Winning In All Arenas | BlackRock’s Rick Rieder, US Child Care Crisis, FIFA in North America

25:13Whatever the risks and opportunities in private equity's growing role in early child care, for both investors and for children, and their parents, everyone agrees that it's not the ultimate answer for the lack of affordable care. And it doesn't address large segments of the population where the needs don't match investors' goals. The portion of the population right now that is probably underserved are not the affluent, but it is probably the bottom two quartiles who are desperately looking for options that are reasonably high quality, but where there's just a fixed number of seats available at the local public pre-K program or the local Head Start program.

25:56So I think private equity, you know, increases capacity a bit, but doesn't, I don't think, fundamentally change solving for the demand that exists out there. That kind of investment is really looking at at short-term gains and looking at solutions that are very much oriented towards the economy of the thing. And I think when you're dealing with children, those can't be the drivers. You have kids who are coming from all different backgrounds right now, and it's critically important that the childcare facility, that early education site, is meeting the needs of those kids and their experiences as they come through the door.

26:44And the experiences of families here in Brattleboro are not going to be the same as families up in Little Fairfax, Vermont, or in Burlington, Vermont. And so that is my hesitation with believing that the solution is private equity investing in these chains. And I also think it's not a great solution for rural America because Because families want to know the people and the entities that are watching their children. It's the most precious thing that you have. Coming up, speaking of children, what does that one big, beautiful bill mean for the children of America and the sick? Our special contributor, Larry Summers, tells us why he doesn't like what he sees.

27:56www.chatchypt.com briefs and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting work mode available on plus and pro plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same. The thrill of closing a deal, whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock.

28:40You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. No data, no AI. It's just that simple. Until now, the data your AI depends OnZone has been trapped behind ever-increasing cloud fees. Wasabi created hot cloud storage and is redefining cloud storage for the AI era, delivering simple, predictable cloud storage for AI, analytics, media, and more. Your data is free to move, fast to access, and ready when your AI needs it, giving your business a competitive advantage. When your data moves freely, innovation moves faster, giving you the freedom to build, train, and do more with your data.

29:18Hidden fees add up fast as AI workloads grow. Wasabi's flat pricing eliminates all of it. One rate, no surprises. With global scale, enterprise performance, and predictable pricing, Wasabi helps organizations focus on innovation instead of cloud bills. Companies that are paying more in fees than in actual storage costs can fall behind. Don't let it happen. When your AI needs your data and you have a budget to meet, get Wasabi. Learn more and try now for free at Wasabi.com. Wasabi, the AI storage cloud. Proud partner of the iHeart Podcast Network.

29:55This is a story about borrowing from Peter to pay Paul. President Trump's one big, beautiful bill found a way to pay a lot of Paul's through reduced taxes, but taking funds away from Peter's who have been dependent on things like Medicaid. Our special contributor, Larry Summers of Harvard, has been outspoken about what he says it will cost us over the long run. David, this is the biggest cutback in the U.S. social safety net in history, measured relative to GDP. It's substantially larger than anything that happened in Ronald Reagan's revolutionary 1981 tax cut legislation. It's substantially larger relative to the economy than the welfare reform that took place during Bill Clinton's time.

30:44So this is a big deal. It's going to mean that some number, it's hard to evaluate exactly, might be 10 million, might be 12 million people are going to lose their Medicaid benefits. It's going to mean that ancillary services that are hugely important for people, getting a ride to the hospital so they can get their dialysis, being able to go to a rehab facility when they can't take care of themselves, but they no longer need to be in a hospital. That kind of thing is going to be cut back. It's going to mean no economic lifeline for desperately important rural hospitals, some of which are going to close.

31:28But here's a crucial point that I don't think has gotten enough attention in the debate. People focus on the moral aspect, and that's important, what's going to happen to some of the most vulnerable among us. But this has consequences for everybody. When people come to the hospital later and sicker with more that needs to be done and there's no government support for their care, the bills of all the rest of us are going to go up. When hospitals are filled with people who don't need to be in a hospital but are there only because there's no other place for them to go, there's less access to care for others when they have an emergency.

32:17When rural hospitals close, that means less access, not just for the poorest people. When these costs mount and ultimately have to be borne, that's ultimately going to translate into higher taxes and greater premiums when the people eventually get sick enough that they qualify for the supported medical care. So this is both immoral and wrong, and it is imprudent and is going to burden the American middle class. It's part of a larger pattern, I think many people have detected in the bill overall, which is a shift in wealth from some of the poorest among us to some of the wealthiest among us. We can talk about whether that's a moral thing to do or an immoral thing to do.

33:20But what does it mean in macroeconomic terms in terms of growth over the long term? David, my values point me towards wanting us to be a more equal society. I don't think that those making estate wills to their children of$30 million should be the beneficiary of new largesse at a time when we've got a massive budget deficit. But I'm going to be honest with you. I don't think honest economists should make all arguments in favor of the policies they prefer. And the reason to oppose this bill is that it's unfair, that it's inefficient, that the deficits are going to do a great deal of damage. But I'm not going to tell you that because of the inequality, we're going to get major reductions in economic growth.

34:25Yes, we're going to get major reductions in economic growth because we're on a trajectory to cutting back R &D in very dangerous ways. Yes, we're going to get reductions in economic growth because we're going to cut back support for other kinds of public investment in education and in infrastructure. But the main reason to be against inequality is because it's wrong and because some of the investments you make to reduce inequality have very high payoffs. But while it would support the policies I generally favor, I am not as an economist going to say that we have convincing evidence that as a systematic matter, reducing inequality raises economic growth.

35:21Even as Trump's big bill will shrink the country's social safety net overall, one increase in federal spending will go toward supporting families, including through a single payment of$1 ,000 for a savings account for newborns. But Summers says he's worried it isn't enough. My suspicion is that it is so subscale that most of the costs will go into administering the thing relative to benefits that will change people's lives. So I don't think we know yet, and maybe this will be an acorn that plants a very valuable tree that will grow over time. But I haven't yet seen the blueprint that convinces me of feasibility at the current scale.

36:11We put in some of the lowest percentage of our GDP into early care and education in the United States of any developed country. And it's because we haven't yet made that leap from the idea that actually the care and learning of young children is very much a public concern. Elliot Haspel at the think tank Capita says market forces alone aren't enough to solve the childcare crisis in the United States. And the government needs to be doing more. Childcare is not a market good. Former Treasury Secretary Janet Yellen has called it a textbook example of a failed market. Doesn't work. So you're going to need some sort of government intervention.

36:47We can also look across the world and see other countries, including just above us in Canada, that have made major reforms in the past few decades, all of which are underpinned by significant permanent increases in public support of a public-private system to make sure that families have access to good childcare options, that educators are paid well, programs are high quality and again that there are guardrails in place to make sure that public money is serving the public good. Haspel's view that government should play a bigger role in helping new parents is shared by Congresswoman Becca Ballant, who was a former teacher herself.

37:27The struggles that working families have right now, they are not the same struggles as people had 20 years ago. You know, you've got young people carrying a lot more debt. they have costs that did not keep pace with inflation. They exceeded them, whether they were housing costs or healthcare costs. So I always say to people, I'm in my fifties, I always say to voters who are grousing about younger families, I say, what they're doing actually is something very different than I did. And what folks in, you know, my parents' generation did, that the economic strain on them is more acute. And so there is this understanding that we need to gain, that you've got families who are absolutely stretched, and it is within our best interest as legislators, as people looking for solutions, to see this as part of the ecosystem of the economy and not an add-on.

38:28This is how you make economies thrive. and certainly other countries have figured this out before we did. Even as state and federal lawmakers take steps to invest more in American families and child care, Summers says we shouldn't be looking to Trump's big bill to save our kids. The costs might well outweigh the benefits, especially for future generations. I think the borrowing that we're engaging in and the risks that that poses to the economy may well do more harm to my children and my one-year-old granddaughter than the putative new programs that are contained. Up next, the World Cup is coming to North America in a year's time.

39:18Cities across the U.S., Mexico, and Canada are stepping up big time to make it possible. But is the investment likely to pay off? That's next on Wall Street Week.

39:56first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on plus and pro plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster.

40:38With revenue agents and automations working around the clock, you'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. No data, no AI. It's just that simple. Until now, the data your AI depends on has been trapped behind ever-increasing cloud fees. Wasabi created hot cloud storage and is redefining cloud storage for the AI era, delivering simple, predictable cloud storage for AI, analytics, media, and more. Your data is free to move, fast to access, and ready when your AI needs it, giving your business a competitive advantage.

41:12When your data moves freely, innovation moves faster, giving you the freedom to build, train, and do more with your data. Hidden fees add up fast as AI workloads grow. Wasabi's flat pricing eliminates all of it. One rate, no surprises. With global scale, enterprise performance, and predictable pricing, Wasabi helps organizations focus on innovation instead of cloud bills. Companies that are paying more in fees than in actual storage costs can fall behind. Don't let it happen. When your AI needs your data and you have a budget to meet, get Wasabi. Learn more and try now for free at Wasabi.com. Wasabi, the AI storage cloud.

41:47Proud partner of the iHeart Podcast Network.

41:56This is a story about the beautiful game. From Maradona to Messi, Peli to Puskash, the biggest stars in the world have left their mark on the FIFA World Cup. And whether you call it football or soccer, the world will be watching as new stars are born when the U.S., Canada and Mexico play host next year. While many of us will be focused on who wins on the pitch, the 16 host cities face a challenge to make sure they win off of it.

42:27The FIFA World Cup is one of the biggest spectacles in sport. 48 teams, 104 matches, one winner. Or maybe two. Sure, one team will lift the iconic trophy. But with an estimated$11 billion in revenue coming in, FIFA might be the real winner before a single ball is kicked. It's the biggest event ever. It's more than 4 billion viewers all around the world, and we will make it the biggest, not only sports event, but the biggest social event that we can think of. Gianni, we're going to have to extend my second term, because 2026, I'm going to have to extend it for a couple of years. I don't think any of you would have a problem with that, but I hope you're going to remember me in 2026.

43:16For sure. Since the World Cup was awarded to the U.S., Canada and Mexico during President Trump's first term, 16 host cities have been ramping up infrastructure spending to prepare for the tournament. I think as a host city, you know, we know this is a big investment. Sharon Bollenbach is the executive director of the FIFA World Cup 2026 Toronto Secretariat. Our budget here in Toronto is$380 million and that has been approved by council. It is in terms of funding partners. We have significant funding partners from our federal government, as well as our provincial government. And then, of course, the city of Toronto.

43:54So it's really all three levels of government are contributing. And the city of Toronto's portion is around one hundred and eighty million. And much of that comes from so that we can reduce the burden on sort of the tax base. Much of that portion that the city is contributing to the event is coming from some reserve funds. We're putting in place a municipal accommodation tax as a source of revenue for a temporary period over the course leading into the tournament and for the couple of months after. As well, we have a big commercial revenue strategy around bringing in host city supporters and other hospitality sales and opportunities for corporate and other businesses and so on in the city.

44:40Toronto's upgrades include better public transit and the development of training centres. But a sizable portion of the budget is going towards upgrading BMO Field, where Nick Eves is the chief operating officer. The FIFA minimum requirement is to get the stadium up to a 45 ,500 capacity. Today the stadium holds about 30 ,000. So we'll be building a temporary 10 ,000 on the north end, another 7 ,000 on the south end. The north end structure in addition to that temporary seating will also have a permanent two levels of hospitality suites, which of course will be usable for the World Cup matches.

45:18All of that work must be complete by March in order for us to then go and host some test matches here to really sort of dry run and experience some of this new infrastructure that's been put into place. So on the first phase of construction, we're on schedule. We will be on schedule for the second phase because ultimately we have to hit that March date to host the test matches. And then we need to hand the stadium over to FIFA 30 days from the opening match. As it turns out, FIFA requires a lot from hosts beyond just stadium capacity. In a published list of government guarantees, FIFA lists the, quote, significant mid - and long-term socioeconomic benefits for host countries, using that to justify a list of requirements that include tax exemptions for the tournament and support in security, public transport, and infrastructure.

46:04And it also takes over external advertising spaces. So Toronto's BMO Field becomes Toronto Stadium and MetLife Stadium becomes New York, New Jersey Stadium. It's the biggest, broadest, you know, most diverse kind of far reaching World Cup there has ever been. And so with that has come a lot of learnings. And I think FIFA have learned a lot, quite frankly, as well about working with three countries, working with 16 host cities. So there's been some things and elements of the agreement and of the requirements that have been laid out from day one. There's been some elements that have shifted, and that's been open dialogue and open communication and an understanding of what are some of the realities that are happening in Toronto that might be different than the realities happening in Vancouver or happening in Los Angeles or happening in New York or Dallas.

46:59So there's been some shifts and some ability for us to work together with FIFA to determine what some of those things are. But FIFA definitely, you know, this is their tournament. This is their tournament. They own the property, as it were. And so they will come in, I think it's May, early May, and sort of take over the stadium. They will manage their portions of this tournament and work with us. They understand our budget. They know what our budget is. We've had to push back on some things. You know, there's been some some good dialogue on some of the items where we just don't have the budget to maybe meet some of some of the requirements that have been in place.

47:39And so that's been a bit of give and take. You know, what are the primary things that we want to make sure are in place? And what are those things that maybe we can we can adjust and change a little bit? So that's, again, been an open dialogue. FIFA, I have to say, have been great partners. We've had the ability to really discuss openly some of the elements, understanding it's their tournament. And they've run it for many, many years, as we all know. And FIFA certainly knows how to make money off of it. The$11 billion in revenue it expects to receive will come largely from broadcast deals, ticket packages, and sponsorships.

48:17Andrew Zimbalist is a professor of economics at Smith College and author of Circus Maximus, the economic gamble behind hosting the World Cup and Olympics. There's a good deal of revenue that doesn't come back to the cities who are sponsoring these things, particularly it goes to FIFA. What happens to the money to FIFA? Where does that money go? Well, it goes to making sure that Gianni Infantino has a very comfortable and luxurious life, for one, and his various deputies. But more importantly, the vast majority of the money goes to soccer federations around the world. So each of the participants in FIFA, the International Soccer Association, each of the country participants has a national soccer association, and they're in charge of developing soccer in their country.

49:05They spend money for youth soccer programs. They spend money for facilities. They spend money to train referees and officials and so on. So most of the money, the overwhelming majority, probably 90 % of the money that is generated for FIFA gets reinvested back into the soccer development worldwide. So where do the host cities see a return? They get none of FIFA's windfall, but expect to make money through revenue streams like increased tourism, job creation and global exposure. For Toronto, that's expected to result in$686 million of positive economic output for the greater area, according to a report from Deloitte and FIFA.

49:49Adam Van Couverden is Canada's Secretary of State for Sport and a former Olympic champion in kayaking. It is a big upfront investment, but we know that it's going to pay off. For example, the federal government is investing$220 million between Toronto and Vancouver to ensure that these 13 games are world-class, safe, and really, really exciting for Canadians. The provincial governments are also coming forward with hundreds of millions of dollars, and the cities are also investing, as are private companies and FIFA especially. So it's an exercise in collaboration, like I said, but the result is a massive positive economic output that Canadians, Canada, Canadian businesses, everybody will see the benefit from that.

50:31Likely, we're going to see about$2 billion increase to our GDP, as well as about$3.8 billion, upwards of$4 billion in positive economic output. We're talking about almost 25 ,000 jobs to be attributed to the FIFA World Cup in 2026. So the economics are very, very sound. It looks like it's going to be a huge boon for Canada's economy, but I'm sure the same is true in the United States and in Mexico as well. Yet not everyone is convinced. So you put the costs and the revenues together, you get a variety of different outcomes, but more likely than not, there's not a financial benefit for the host city.

51:06Although virtually every one of the 16 cities in North America will have an increased flow of tourism into the city, virtually every one, I suspect, very often the soccer tourists, the soccer fans, replace the normal fans. So somebody who might otherwise be thinking about a trip to Vancouver, Canada to watch some of the World Cup games might decide, gee, as nice as Vancouver is, and it is a great city, as nice as it is, I'm not going to go there when the World Cup is happening because I'm not going to be able to get a ticket to the game or I don't want to spend$500 to get a ticket to the game.

51:41And so why would I want to put up with the congestion and the higher hotel prices? And so what happens is the soccer tourists substitute for the normal tourists. The normal tourists are the ones that spread the word best about the city. And tourism in cities is best advertised by the actual visitors who come and they go home and they talk to their friends, neighbors and relatives about what a nice city it is and the different pleasures that they had when they were in the city. If the World Cup tourists are replacing the normal tourists, that's not good for long run tourism as a general principle.

52:11But the other thing that's true is that FIFA requires the host city to basically cancel all sales taxes and related taxes on things that are related to the games. If the tourists come to the city and they go to what's called the Fan Fest for the World Cup in the city, the city is required to put on a Fan Fest, and they buy things at the Fan Fest, say they buy food, that's money being spent on hamburgers and hot dogs that's not being spent at a normal tourist restaurant in the city. A normal tourist restaurant in the city will produce sales taxes and revenue for the host city. But if it's being spent at FanFest, there are no taxes allowed.

52:48Same thing with ticket prices. They're not allowed to charge a sales tax on ticket prices. So the city can actually be losing money because if they were playing a normal sport in the summertime and people were buying tickets, there'd be a sales tax on that. That would be revenue to the city. But when they're hosting the World Cup, they're not allowed to have that. There's a lot of talk about long-term benefits. from hosting World Cup games. How sure can we ever be that, in fact, it's worth it? There's always the hope when you host a sport mega event and you're put, in quotes, onto the world stage to a degree that you hadn't been before.

53:25There's always the hope that there'll be more people around the world who now want to visit your city. And there'll be more companies around the world who now want to trade with them for your products. and there'll be more investors around the world who now want to invest in your city. We don't have any evidence that that happens. Those claims have been made frequently. They're made certainly abundantly in the case of London in 2012 when they hosted the summer games. But there really isn't any evidence. Good companies don't trade with a city or with a country because they hosted a sport mega event.

53:59And they don't invest in a city for that reason. They invest in cities because they have good resources, because they have a good labor force, because they have good fiscal legislation, because they have good transportation and good location vis-a-vis their markets. And I think that if everything aligns properly, if the city already has the ready-made soccer stadium or stadiums, and they already have the transportation infrastructure and security infrastructure, and FIFA is giving them some of the more interesting games during the course of the World Cup, then the revenue side could go up a little bit and the cost side could be moderated.

54:32and at the end of the day, maybe they generate a small surplus. Ultimately, surplus or not, the World Cup's reach goes far beyond the spreadsheet. And perhaps few know that better than Canada's Olympic champion turned politician. I know the power of sport. It has the power to change lives for the better. When we invest in physical activity programs and recreation opportunities for young people, for families and for older folks alike, we get positive social outcomes. But we also see the economic benefits. We see reductions in health care costs. We see less of a strain on our judicial system. We see kids happier, healthier and more connected and our communities really coming to life.

55:12And that's what I expect to see with FIFA. When it comes to town, we're going to celebrate the beautiful game. We're going to celebrate the opportunity to play host for six incredible games here in Toronto and seven across the country in Vancouver. But I know that in every city across Canada, you're going to be celebrating the great game of soccer.

55:31Much has been made in recent years about the booming business of sports, and next year's World Cup looks set to be no different. But perhaps the lasting legacy of a successful tournament won't lie on the bottom line, but what happens inside the white lines. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

56:28Thank you. One for everyone. Learn more at business.optum.com. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio.

57:03Start your free trial at adio.com slash iHeart. Some people use ChatGPT to answer questions. Others use it to get real work done. With ChatGPT Work, you bring the goal, plus real inputs like briefs, notes, files, feedback, data, and project plans. It can help turn them into an analysis, tracker, deck outline, prototype, or workflow you can review and keep shaping. You stay in control, giving direction and choosing the final output. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode. Available on Plus and Pro Plans.