Worse than Teenagers: Sen. Rand Paul on Congressional Spending 7/10/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Voting no, Republican Senator Rand Paul stood firm on his no on the giant spending bill. It adds about$270 billion to the debt. In addition, they raised the debt ceiling$5 trillion. He was ready to compromise as long as Congress would revisit the debt ceiling every three months. You need a shorter leash because you haven't shown that you're responsible with money. And Rockefeller Capital Management CEO Greg Fleming on the surprising market performance in 2025. In the last three or four months, the word I'm using is resilience.

0:43Plus, the Trump tariffs hitting Brazil, a change at the top of X, NVIDIA's massive market cap. Just in the past year, they added an entire Berkshire Hathaway. And the sweet smell of a candy cereal marriage. What happens to lucky child? I mean, you're not lucky anymore if you don't have the green shamrocks. It's Thursday, July 10th, 2025. Squawk Pod begins right now. Stand by Joe in three, two, one. Here's Mike. Good morning and welcome. Not welcome. Welcome back from yesterday to Squawk Box. Everybody, I mean, it's. They always come back. Must see. Live from the NASDAQ market site. Whose voice was that?

1:24You ask. It was Robert Frank. I'm Joe Kernan, along with Contessa Brewer. and Superman, Clark Kent, Becky, and Andrew are off today. I ask you, would you take the jacket off? But apparently there is a cape in the back and everyone... It's all sewn together. You can't take it apart. Everyone would know. And you don't know anything about the new Superman. I haven't watched it. Contessa? I will watch it, though. I just think if you're going to play Superman, you better show up with your cape. You better. And you cover a lot of different beats. I do. Obviously, here. and you're great at whatever you do.

1:59You'd be great anchoring, but we don't have to cover any vice. Do we? Any gambling or prostitution? I mean, I don't know what Squawk Box would be if I'm on it and we don't talk about some sin. Can you figure out a way to get into it, whether it's alcohol or... I keep trying to steal coverage. These new sex cruises. These new sex cruises. Already. It's 6.01 and we're already at sex cruises. In case you want to launch it. Have you heard of the sex... No one could get off that boat. So if you are on the wrong one and you look around. Anyway, I didn't say they can't get off on that. I said they can't.

2:31Yeah, okay. NVIDIA's market cap briefly touched the$4 trillion mark in yesterday's session. Now that comes about two years and two months after the company first crossed the$1 trillion mark. Did you know that just in the past year they added an entire Berkshire Hathaway just in 12 months? It's amazing. NVIDIA closed below the milestone yesterday, so it didn't quite get there. We reached it and then the pre-market right now we're looking at 3.998. So come on, guys, we can get there again. It's the most valuable company on the planet. It came out of nowhere, not out of nowhere, but, you know, you would have thought Microsoft or, you know, Apple.

3:15Well, and then we, you know, it's had some scares along the way. We had the deep seek scare. Everyone thought, OK, well, that's it for NVIDIA and that passed. And then we had the China scare. Well, the restrictions on selling those tips to China, that's going to kill it because 16 percent of the revenue or something like that. They blasted through that. So it keeps proving the doubters wrong. You have to wonder, though, how much of this is just about rampant investor enthusiasm. How much I mean, NVIDIA has been the stock to talk about for several years now. It is the momentum mover. And so how much of this has to do with the psychology of wanting it to win?

3:51And the MAG-7. Yeah. But do not, I don't want to look askance at how we lead technology in the world right now. We're the envy. Trump keeps saying how hot we are as a country, the president. In terms of, can you go anywhere else in the universe and find a place like Silicon Valley? TSMC, which is truly multinational, they just reported earnings a couple hours ago. The revenue is up 39%. Selling to our great tech companies. Exactly. Yeah, exactly. Not selling to the French's great, what do they have, SAP or something? Is that still around? Well, and there you're seeing the stock up more than 1 % in the pre-trade.

4:29And I think what's interesting about the exceptionalism of corporate America is how it's surviving in face of the political turmoil and policy questions. Surviving? How did it survive the last four years? It's going to thrive now. And it did thrive. But I mean, what we saw was a market that was on the upswing. Right. But they got expensing. You know, the tax cuts are permanent on corporations. You might have a couple of tariffs, but deregulation, mergers and acquisitions, antitrust. A couple of tariffs. They're not in yet? No, they're not. You haven't seen it in inflation or in the labor market.

5:07No, we haven't. However, Swiss Re was out with a big report yesterday that said that global growth is going to slow to 2.3 percent specifically and directly because of the trade war and the tariffs that have been involved and says long term, the brand damage that is caused by all of the uncertainty means that overseas investors are not going to see the U.S. as a safe haven. I heard that three months ago. That's crap. No, I don't. I don't. I don't. I don't. I don't. I don't. We've been saying that all along the dollar. The word that every strategist has now using to replace uncertainty is complacency.

5:41They're saying, well, the market doesn't get it. Well, maybe the market is smart. Maybe the market sees through these tariffs and says, you know, either they're not going to be a big deal, they're not going to be as big as they've announced, or this is a market that's so dependent on large cap tech companies that are the least effective in tariffs, so it doesn't matter for the indexes. Pick your poison. What are you worried about with the tariffs? Inflation or gross slowdown? Or, you know, the naysayers are, you know, pearl clutching about both. And that's possible. Stagflation. Or it could be neither, which is what we've seen up to this point.

6:17Now, you know, we're waiting for Godot, every CPI number, every Friday, first Friday of the month, we're waiting for labor weakness. Nothing. Is it possible that this is just not showing up yet in the data? It's not immediately apparent. It's possible it never shows up. Yeah. And it's interesting. But he's delayed all that. Most of the tariffs have gotten respites, right? We're not at maximum threat level DEFCON 5 tariffs. Well, speaking of tariffs, President Trump is now threatening 50 percent tariffs on Brazil, right? Citing the ongoing prosecution of the country's former president, Jair Bolsonaro.

6:53Megan Casella joins us now from Washington. Megan, what are you learning about the threat and about what's behind it? Hey, guys, good morning. So a lot to unpack here. This tariff letter to Brazil was the 22nd letter the president sent to a trading partner this week. But this one was strikingly different from the others. The 50 percent tariff for one is the steepest that we've seen threatened so far against any trading partner. The president says he's also directing his U.S. trade representative to open a Section 301 investigation into unfair trade practices, specifically around digital trade that could lead to additional tariffs down the road.

7:27But most notably, Brazil was not until now facing a reciprocal tariff from this White House. The U.S. runs a rare trade surplus with Brazil, so there is no deficit to fix here. Instead, the president said in the letter that these tariffs are explicitly for political reasons, due in part, as you mentioned, to Brazil's treatment of Bolsonaro, which Trump called a witch hunt. But he also blamed what he called insidious attacks on free elections and the free speech rights of Americans. And the other thing to keep in mind with this one, guys, is just how close Brazil has been getting with China. Beijing has been investing heavily in Brazil as it looked to de-risk away from the U.S.

8:06It's now Brazil's largest trading partner. You can see here about 28 percent of Brazil's exports go to China, some 94 billion every year versus just about 12 percent of exports going to the U.S. So that relationship not explicitly referenced in the letter, but we do know it's something that Trump administration has taken issue with. Well, then you have to question how this improves the relationship. And in fact, President da Silva, I know, is threatening reciprocal tariffs. Does that matter? And which industries does that hit, Megan? He's holding firm. He promised to put the same level of tariffs in place that the U.S.

8:41does put in place. So if the U.S. goes with 50 percent, he's saying Brazil would go with 50 percent as well. It's not a huge amount of trade for the U.S. About 1.3 percent of all U.S. imports come from Brazil. But there are specific industries. Think about coffee. Think about some produce. Think about some oil, gas, metals as well that could be impacted there. But you're right to ask the question of does this ultimately or could it ultimately drive Brazil even closer to China? And it could because Brazil has to have somebody buy their level of goods. We're still buying 12 percent of them. So if the U.S.

9:14stops buying it, China has the space there to just pick up the slack and buy even more. They have no leverage. One percent is not going to scare anyone. Right. At this point. And I thought it was interesting, which how many reasons do we have for tariffs at this point? Have you calculated all of them yet? Megan, this is a new one. And I'm not saying I disagree with with it because, you know. But as a but as a motivation for a tariff, I'm not saying. Yeah, I think that you can use whatever means necessary. If we've got, you know, bad actors around the globe, if it's fentanyl, that's one thing. If it's bringing back, you know, manufacturing, that's another thing.

9:56If it's global. Whose definition of a bad actor? For instance, if China said we're going to withhold magnets because we don't like the way you're treating James Comey. Yeah. Would that be justified? That's fine. They can do whatever they want. The country's going to do it. You have a you have a doubt who's wearing a white hat around the planet. I don't. I mean, it's every. They would. They are. But I don't. America first. I don't have any problem thinking that we're trying to do the right thing. that's, you know, maybe that's jingoistic or whatever. But, you know, I'm not going to worry about whether China is going to not like what we ask.

10:30Maybe the Uyghurs are worried about James Comey. What, Megan? I was going to say what's so interesting about this one, I haven't counted all of the reasons, the different reasons for tariffs, but this is explicitly using them for political goals rather than economic ones. It's not the very first time. I'll flag that. Remember, versus Colombia back in February, he wanted Colombia to accept more U.S. deportees and threaten tariffs there. They never went into place. This is the most similar to that because it is explicitly political. You could add fentanyl in there, too, although at least that one's about the movement of goods.

11:04But that's key because it really gets to the legal justification here. Remember, these tariffs are supposed to be in place because the president says trade deficits pose a national emergency. If we're getting away from trade deficits, we're getting away from that legal justification. And these are much more likely to be challenged in court. That's if they do take effect. Maybe this is more about negotiations. We'll have to see. The executive, I mean, in the past, there's a wide latitude for what the president himself or herself can do with tariffs. I know that the argument was made that, wait a second, and fentanyl's an emergency, so you're doing all these different, and even whether the trade deficit suddenly has become an emergency, but they still get wide latitude probably in the courts, don't you think?

11:51They do, yeah. But we'll see, though, if what's going on in Brazil and domestic politics there, if courts agree that that's a national emergency for the U.S., that might be the argument that they make, or maybe in the Section 301 they find other unfair trade practices that are then more legally durable. Other than a national emergency, there's a lot of other... We have a trade surplus with Brazil last year. They're not taking advantage of it. That's not the reason that they're saying it. Megan, thank you very much for weighing in this morning. Appreciate that. We have a trade surplus with the UK, too, or something.

12:24We did a deal with the UK. That's not the reason. No. That's the point. There's a lot of reasons. A lot of reasons. Tariffs that we're told.

12:36Linda Yaccarino is stepping down as CEO of Elon Musk's ex, formerly known as Twitter. She didn't say why she's leaving, but a source told NBC News her exit had been in the works for more than a week. A week is pretty short. It's a week. Yeah. Yeah, this was expected. Yaccarino previously headed the global advertising business at our parent company, NBC Universal, before Musk hired her away in May of 2023. Musk posted in response to her departure, thank you for your contributions. Short, sweet, succinct, as a post on X is supposed to be. She said something about a lot of the advertisers have come back and I've accomplished a lot of what I wanted to do.

13:21But then they immediately, I think I saw it somewhere, maybe it was Drudge. I don't know why I still look at Drudge, but I do just to see because there's sometimes, but they're just, but someone, I did say that she's had some reputational damage. They said that she was a very well thought of advertising, media advertising executive at NBC. Took a shot at this, only two years. And I'm sure she, but you know what? Knowing her, she's so talented. She'll land on her feet and I would not, you know, they like to look at the half empty. I think this is good for her reputation. I think this had to do more with the merger with XAI.

13:58Exactly. So once you're subsumed into a much larger, fast-growing, you know, everyone loves X and AI right now in terms of where they're going to put capital, you know, basically X became more what was Twitter became a lot less important. So I think the merger had a lot to do with it, coupled with the fact that she was two years banging her head against the wall. And she did successfully bring advertisers back. I don't think they're quite where they were before the acquisition by Musk, but they made a lot of headway, especially given that he would say something or do something that she would then have to clean up.

14:30Exactly. From the very beginning. Completely at odds with what she was trying to accomplish. So if you're trying to woo them back and then he's like, nobody cares, go get lost. Yeah, which is a nice way of saying what he actually said. I just don't want to be canceled. So, you know, that's why. But I think what's interesting is if you are able to deal with that kind of a founder in that kind of a situation, I mean, not that he founded X, but, you know, that sort of it's his baby. He owns it. It's his. If you're able to navigate Elon Musk in that environment, who doesn't want you to come in and and clean and tackle a big challenge?

15:09Any company that's in a big challenge would be lucky to have her. She got overruled with this new person as well, the new finance chief. That Musk brought in. That brought in and was hired, was supported by Musk and replaced Yaccarino's person, previous head of that. It's all about AI now. It's all about AI. It's gone way beyond advertising. But it looks like the writing might have been on the wall longer than a week. Yeah, absolutely. Absolutely.

15:40Shares of W.K. Kellogg are soaring following a Wall Street Journal report that says the chocolate maker Ferrero is close to a roughly$3 billion deal to buy the cereal company. W.K. Kellogg makes cereals like Fruit Loops, Special K, Frosted Flakes, all the good stuff. It was spun off into a standalone company in 2023, while Kelanova kept the snack brand portfolio, including Pringles and Cheez-Its. The family-owned Ferrero Rocher is the Italian candy maker behind its namesake. It's the circular hazelnut chocolates as well as Nutella. That's one of my favorites. And candy brands that include Butterfinger, Baby Roof.

16:18They also own Tic Tacs. The journal says the deal could be finalized as soon as this week. The Ferrero family is really interesting. They're the richest family in Italy. Gianni Ferrero is the executive chairman and the head of the family. and they've been just buying, they're the fourth largest candy maker in the world now and as a private family just buying every candy brand in the world. And they started in hazelnuts after World War II and now there's a hazelnut shortage. So they're spending a lot of money out on the West Coast in California helping farmers to develop better ways of making more hazelnuts.

16:55What candy is? Nutella. Nutella is hazelnut. And Ferrero Rocher, those little nut balls. Yeah, nut balls. Jesus. I love Butterfinger and Baby Booth. Is that your go-to? I'm a Reese's guy. I like Reese's. Okay. I like most candy. But I was thinking about the cereal business. Everything's going to be tan. RFK Jr. Everything's going to be tan. RFK Jr. It's like my Fruit Loops. It's like, which one of these do I like? And Lucky Charms. What happens to lucky char... I mean, that... You're not lucky anymore if you don't have the green shamrocks. Did you see the article the other day was who's really pushing back?

17:37And I don't know how you do it without M &Ms. What would... Green, where do they... Where do you get a green light? What is a natural colored M &M? Maybe they'll get algae. Maybe they'll use algae. The red dye is the one that is of most and utmost concern. Just use beets. I'm still alive. Up next on Squawk Pod, Republican Senator Rand Paul from Kentucky voted no on President Trump's mega bill. He explains why. It's equivalent to your teenager. If your teenager runs up the credit card$2 ,000 and they're at their limit, do you give them a$10 ,000 limit or do you say, no, you got to keep paying down your limit?

18:12Senator Paul was willing to compromise, but he wanted a leash for spending. Congress is worse than reckless teenagers. We'll be right back.

18:27This is Squawk Pod. Stand by Joe. His mic here. You're watching Squawk Box on CNBC. I'm Joe Kern along with Contessa Brewer and Robert Frank. Becky and Andrew are off today. We know that. Thank you. That's why you guys and gals are here. Well, as you know, President Trump signed his big, beautiful bill into law nearly a week ago. Senator Rand Paul was one of three Republican senators that voted against it. join us now is Senator Paul. And it's great to have you back on center. We've talked about all these things. We're going to talk about last time we had a little back and forth about whether the president should help Israel and Iran.

19:07I want to ask you about that in a little while. But you made the point that a lot of that bill you were totally in support of in terms of extending the tax cuts and everything else. Were you in support of the what we were just talking about, the 100 % depreciation as well? Maybe one of the most important parts of the bill. I mean, you can target something you don't like or looks extravagant like a plane. But what about a bulldozer? What about a dump truck? There's a lot of capital expenditures that immediately expensing them is great for the economy. It allows people to more quickly get another dump truck or another bulldozer.

19:43So no, this is probably one of the most pro-growth positive aspects of the tax bill. I supported in 2017. It was going to go away. I'm glad it's remaining and I'm glad it's permanent. Because there's so many things you like. And, you know, I've been watching you for a long time. Everybody has been watching Senator Rand Paul for a long time. If there's something in there that you're just philosophically against, you're not going to bend. You're not going to, you know, they can whip you all they want and you can get calls and you're just not going to move. What was it in this bill that was just a no-go, no matter what?

20:18Well, you know, they talked to me through the night, and you saw me come out of a closeted room with blood dripping out of one ear. They almost had me. They almost had me. But no, the biggest deal for me was that it added about$500 to$600 billion in new spending, that the projections, even the rosiest of projections, will that be in the first five years, it will add about$500 billion to the debt. And really next year, the most important and the most predictable, it adds about$270 billion to the debt. In addition, they raised the debt ceiling$5 trillion. This has never been done. This is historically the largest increase in the debt ceiling.

20:54And people argue, well, it's got to go up, it's got to go up. But when you raise it$5 trillion, you sort of set the limit so high that it goes on to the back burner. And people say, oh, well, whatever, we'll talk about it in two years. And I really think the opposite. it. But when they negotiated with me, people say, oh, he'll never bend. He'll never compromise. I told him that morning and it was a negotiation. It was either give the senator from Alaska more carve outs and more freebies, expensing lunches for whale captains, all the kind of stuff they stuck in the bill, or they would have had to do a shorter debt ceiling.

21:26And I told him I'd do three months of debt ceiling, about five hundred billion dollars, which is a big compromise from my point of view. But then they'd have to vote again. They said, oh, we don't want to vote all the time. And I said, well, that's exactly what you need. You need a shorter leash because you haven't shown that you're responsible with money. You actually need to have a short leash where we discuss this every three months. And the American people can say, well, how well are they doing now? Have they improved their behavior? Are they getting better with money or are they getting worse?

21:53Senator Paul, I'm just curious when people come out and they are when lawmakers come out and are pushing for more responsible approach to the people's money, to the finances of the nation. And then they turn around and they put special projects in for their districts. Is it real? Is that something that it's because it matters so much? Is it just politics? I'm always confused by how on one hand you can say, I want to balance the budget. I want to tackle the deficit and then go and put in your own specialty projects for your district? So one of the disappointing things was, you know, special tax expensings for Alaskan whale captains, but also what was put into there, there was a reform on food stamps.

22:40And if you have a fraud rate greater than 6%, your state would have to pay more of your share of food stamps. And it applies to everyone now, except for Alaska, the fraud rate in Alaska, 60%. But Alaska is now exempt from any kind of rules to try to reform the system to make their fraud rate less. So that's what kind of happened. And it was a negotiation back and forth between them wanting to come to what I was asking for, which wasn't anything special for one state or one person. What I was asking for is more attention to be paid to the debt and to the debt ceiling. And what other people wanted were special car valves.

23:15They had to get you or Murkowski. They had to get you or Murkowski. What could they have given you for your state that could have coaxed you into voting for this bill? Well, that's what I told them. I wasn't looking for welfare or carve outs for my state or particular people. I'm concerned about the general welfare of the country. And so all I asked was that we shorten the debt ceiling to three months. And that would have been a big reduction. They wanted to increase it$5 trillion. I said we can increase it$500 billion. But then in September, when we discuss the next big, beautiful omnibus, that spending bill, we would also discuss whether to raise the debt ceiling.