend of mine just the other day who's a software engineer out here, how much of your time are you actually like, you know, giving off to vibe coding?

22:18And she said about 10 percent. You know, they're checking the software, they're testing it. They do a lot of other things. So I do think that there's going to be a lot more, you know, in other companies as well. I don't know about Microsoft, more of this restructuring and reprioritization, but not a huge loss of jobs due to AI anytime soon. It seems like it would be a good time for a lot of the other Mag7 names or big cap tech names outside of Meta to examine that year of efficiency. Meta really gained a lot in terms of stock market value because of the year of efficiency. And with AI kicking in, the ability to reap those efficiencies is much easier, I would imagine.

22:56We hear about that all the time, but we just don't see the evidence of it yet. I mean, there's so many anecdotal stories when I talk to CTOs at companies and I say, you know, are you guys using it? Are you using did you buy a copilot license and so forth? And so many people say, yeah, we're testing it, but it's too expensive. It doesn't do enough. You know, we see some moderate gains in productivity. It's not really fulfilling that promise that we heard of. But let's extrapolate this a little bit, because I was talking to I can't really say who it was, but I was talking to someone who works in HR at one of these big tech companies.

23:27They are already talking about a universe in the not-too-distant future where your boss is an AI agent, and they're already talking about, within this company, planning for a world where you're literally reporting to an artificial intelligence agent. What does that look like? How do you handle human resources? How do you manage people like that? This is how they're already... These companies are already thinking that way is what I'm saying. I've talked to people about that. I've talked to people about who think that they're going to have sort of these agent hierarchies where there'd be an AI boss that would be bossing around, if you will, other AI agents that would have different tasks.

24:07If you were to think of sort of a various hierarchy, one might be responsible for if you were a reporter, one might be a reporter and they might have an editor or a producer in this universe. Why couldn't you make an AI agent that could do all? Yeah, why can't it do it all? Why is there going to be layers of agents and AI bureaucracy? I think early on, part of it is, as you probably, we've all learned through prompting, you have to do it. Everything is actually quite specialized. You can't, if you just tell AI to go do something. You have to be specific. It doesn't, it can't really do it, right?

24:41It's just like a person, by the way. A person is specialized in something, and they have sort of a strategy and a plan to do it. It's not like it becomes an all-seeing robot, I don't think. And to your point, that's why we're not seeing huge layoffs, because you can't take those jobs yet. Mikhail, what do you think about that? Do you think we're all going to have an AI boss soon? No, I don't. Not at all. I think we will have an AI helper, an AI assistant. I think that makes a lot more sense to me. By the way, there's a company out here called Lattice Works. They're in the HR space, and they actually launched a product a while back that was onboarding AI agents.