Socialism Vs. Capitalism & Diesel Exports 9/23/26

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0:48Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The debate of 2020's politics, capitalism versus socialism. California Congressman Ro Khanna joins us. There are common sense ideas that we can have in this country to help homeownership, to help build jobs. And for the progressive Democrat who represents big tech, the 2028 presidential election is looming. I'm looking at it and I'll tell you why. Meet the candidates on SquawkFox.

1:30The future economy is in my district, but I think it's working for too few. To counter the rise of democratic socialism, the U.S. Chamber of Commerce could soon be rolling through a town near you pushing free market capitalism. The chamber's CEO, Suzanne Clark, with what's at stake this November. Even if you end up with 10 DSA sympathetic members in Congress, they're going to make a difference. These votes and margins are really tight all the time. All that today, plus Diesel's record high, Meta's muse, China comes to Washington, and a new AI role for Scott Besant? Still think President Trump in a lot of matters refers to his Treasury Secretary.

2:10I think the Treasury Secretary himself would say he is carrying out what the President wants. Exactly. It is Wednesday, September 23rd. Squawk Pod begins right now. Stand Becky Bye in three. Two, one. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew is off today. Yesterday, you saw the NASDAQ and the NASDAQ 100 setting new highs. This morning, the NASDAQ's pulling back by less than 10 points. You've got the Dow, which was down slightly yesterday, indicated up by about 25 points.

2:50And then the S &P was flat yesterday. it's indicated up by about six points. Joe, I went back and looked at the beginning of the war. Since the beginning of the war, the Dow is actually up by about 6%. The S &P is up by close to 12%, and then the NASDAQ is up by more than 20%. It's 23 % if you're looking at the NASDAQ 100. That's happened while WTI has increased about 40%. Yeah. Kind of phenomenal to see. I don't know what the counterfactual is, but so far so good on being, you know, somewhat resistant to all those forces. I mean, you look at tariffs, same situation. Nothing but go up. There's something, there's either something else very powerful going on, super intelligence.

3:29I don't know if I can start. I don't like super intelligence. Artificial. Are we going to stick with AI? I think we're probably going to stick with AI. Yeah. We're watching some key financial names this morning. There was a little weakness yesterday. The quick adoption and growing popularity of Meta's Muse AI agent pressuring bank stocks and brokerages. J.P. Morgan, Bank of America and Wells Fargo each fell more than 3 percent yesterday. Charles Schwab was down more than 6 percent. Met is pitching a muse as a way for everyday consumers to manage and direct digital assistants that can perform a number of tests across the Internet.

4:06The fall in financial shares echoed some tremors in the markets earlier this year when investors suddenly got worried that evolving AI capabilities would hurt sectors from computer coding to tax prep to legal work. The world is changing. What's the expectation of financial stocks, though, that you're going to find the highest yield on your accounts? Maybe that's it, right? And it might not be at a bank, right? Maybe. China's President Xi Jinping slated to arrive in the United States today for a state visit. That trip will include a formal state dinner tomorrow, and it follows President Trump's travels to China earlier this year.

4:46Earlier today, China's ambassador to the United States warned Taiwan and human rights are red lines that can't be challenged. AI developments will be front and center, with tech titans expected to join the White House state dinner tomorrow. Among the executives expected to attend, OpenAI's Sam Altman, NVIDIA's Jensen Wang, JPMorgan's Jamie Dimon, Amazon's Jeff Bezos, Google's Sundar Pichai, Apple's Tim Cook, Meta's Mark Zuckerberg, Microsoft's Satya Nadella, and SpaceX's Elon Musk. That's a mouthful. That's a lot. I'm looking to see who's not a billionaire. I don't think Jane is yet. Is she? Jane Frazier.

5:27No, I don't think so. That's the one name I didn't just say. I think Michael Dell, everybody else there. Everybody else is there. Oh, it doesn't make them bad people. OpenAI CEO Sam Altman and Anthropic CEO Dario Amadei are expected to brief the U.N. Security Council on artificial intelligence. Reports say that the meeting is going to take place today. According to a U.N. spokesperson, the CEO of Hugging Face will also join that meeting. During his speech to the U.N. yesterday, President Trump rejected calls for global control of AI. He promised to encourage AI development and said he's not going to stifle the growth of that business.

6:07That, in his words, will be bigger than the industrial revolution. Treasury Secretary Scott Bessant appears to be the favorite for the position of AI czar within the Trump administration. That's according to a report from the online news site Semaphore. A White House spokesman said that any reporting about personnel decisions that haven't been announced by the Trump administration is baseless speculation. Last weekend, Besant met with China's vice premier ahead of Chinese President Xi Jinping's visit to the United States. Besant said that the U.S. floated the idea of a notification system between the two countries so that they could communicate about serious AI incidents.

6:50The Chinese models are very powerful, even though they're open models. They are very powerful. The U.S. remains in the lead. And that was a very good acknowledgement that I got from my Chinese counterpart. They agreed that we are in the lead. Besson told us Monday that Chinese and U.S. officials would probably meet again on AI in about two months time. But it'd be interesting to see him in that position. He has a lot of strong thoughts about AI. It's already. It's weird. De facto names. Yeah. I think, you know, the Treasury secretary and then him specifically. Yeah. And he kind of took the lead as a on this show on on Monday, I would say.

7:31And it made a lot of sense and was very, you know, I'm not going to say he may know nothing but never be in doubt because he knows a lot. But he was not in doubt about how he felt about liability and what the companies were saying. I mean, he's got very strong views that don't seem like they need to evolve for him to take charge. Right. And for anybody who missed that interview, that is what he talked about. The Trump administration believes that these companies won't be shielded from liability and that should make them police themselves a little more effectively. I still think this gentleman I'm going to talk about right now, I still think President Trump in a lot of matters defers to his Treasury secretary.

8:10Don't you think? I think the Treasury secretary himself would say he is carrying out what the president wants. Exactly. But he's very skillful at, I don't know, getting the president to, you know, they seem to find common ground on the path forward. Although you pushed him on Monday, the idea that his perspective on AI seems to be a little more nuanced than the president. Yeah. From when, you know, those published reports that a couple of months ago that he's considered. We all probably are a little bit concerned, but I definitely come down more on Trump's side on less is more in terms of especially, you know, that's all we need is some euro style regulation.

8:54President Trump is backing a ban on diesel exports as the price of fuel sits near a record. We had, my mind is mush, we had someone, Louisiana Governor Landry. Landry, yeah. Says that that makes a lot of sense. I came up with it. Because it was like two days ago. Treasury Secretary Besant said the White House was studying whether diesel restrictions were feasible and whether a full or partial ban would work. Some Republicans running in competitive midterms have called for the Trump administration to put a diesel export ban in place. A gallon currently stands just below a record that's$6.52. China has put a ban in place.

9:36Russia has put a ban in place. And there are calls for this, But then there are also calls within the industry of people who say the reason that we are not being more hamstrung by closing the Strait of Hormuz is because we have so much production here, because we have so much refining capabilities. And that is because they have invested in this industry. If you put a ban on, it might make, you know, even if you talk about the ban, it makes people think twice before investing in this in this industry. So short term, it certainly would help, particularly before the midterms, longer term. It could create a problem.

10:13Right. The Trump administration moving to cut hundreds of thousands of people from Obamacare health plans in a push to root out fraud in the program. J.D. Vance, the vice president, said the White House wants to make sure that Obamacare enrollees are actually alive and actually entitled to benefits. He said more than 70. I put that in. But there were some people they couldn't even find. 750 ,000. 750 ,000. But of some of them, they're not even sure that they're real. CMS estimates there's like a million people who didn't use a Social Security number and applying for it. They were fraudulently enrolled.

10:54People on health insurance exchanges were fraudulently enrolled or simply don't exist. It's a great gig if you can if you can do that. And the government wasn't checking whether they were eligible for assistance. Vance said the effort could save up to two point two billion dollars. You know, I looked into it because you worry any time that you throw 750 ,000 accounts out of it that you're going to be throwing out the baby with the bathwater. But that's not what occurred to me. No, it went from 10 million people enrolled in it to 22 million enrolled in it during the Biden administration during COVID.

11:27They also lifted income limits because, and by the way, those income limits came back in into effect at the beginning of the year. For a family of four, the income limit, the poverty level is 32 ,150. You could be 400 percent of the poverty level and still get this. But I think there was a lot of confusion, the idea that they weren't checking on these things, that they weren't actually double checking some of this. Well, that's the story of our life. And any emergency programs that we put, we never get rid of them once once the emergencies over. The whole argument we had and shut down the government over was when Democrats wanted to because prices have got because Obamacare really doesn't hold down prices.

12:05And the premiums have to go up because the whole health whatever is causing all the health care inflation. It's not just Obamacare, obviously. But those enhanced premiums that were put on during COVID, that's what that whole argument is about. The Democrats didn't, they, what's the word? They didn't want the emergency protections to end or the emergency subsidies. They didn't make them permanent in the first place. So they were going to lapse anyway. And then when they had the chance to do it and had both houses of Congress, they didn't do it. So then they blamed when the Republicans wouldn't go along with it.

12:39That's what shut the government down. It was the enhanced premiums that were from the pandemic. From COVID, right. Cheese will be next. Coming up on Squawk Pod. Who are you? Congressman Ro Khanna is a progressive Democrat representing the heart of Silicon Valley, and he hits on a key debate in today's politics. Can capitalism and more traditionally left views coexist? We've talked about a Rojo or a Joe Ro ticket. I still love you, but I've looked at some of your comments and I wonder, I hardly knew this man. I was ready for it. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

13:21Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. When you partner with CDW, your people get more out of technology. CDW data experts are simplifying complex workloads with high speed AMD processors, which helps your project managers efficiently manage heavier workflows. Game designers level up creativity and scientists develop their next breakthrough.

14:04Amazing, right? Make amazing happen. AMD and CDW. Learn more at cdw.com slash AMD. Hey, Chicagoland. The Wayfair store is in your neighborhood at Edens Plaza and Wilmette. Finally, you can feel the fabric, sit on the sectionals, and even open the refrigerators. Plus, our in-store designers will help you bring it all together with free one-on-one design support for any project on any budget. Yep, we said free. Oh, and did we mention the cafe? So what are you waiting for? Come see all that's in store. Visit the Wayfair store today at Edens Plaza and Wilmette. Wayfair, every style, every home.

14:47This is Squawk Pong. Stand by Joe. Here's Mike. Q. You're watching Squawk Pong on CNBC. I'm Joe Kernan, along with Becky Quick. Our next guest is holding a hearing later today, pushing for a U.S.-China deal on AI. It's bringing Congressman Ro Khanna, California, representing the heart of Silicon Valley. He's a ranking member of the China Select Committee. We've talked about a Rojo or a Joe Ro ticket. I know you're not feeling it. Lately, Ro. Lately, I've looked at, I still love you, but I've looked at some of your comments and I wonder, I hardly knew this man, apparently. Oh, come on, Joe. I was ready for that.

15:22Come on, Joe. No, and before we get started, I'm just wondering, are you this reasonable capitalist that represents Silicon Valley and a friend of technology? Or are you some DSA spouting nut job that hangs out with Hassan Piker and backs the guy in Michigan and in Maine? Who are you? I wrote a whole book called Progressive Capitalism. I believe in free enterprise. What happened to the Democratic Party? The Democratic Party understands that the economy is working for my district. Right. It's one third of the nation's wealth is in my district or the 50 miles surrounding it. And it's not working for the people I grew up with in Pennsylvania, where steel mills shut down, where young kids say, I can't buy a house.

16:10I can't get a good job. And so what we want to do is have an economy of the future that's working everywhere. Are you going to run for president at some point? Just because you're looking far beyond your district at how things are impacting at this point. Well, it looks like I've already lost my VP. And you're right, I was the VP because I don't want to do much. It was going to carry the Midwest for me. I'm looking at it and I'll tell you why. Because the future economy is in my district, but I think it's working for too few. And my view is that we need this country working for the people I grew up with.

16:44That, in my view, means taxing the billionaires. I know we have a disagreement. It means having an industrial investment bank to have high-paying jobs across America. It means having child care jobs. It means taking the venture capital, 85 percent that's in California, and having a venture fund across America for small business. So I believe the Democrats need an economic vision. But, Ro, if we raise taxes on whomever, billionaires, fine. You know, if you want to do that, I'm not, no skin off my back. Believe it or not, I'm not a bill. You're going to just expand more social programs, expand more spending, expand, expand, expand.

17:25Not try to maybe pay down what we already have or narrow the deficit that we run every year. Any new taxes, you already got a place to spend them. And we know how well the government spends. Here's the thing. I'm for investment that's going to create jobs because right now we're wasting a lot of money. We've got, as you know, a$40 trillion debt,$2 trillion deficit. But why are we wasting money on wars that we are not winning, on insurance companies that are upcoding on Medicare Advantage, on drugs we're overpaying for, on fossil fuel subsidies? I have a plan where I list areas where we can cut spending to reduce the deficit over$12 trillion.

18:06You didn't get me on any of these. Obviously, we need to spend money on defense. Maybe you don't like this war. A lot of people don't, but we need to spend money probably on defense. It's such a dangerous war. The fossil fuel subsidies, is that really the big thing? The things that you're talking about expanding are where most of the problems are. We need to do things with all the entitlements and all the welfare and all the, we've got to fix Social Security, got to fix Medicare, got to fix Medicaid. We've got to fix all those things. Look at the spending that Trump wants on defense, right? It's a$200 billion increase.

18:37He wants more F-35s. We can't even integrate the F-35s we're currently ordering into the military. He wants this global dome. And the generals will tell you that's not going to protect us against intercontinental ballistic missiles. So what would you how would you make succeeding in America easier for these people that you grew up with in Pennsylvania? What are you talking about? Here's one proposal you may actually agree with. For our veterans, we give them zero down payment and low interest loans. I say if you work seven years, you got to work, you get zero down payment and low interest loans for your first home.

19:15And we make home buying possible for people by 35. Get people into a into a house. Would you would you go for something? People who aren't veterans, people aren't veterans expanded to expand the program. But you got to work for seven years. Here's another idea I have. But zero percent. I mean, that's a if interest rates rise beyond where they are right now, you are talking about a huge program. I get it for people who have served their country. I absolutely think that they should get those things. Those of us who haven't, maybe not. Well, my view is that we this new generation, they're in huge debt.

19:49They don't have often a good job. They can't even look at buying a home. And we need to do things that have a new social contract to it. And the way to to do that, that'd be about 20 to 30. They serve their country for seven years. Should they serve give a year service to do that? So one of the things I've argued for is a federal jobs program for people out of high school or college four years to rebuild their local communities, open a park, help do counseling, help be a teacher's assistant or work in the federal government, do it to form a civic service like military service. Another idea where we may have common ground.

20:24Which may be a lower paying job, but as a result, you can get access to a program like this after you do it. Which may be a lower paying job, but at least it's a job and you're rebuilding the community. you're helping contribute to your local community or the government. Another area we may have an agreement. China is spending$1.5 trillion on industrialization. $1.5 trillion. Why don't we do a national industrial development bank that helps us? If you're a manufacturer in America, you make something that we're currently importing. We'll help you. We'll help you expand. We'll provide you with finance and capital.

20:59and will do it particularly in places like Johnstown or Youngstown or Downriver, Michigan, which have been deindustrialized. I did that bill with Rubio before he became secretary of state. I mean, there are common sense ideas that we can have in this country to help homeownership, to help build jobs. Why don't we get a thousand trade schools across America? Sounds like he is, but because we don't have that much time to go, I just let me let me phrase the question this way. So the Democrats probably will make inroads in the midterms. But at the same time, there are parts of the Democratic Party that may succeed because of an animosity towards Donald Trump.

21:38We know what the feelings are for Donald Trump. But to enable, for example, I'm not going to do it specifically, but let's say anti-Semitism or some of the things that seem to be rife in your party right now, some of the crazy ideas about take your pick, you know, defunding police or. I've never been. I'm not talking about you. Yeah. But all these things that are pervasive in that wing of the party right now that that are so out of the mainstream, but somehow accepted because, oh, you know, an enemy of my enemy. If it's Trump, some of these people are going to get in just because of who the opponent, you know, just because of the feeling and the animosity towards Republicans and Trump at this point.

22:21Are you have you spoken out against any of of what you see as some of the extremes in your party? None of your other Democratic colleagues are speaking out about this stuff. People are speaking out. Fetterman. That's the only guy. People are. Look, here's the thing. There's a lot of spoken out against anti-Semitism. I have unequivocally condemn anti-Semitism. I unequivocally condemn it in any any form. Of course, I condemn anti-Semitism. In our district, actually, the police are well-respected. We have some of the safest cities. You want to get rid of ice? You want to open borders? Get dissolve ice?

22:55There's a difference between getting rid of ice and having secure borders. I'm always for secure borders. My parents were immigrants. There's a process where you come into America. My dad came, as you remember, to Michigan, maybe. It was a student visa. Then they got a green card. I was born in Philadelphia. There's a process. We need secure borders. But ice, I think we should start over. They have been a rogue agency. We need an enforcement agency that actually goes after drug traffickers and sex offenders. And that's under the law. Look, there are a lot of common sense solutions we could get.

23:27I'm to your left, Joe. There's no doubt about that. Are you to the right of where the geographic center of your party is right now? I'm a progressive Democrat. I'm a New Deal Democrat. I'm an FDR Democrat. My view is that you have economic opportunity that's concentrated in the hands of a few people. I happen to see that firsthand in Silicon Valley. I don't begrudge the entrepreneurs in my district. I know how hard some of them work. I know that I've seen some of them on credit card debt, mortgaging their entire futures to build these businesses. I know that a lot of them have ambition and they add value and they create jobs.

24:02But my point is that what about the rest of the country? Like, what do you think? Do you really think a third of the nation's wealth should be in one area? How do we build that future economy so that if you're growing up, in Ohio, in Michigan, you can say, yeah, I can get a good job. I can get a house. I can take a vacation. I can support a family. And that promise is not working. And so my view is, if we can tax some of this extraordinary wealth so people can have child care and they can have health care and they can have a good public school education, and if we can have more investment to create high-paying jobs everywhere, why not try to do that?

24:37I don't know how to fix public education. I'm not sure whether it's school choice. I'm not sure how to do it, but we're lagging behind there. We've got to do it. So we spent a lot of money on it already. As far as everything else, if we don't fix Social Security, Medicare and Medicaid in the way it works, it keeps adding to basically adding to the deficit. You add to the deficit, you get more debt, you get more debt than most of the debt that we're or most of our expenses are just in servicing the debt. Particularly if interest rates rise. That's the other. Yeah, no, I get that. But look at Trump, I mean, I'm not being partisan.

25:12You both you would acknowledge, I assume, that he has exploded the debt and the deficit. No question. I just wonder if anybody's ever going to look back at kind of focusing on the debt and the deficit and worrying about that. It doesn't seem like either party has huge concerns about it. I would argue that the way to do it, in my view, is to get out of these foreign wars. It's been a lot of the spending. It's to raise taxes. I mean, at least I'm honest saying I want to raise taxes on billionaires and I want to close them. But spending is a 24 percent GDP and revenue is about where it's always been, 17 or 18 percent.