Walter Isaacson & Business Roundtable CEO Josh Bolten 5/19/25

0:00Bring in show music please. This is Squawk Pod from CNBC. Here's what you need to know today. Unpacking President Trump's relationship with America's CEOs. First, with best-selling author and biographer Walter Isaacson. I think you've got a transactional president. It's interesting to see one that's pretty transparent. And with the CEO of the Business Roundtable, Josh Bolton. As high tariffs might be, equally damaging right now in the economy is the uncertainty about where the costs are going to be highest and its freezing investment. Plus, today's headlines including an update on the reconciliation bill in D.C., a downgrade of U.S.

0:50credit, and that DNA you sent to 23andMe might end up in pharma. I imagine that data is what Regeneron is effectively buying. I'm CNBC producer Zach Valisi. It's Monday, May 19th, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good morning everybody. Welcome to Squawk Box right here on CNBC. We're live from the NASDAQ MarketSite in Times Square. I'm Becky Quick, along with Andrew Ross Sorkin. Joe is off today. Now, the major averages are all coming off their best week in more than a month. You have the S &P 500 and the Nasdaq both on five-day winning streaks up to this point.

1:34We'll also be watching very closely what's happening in the Treasury market. Right now, yields are higher across the board. In fact, the 30-year topping 5 percent. Right now, it's sitting at 5.024 percent. It's a little lower than it was just slightly earlier this morning. Earlier this morning, it yielded 5.028%. That's the highest level we've seen since November of 2023, and the highest level, that November 2023 number was the highest yield we'd seen since 2007. So once you see treasuries get up to these levels, it does change the perspective for a lot of things. It's going to increase borrowing costs for anyone trying to buy a home, buy a car, pay off a credit card, and it will be more expenses for businesses to buy money, too.

2:19There's been some unease in the Treasury market over the last week or so. And again, this all happening because of what we saw with that downgrade from Moody's over the weekend. A lot of commentary on that. We're going to dig into that in just a moment. But we're also watching the dollar this morning. And in fact, if you take a look right now, you'll see that the dollar is down by about one percent as a result. Meantime, the House Budget Committee voting now to advance President Trump's multi-trillion dollar domestic policy package. The vote late last night was 17 to 16 along party lines. Four Republicans who opposed that bill when it failed in committee on Friday voted present last night, effectively allowing the measure to pass.

2:58Now, it would extend President Trump's tax cuts from 2017 and cut Medicaid, food assistance, also cutting clean energy funding, as well as pay for immigration enforcement and provide more money to the military. On Truth Social, President Trump congratulating Republicans. The bill looks like it will need changes, though, before it can pass the full House. Chip Roy, one of the Friday Republican holdouts who voted present last night, said on exit the measure, quote, does not yet meet the moment. Next up for the bill is the House Rules Committee. And just a short time ago, it said it will meet Wednesday morning at 1 a.m.

3:34Eastern time to take up that bill. Yeah, 1 a.m. Eastern time, I think, has something to do with how many hours. You have to wait from the time it has passed out of committee before you can get to the next step. And I think they are trying to move this along as quickly as possible. Does that mean they really meet at 1 a.m. or does that mean they will start meeting at 1 a.m. or say I think it means game on at 1 a.m. We'll see as they can move it. In the meantime, Treasury Secretary Scott Besant on Meet the Press yesterday morning with plenty to say about Moody's U.S. credit downgrade and Walmart's appetite for tariffs.

4:08Eamon Javers is here. He's been covering all of this in a very busy weekend. Good morning, Eamon. Hey there, Becky. Treasury Secretary Scott Besson blamed Biden-era government spending for Moody's decision to downgrade U.S. debt on Friday. On NBC's Meet the Press on Sunday, Besson said the downgrade reflects government behavior in the past. Moody's is a lagging indicator. I think that's what everyone thinks of credit agencies. Larry Summers and I don't agree on everything, but he said that when they downgraded the U.S. in 2011. So it's a lagging indicator. Bessand also minimized Walmart's decision to raise prices due to President Trump's tariffs this week, arguing that the retailer is absorbing some of the costs which are not being passed on to American voters.

4:57I was on the phone with Doug McMillan, the CEO of Walmart, yesterday. And Walmart is, in fact, going to, as you described it, eat some of the tariffs. And on other topics, Besson said that neither side had backed down in the tariff standoff with China because the situation was unsustainable for both sides in the end. And he defended President Trump accepting a new luxury jet from the government of Qatar because it is a gift to the U.S. government, not to Trump personally. Guys, back over to you. Okay, Eamon, a lot to go through with this. Maybe we start on the Moody's downgrade. Scott Besant is right.

5:33This is not something that's happened in the last hundred days. However, he said this was the Biden administration. Moody says this was more than the Biden administration. Obviously, the deficit went up substantially under the Biden administration, but it did under the Trump administration before that to the first Trump administration. I think what's key here and probably the timing with Moody's has to do with whether or not Congress is going to take action and start to cut into that deficit or whether they're going to continue to expand it over several years before any of those cuts really take place.

6:03Yeah, I mean, you heard Besant there saying that it's a lagging indicator looking backward, but also they're looking forward at this idea of whether or not there's any kind of deficit relief coming from Congress. And there doesn't seem to be right. I mean, both parties have struggled no matter what configuration of the government you have. Republican president, Democratic president, Republicans in control of Congress, Democrats in control of Congress. Both parties have struggled to make meaningful cuts in the deficit because when you're an elected official, it's just politically better for you to spend money than to anger people by cutting back benefits and cash that they've been depending on, right?

6:38So it's politically really challenging. And even though you've got all this deficit rhetoric in Washington and we had Doge, you know, making significant cuts through the early part of this year, we don't see any sustained deficit cutting ability up on Capitol Hill over the long term, right? You know, next couple of years baked into law as opposed to one-off cuts by the executive branch. I was going to go, I was going to pivot to Walmart just because I'm so fascinated by it. And I don't know if you were reading the editorial page of the Wall Street Journal this morning. Donald Trump goes full Kamala Harris in demanding that the retail giant not raise prices.

7:15And then actually they juxtaposed a quote that he had made about her. And then with a quote that he had made, both of which calling her a Marxist for doing right, for trying to put price controls for trying to do this. So the question that I think the real question, even underlying all of that, though, is actually how much of these tariffs companies like a Walmart are going to ultimately eat. versus how much the customer is ultimately going to eat. Yeah, it's really interesting, Andrew, to watch the president of the United States tell Walmart basically how much profit they can make by eating these tariffs and whether or not Walmart will respond to that.

7:55Walmart signaling last week that it was going to have to raise prices. And then you heard Secretary Besson in that clip that we just played saying, well, what Doug McMillan told me is that they're going to eat some of the tariff costs, right? So they're not going to pass it all on to Walmart shoppers who are, broadly speaking, American voters, right? So this is a fascinating moment where companies have to decide how much of their margin do they want to protect here and what's the political risk and downside to a company if they anger this president of the United States. And it's a fascinating moment because, I mean, this is a Republican Party that used to be against the idea of government telling business what to do, right?

8:36And here we have a very literal case of government telling a business what to do. And that business now has to wrestle with, you know, how do we play this and what are the downsides for us, either in passing these costs on to our customers or in terms of our margin and eating these costs. Well, ultimately, look, every retailer, every one of the major retailers, I'm sure the minor retailers too, are trying to do their best to rein in their own expenses. They are trying to do their best to pressure their suppliers to not raise their prices as a result of the inflation that they might be seeing. It's what we saw, and Besson pointed this out yesterday, it's what we saw in 2018, 19, and 20.

9:15All of the major retailers very much tried to absorb as much of the 10 % tariff that they possibly could. It really comes down to how big these tariffs are. If you're talking about tariffs that are 20, 30, 40%, it's a lot harder. Some of that will get passed on. It's inevitable that that inflation is not going to be completely eaten by the retailer because in some cases you're dealing with pretty thin margins, particularly if you're talking about groceries, which traditionally move on a margin of one or two percent, maybe three percent at top. And so many of the products that we're importing, things like bananas, we get almost all of our bananas from Costa Rica.

9:55You can't turn around and make them in the United States. So, you know, it's going to depend on what is hit. It's going to depend on how high those tariffs are and how long they last. And then the business has to factor in this question of, you know, President Trump saying, I'll be watching you. You know, what does that mean in real terms? And what is the risk there for the business in getting some kind of additional regulatory scrutiny or regulatory burden placed on them because the president decides that they're passing along too much of that cost. And that's sort of, you know, one of those things that you just kind of can't calculate.

10:28You have to think about as a business, but you can't really figure out what it is that the president might do to you. And that, I think that's going to make people very uncomfortable. I'll tell you who else will be watching. Who else will be watching is the market and shareholders. So they're caught in a very difficult position because if you don't pass the cost on, your shareholders will sell your stock. Well, that's why they get paid the big bucks. make the tough decision. There's sort of another piece to this to me, which is it's not just being caught between the shareholder and the president.

10:57And the customer. You don't want to turn off your customer. Or the customer. No, no, but I was going to throw in another sort of version of this, which is depending on how aggressive the president decides to be or not about any particular company. So there's the regulatory regime, which is, you know, he can try to use that arm to do something to Walmart if he so chose. But he can also galvanize Walmart's customer base in a very interesting way. Walmart has always protected its customer base. That has been since the creation by Sam Walton. They have always thought about the customer first. How do we get the everyday low prices to the customer?

11:32That has been their brand and their absolute mission. Sure, but I'm saying if the president decides to target a particular company and say this is un-American, what's going on, given actually Walmart's customer base, which actually is probably more 50-50 or maybe even more red than blue or whatever it is, then it creates a demonstrable issue to the extent that then he can say, go over to these guys. The question is, who do you go to? I don't know if there's some other retailer that somehow is going to be eating the prices, and so therefore there's cheaper prices. It's really hard to undercut Walmart.

12:12Because they are so big and because they're focused on the bottom line, it's really hard to undercut them. So it's hard to imagine that anybody can come in and say that we're going to eat this, whether that be Amazon, Target or anybody else. It's next to impossible to undercut them on pricing. But to Andrew's point, it doesn't have to be necessarily competition on the merits, right? I mean, this is a president of the United States who leads a vast social movement. and he can move those voters and those shoppers, you know, with social media posts. And he could just sort of shift them to another retailer and say, hey, you know, Target is doing the right thing and Walmart's not.

12:47Let's all go shop at Target. That would have a measurable effect on Walmart if he did that. You know, we'll see. That's what the question of what does I'll be watching and so will your customers mean in real terms. Yeah. You also had President Trump talking about his difficulties with Tim Cook. I don't know if you guys covered this on Friday. Yeah, we did. Right. But again, this was, you know, we don't want you building things in India. We want them built here at home was his point with that, too. So it's just about any company probably trying to keep their head below the radar at this point. And is that even economically workable for each of these companies?

13:26That's a real question for them to decide. Eamon Javers. Oh, sorry. Thank you, Eamon. DNA Genetics Company, 23andMe, announcing it has now reached an agreement to have Regeneron acquire that company for$256 million. Now, 23andMe filed for bankruptcy protection earlier this year. It's part of the court-supervised process. Regeneron will have to abide by all of 23andMe's privacy policies. That's what I was waiting for. Yeah, having said that, you know, the privacy policies, I mean, we need to sort of delve into that at some point. I imagine that data is what Regeneron is effectively buying. That may be that they can't share that data beyond Regeneron, but I don't know when people first got involved with 23andMe whether they were anticipating that it was going to go to a company that makes and manufactures drugs and things like that.

14:16I was not, and I am somebody who gave them my, you know. So they have my DNA, too. They have mine, yeah. And it's interesting,$256 million, not a lot of money. You can go back and look at what the valuations of that company had been at one point. I will say there's a way to to take yourself out your information out. But when I tried to do it, the system was overloaded with too many people trying to do that. I don't know if it's too late to still be able to do that. But there were several days where you couldn't get through or you had great difficulty trying to get through to be able to shut off those purchases of it.

14:47My guess is that it is something that will draw the attention of Congress at some point if things go down that line that you were just talking about. It's kind of creepy new world, right? Very much so. Very much so. But you know what? We should talk to the guys at Regeneron, find out what they're planning to do with the business. That's a good idea. If they want to come on, we'd love to have you. Cheese will be next. Next on Squawk Pod, bestselling author Walter Isaacson gives his take on President Trump's cut on the government funding of research and development. For 80 years, our nation has led government-funded basic research, which led to CRISPR, which led to the Internet, which led to search engines, which led to America being the strongest, most innovative nation.

15:35That's being cut.

15:44Welcome back to Squawk Pod. Three, two, one. Up in Andrew. Q, here's Mike. We want to get to the intersection of business, science, and politics. Just in the last week, we've learned about some huge breakthroughs in gene editing and biotech to cure diseases. But at the same time, some of those very labs making these discoveries are having their federal funding cut. Joining us right now to talk about it all is Walter Isaacson, Perella Weinberg advisory partner, Tulane University history professor, and author of many, many best-selling biographies, including Elon Musk, and maybe more specifically to this topic, Codebreaker, your 2021 book that took a look at where we are on this brave new world in terms of what we are coming up with.

16:30It's the biggest revolution happening other than AI. And the Codebreaker was about using new gene editing tools called CRISPR that Jennifer Doudna and others created. And now this past week, we've seen Sam Sternberg at Columbia, who was a graduate student of Jennifer, use jumping genes to be able to put new genes when somebody has a genetic illness. Likewise, David Liu won the Breakthrough Prize. It was very moving to be there to watch the 17-year-old he had cured and just last week announced another cure for an infant by using this. A nine-and-a-half-month-old baby. But what makes it really sad is the devastation of these labs happening right now at Harvard, which is where David Liu is, Columbia.

17:16They're just having to fire everybody. I mean, I should say everybody, but decimated, really firing more than half the people, bringing on no new ground. So we're going to quit this research that kept America in the vanguard. I mean, I think this is so important. When you were talking about CRISPR in 2021, I thought it was still at least a decade away, if not two decades away. What we have seen over the last four years has been astounding. People are being saved from diseases that would have killed them six months ago. Especially these rare genetic diseases, but you'll soon see it with cancer.

17:51We're already seeing some of that, which is immunotherapy requires using it. And we have three major attacks on this. One is just the cutback on research and development. For 80 years, our nation has led, since Vannevar Bush and Harry Truman and Roosevelt at the end of World War II, created government-funded basic research, which led to CRISPR, which led to the Internet, which led to search engines, which led to America being the strongest, most innovative nation. That's being cut. Secondly, they're targeted attacks because of anti-Semitism, which I get. It's important to fight that. But when they attack a university for anti-Semitism, say Harvard or then Columbia, it's actually the graduate students in the labs doing science research that get hurt.

18:40Because that's what government grants that get. Can I ask you, someone who knows Elon Musk probably better than just about anybody else, whether you think about this in the context of Doge or whether you think about just in the context of the administration or USAID or all the things, which in very many ways are all interrelated. He thinks what about what you're discussing right now? Well, I don't channel his thoughts at the moment, but I know that he understands that research and development is what got us into space, got the type of things he's done, allowed GPS to be widespread. So it affects every business, whether it's Tesla, Starlink, and all.

19:17I do think that he and anybody who has been in the technology business understands that the seed corn for innovation is research in basic science. And when you cut that for either political reasons, because you're targeting a university, or you just want to cut back somehow National Institute of Health funding, or you have a fear of the letters RNA, which is what some people have. The biggest issue is everything is facing cuts. The only ones that aren't going to get cuts are the ones that have the biggest, loudest lobbyists. And I'm not sure that the research and development have the biggest, loudest lobbyists.

19:58I think, too, that people are mistaking the fact that, oh, we don't like elite universities. And I get it. Maybe there were some problems and everything from anti-Semitism. And so you want to attack it. But why is that the blows to those universities, the grants you're cutting, aren't, you know, for admissions offices. It's for research and development in basic science, especially life sciences, that's saving lives now. And we are letting go of doctoral students and the graduate students who are doing this work. I think you make the point that the big issue is we could lose a lot of them to China or to European universities.

20:36Well, absolutely. We now have seen in these clinical trials and these things you talked about that happened the past few weeks in which people are being cured of genetic diseases. There are now more clinical trials in China than there are in the United States. For 80 years, we've led the world. When you start seeing more basic research and clinical trials being done in China, you know that's not going to be good for the next decade. It's not just the funding issues. It's also whether you have the regulatory structure to allow those things to happen. The FDA has kind of been gutted over the last two months.

21:11Right, right. And it's a complicated thing you were talking about, Regeneron having all of our DNA now, because there's 23andMe. In China, you have no privacy protections that way we hope we could have here. So there are a lot of complex regulatory issues. but the main one right now isn't is there too much or too little regulation on health research. It's why have you decided to just get rid of all this basic science funding. Love this. I would love to have you back to talk more about it. Very quickly while you're here though, why don't we talk about the business world's relationship with the White House at this point?

21:48Where are we? It's complicated with tariffs. We just saw this huge tour in the Middle East with a lot of investment that came in as a result. I think you've got a transactional president. We always look at presidents. Are they realists or are they idealists on foreign policy? It's interesting to see one that's pretty transparent, meaning that President Trump is very transactional and brought the head of NVIDIA, Elon Musk, of course, was there, all to the Middle East. And I think this is a major rebalancing in this world where you used to have a world of China, maybe Europe, the United States, the U.S.

22:25alliance with NATO in Western Europe. And now you see a transactional, in many ways, great investment things being done in AI in which the Persian Gulf states are the ones that will be part of a new economic alliance with the U.S. I have an AI-related question for you while we have you here, which is, it's a grok. It's, again, an Elon Musk question. It's a grok question. You've seen some of the stuff about white supremacy in South Africa that's shown up last week on Grok. How do you think that happens? Do you think that that happens by accident? Do you think it happens because it's directed by some?

23:03What do you think is going on when we're seeing stuff like that appear? I think all AI is as good as the data upon which it trains. And one of the things that Musk got almost serendipitously when he bought what was then Twitter was he got the billion tweets a day as training ground for the new AI company he was starting. And so I think that's one of the reasons. Are there people there trying to please the boss and put a finger on the scale when it happens? I don't know, but I will say that Grok.ai is actually now better in terms of timely things. Oh, I think for timely things, if you just want to know about the news, most of the time it's much better.

23:44It's really good to have many competing AI companies, which is why I hope OpenAI stays a bit open with its source. Because if you have one that goes off the rails and decides to be politically this way or that, we don't want to have just two or three AI companies. It's useful to have six or seven. Walter, there's 15 other topics I would love to discuss with you. Come back when you're in town again. Well, thank you so much. Thank you. Good to see you all. It's great to see you. Up next on Squawk Pod, the Business Roundtable represents over 200 American CEOs across every sector. The organization's own CEO and President Josh Bolton weighs in on the Trump tariff agenda, as seen by his members.

24:32Most retailers operate on very thin margins, maybe 3-4%. Some of the tariffs that have been threatened or imposed would be 10 times that much. Bolton spent time in government and trade himself, serving both George H.W. Bush and George W. Bush. We'll hear from him right after this break.

25:02You're listening to Squawk Pod from CNBC with Becky Quick and Andrew Ross Sorkin. Well, it's been a busy few months for CEOs as they navigate the new Trump administration's policies. Joining us right now to talk about everything from taxes to tariffs and share what CEOs are thinking is Josh Bolton. He's the CEO of the Business Roundtable, which represents over 200 CEOs from America's leading companies in every sector of the U.S. economy. Josh, good morning. What are CEOs thinking about the economy right now? Good morning, Becky. Well, the CEOs are always optimistic. They're always looking ahead to what's good in their business, but they've got to be concerned about the business environment that they're operating in.