Ro Khanna on the Megabill & OpenAI Warns ‘Token’ Investors 7/3/25
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This is SquawkPod and I'm CNBC producer Cameron Costa. On today's episode: The House of Representatives poised to vote on President Trump's mega bill. It's likely to pass, but not before the Democrats speak their piece. California Congressman Ro Khanna joins us. The reality is you have to raise taxes on the wealthy. You can't be cutting taxes on the wealthy if you want to do anything to lower the deficit.

And Microsoft cutting 4% of its workforce. Is AI to blame, really? Our own Steve Kovacs says, eh. I think it's an excuse, maybe not a reason. It was mostly just getting rid of middle managers. AI can't replace that. Fellow tech journalist Mikhail Levram says it's all part of a cycle. This is kind of a natural thing that happens with Silicon Valley companies when we're going through one of these big technological transformations and reallocations.

Those stories, plus the jobs report for June. What a better-than-expected metric from the Labor Department means for Fed Chair Jay Powell. It's Thursday, July 3rd, 2025, and SquawkPod begins right now. Stand and or buy in 3, 2, 1, cue and or buy.

Good morning and welcome to Squawk Box right here on CNBC. We are live at the NASDAQ market site in Times Square. I'm Andrew Ross Sorkin along with Melissa Lee. Joe and Becky are off today ahead of July 4th, but ahead of a very, whether it's a big beautiful bill or not, a bill nonetheless and the jobs report. It's a half day for the U.S. markets. The closing bell coming at 1 p.m. Eastern time today. U.S. equity futures right this moment.

First up today, as Andrew mentioned, the June jobs report. Some data heading into the holiday weekend. U.S. payrolls for June increased by 147,000 jobs. Definitely a bit better than expected, no matter what your range was. Our own Rick Santelli read out the numbers as they broke this morning, including the unemployment rate, which ticked down

to 4.1%. But while jobless rates fell, the labor force participation rate fell to its lowest since late 2022, which means we saw a decrease in those working or looking for jobs. Now, important to note, a lot of the job growth this month

came from state and local government hiring. But overall, as one of our guests put it, a check plus. A good report that leaves us wondering, what does it all mean for the Fed's monetary policy? Amid pressure from President Trump, Fed Chair Jay Powell has remained cautious on his next move on interest rates. But the pressure is still on. And as CNBC's Steve Leisman knows, the markets are watching. I wouldn't cut rates right away, but I'd have my finger near the trigger.

Let's get back to Andrew Ross Sorkin and Melissa Lee. President Trump calling on Fed Chair Powell to resign. That came in a post on Truth Social. The president used his derogatory nickname for Powell too late and linked to an article that detailed a call yesterday by federal housing finance agency head Bill Pulte for Congress to investigate Powell.

Pulte had issued a press release in which he asked lawmakers to look into what he called Powell's, quote, deceptive testimony to Senate, to the Senate, that is, although Pulte did not provide any evidence for his claim that Powell made inaccurate statements. Part of this concern concerns renovations really to the headquarters of the Federal Reserve. And following this story, recent reports have made the case that the project has seen rising costs.

Interestingly, the Fed technically pays for itself, but you could also say the Fed arguably prints the money. So it's a complicated one. But again, the question is, you know, we keep talking about the independence of the Fed. Investors say we care deeply about the independence of the Fed. And yet then the president says these things.

And the market doesn't seem to care? Or is it just because this is all just like a social media spat? Or is it real? Or is it because we know that come May anyway, there's somebody else in that role? Well, there's somebody else in the Fed chair role. But there is some question as to whether or not Powell will actually relinquish his role as a Fed governor. With the handcuff, President Trump's ability to appoint a whole new member to the committee that would be presumably more inclined to cut rates. You know what we haven't talked about?

So many things. I mean, it's only 6:09, Andrew. I know, but what would it feel like? Beginning of the show. What do you think it feels like to go from being the chair to being a governor?

You run the place. Right. It would be like you're the president of something. And then you're vice president. Yeah. Then you're like the deputy. Not even the deputy. You're like just another. Maybe it would be a relief. Maybe it would be a relief. I don't know. I mean, it's quite a weight to bear to be the Federal Reserve chairman, I would think. I'm sure it is. I'm just saying that if you were if you were President Trump or you were President Obama and then somebody said, well, actually, we'd like you to be the.

Secretary of Transportation. Yeah, right. Would you take that job? I don't know. You might. You might. But for Powell, if he were to stay on as governor, it would not only be, you know, obviously he probably loves being, you know, part of the Fed. Oh, no, he would stay in because of the independence of it. Exactly. Because it's important to the sanctity of U.S. assets, especially treasuries, in the eyes of foreign markets to have an independent Fed. So it's a greater sort of...

burden. That's the conventional wisdom. This president, by the way, has, I don't know if it's proven it or not, but increasingly sometimes does seem to be proving it that sometimes the conventional wisdom is not right.

OpenAI distancing itself now from Robinhood's latest push into crypto after the trading platform started offering what they're calling tokenized shares of SpaceX, which, of course, is a private company to users, though the users and I should say are only in Europe. So this is not available to customers of Robinhood here in the United States. In a post on X, though, OpenAI saying the following says these OpenAI tokens are not available to customers of Robinhood.

are not OpenAI equity. We did not partner with Robinhood. We're not involved in this. We do not endorse this. Told users, please be careful. Now, in response to OpenAI's post, a

A Robinhood spokesperson saying, quote, these tokens give retail investors indirect exposure to private markets. Opening up access are enabled by Robinhood's ownership stake in a special purpose vehicle. We'll explain how this works in a moment. Robinhood stock hitting a new high on Monday when it made less than $1.

that new token and blockchain announcement, US users, as we mentioned, cannot access these tokens because of regulatory restrictions. We talked to Paul Atkins, the new chair of the SEC, a little bit about this token issue. And so what's really happening, and you can speak to it probably even better than I can, is there's private companies, SpaceX, OpenAI, what have you, those are not available. Those shares are technically not available to the public because they're private. They don't have the same disclosure as a public company.

What a whole number of companies are doing, including Robinhood, is effectively trying to create a almost like a derivative of the underlying asset. They own the underlying asset through oftentimes a special purpose vehicle or some other kind of mechanism. And they're saying, we're going to basically break that special purpose vehicle up and then we're going to into pieces, but not really because we're going to keep it. We're going to create sort of derivative pieces that track. It's almost like a tracking stock of that.

And OpenAI is saying, this is not our thing. The other piece, so there's two pieces to this that I'm very curious about. I don't know what you think. One is, clearly these are private companies that shouldn't be in the public. This is a mechanism to get around the law. And by the way, only happening in Europe through Robinhood. Others are doing it in the United States, by the way. So they're just going straight at it and saying they're going to even do it here.

and the question is should they be allowed to do that the other question is the open ais and spacex's of the world in some cases don't even want these guys to have the shares meaning they don't want robin hood to own the shares they don't want anybody owning these they don't actually want a liquid market because typically the way these kind of shares work they come usually from employees honestly and they don't want the usually you have to sell it back to the company like they get the first

Look, they don't want the employees. They want the employees to have some liquidity, but not too much liquidity. Because the truth is, if all the employees are able to sell today, it changes the whole culture. This goes back to Sam Altman saying, you know, if Mark Zuckerberg's paying everybody $100 million, it's going to create a culture of mercenaries. So they don't want everybody to become bajillionaires yet. I think that there are a lot of different...

issues and potential problems with this whole notion of tokenizing security. I mean, I think for individuals, I think the marketing of this product is going to be very telling because you do not own. And I don't think people understand that you don't actually own the shares because they think that they're owning tokens which represent shares. They represent them the way an option represents a stock. You don't actually own the stock. You own an option. I mean, it's it's it is a derivative. It is not the underlying asset. You might as well be on FanDuel.

Yeah, betting on the direction of the value, the valuation. That's what it is. It's a bet. So the question is whether you think

I mean, we just talked to Paul Atkins. I don't think that he is prepared to regulate this market in a meaningful way. I think what he would like to do is try to make being a public company more attractive here so that he can sort of edge out and make it less attractive or so there's no need for this kind of thing. But he doesn't seem to be saying this over here is no good and we're going to stop it. It sounds like he's reluctant to say that yet.

But I think that, I mean, maybe we're putting words in his mouth, but there are disclosure issues, right? There's a reason why retail investors don't have access to this. There's a reason why these companies are private. They have less disclosure. And retail investors need to, you need to have that disclosure. Fidelity might have more access than you. Here's the thing that I don't know about.

All of these things are pitched as democratizing investing. And by the way, we would like to democratize investing. I think you want more people- That's what we are all about, right? I'm not disputing that. And so then the question becomes, people who are watching are saying,

Melissa, Andrew, I want access to this stuff and I can't get access to it currently. Why are you trying to stop me from having the same opportunity that Marc Andreessen and Peter Thiel have? And that is no, but that is the that is part of this issue. And we haven't really grappled with that from a policy perspective.

then you could make the argument the entire other way. That is, investors should have access to anything they want. That guardrails. Correct. I'm not arguing that. And there's so much anti-fraud laws to protect you. All I'm suggesting is there are people out there who say, look, you're not protecting me, you're protecting the man. I get that argument. Tease will be next.

Up next on SquawkPod, what a Democrat is saying about the mega bill poised to pass in Congress. California Representative Ro Khanna, direct from the Cannon House building. Are there aspects of the bill in isolation that I could support? Things like the no tax on tips, things like the making child tax credit permanent, no tax on overtime. Absolutely. But overall, the bill is skewed

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Welcome back to Squawk Pod from CNBC. Today, while we aired, the House of Representatives was poised to pass President Trump's mega bill. But ahead of the final vote, Minority Leader Hakeem Jeffries spoke for hours on the House floor, starting just before 5 a.m., aiming to delay the vote and thus the passage. But I'm here today to make it clear that I'm going to take my time and ensure that the American people fully understand

how damaging this bill will be to their quality of life. Democrat lawmaker Ro Khanna was there and joined us on TV directly from the Cannon Rotunda in the House building. Here's Andrew Ross Sorkin, who's in New York.

Ahead of July 4th, we are waiting on a House vote now on President Trump's tax and spending bill. Hakeem Jeffries is continuing to speak, as we keep saying, pulling a bit of a Cory Booker the last couple of hours. We'll see when that finishes. Congressman Ro Khanna of California has been listening to Hakeem Jeffries, the minority leader, but just popped out for Squawk Box. Good morning to you, sir. Good morning. It's been a long night.

It's been a long night. You're on the losing end of this situation. What do you think the implication is here?

There are two major problems I have with the bill. One that Larry Summers and Bob Rubin pointed out. This bill is going to add $4 trillion to the national debt, and it's going to take deficits to 8% of GDP, almost unprecedented in peacetime when there's no external shock like COVID or the Great Recession. And the second is the distribution. I mean, even Bush's tax cuts and Trump's tax cuts

helped everyone. They disproportionately helped the rich, but they gave a break to everyone. These tax breaks actually make poor working class Americans poorer while giving the rich tax breaks. They take away Medicaid, they take away food assistance, and that's pretty unprecedented in modern history.

We talked to a congressman on the Republican side of things who actually had a negative view of this bill last night and a positive view of it this morning. And one of the things he said was that he got assurances effectively from President Trump that certain parts of the bill may be slow walked or other things might happen as it relates to a whole number of things. Have you heard that in terms of in terms of those holdouts who've come come along, why they've come across?

Well, one, they don't want a $20 million super PAC coming after them in a primary. I mean, look at what happened to Thomas Massey when he spoke out against the Iran strikes and the War Powers Resolution. So Donald Trump has a lot of power in the Republican Party. But on the substantive thing, I've been told that they've been promised future reconciliations that are going to make more

The question is, though, how are they going to pay for them? The reality is you have to raise taxes on the wealthy. You can't be cutting taxes on the wealthy if you want to do anything to lower the deficits. It's not just me. That's what Rubin and Summers say. That's what economists look at the mat say. And so they're being promised future reconciliation packages to cut the deficit. But it's unclear where those cuts are going to come from if they're not willing to increase taxes on the wealthy.

Congressman, I want you to weigh in on this. We've been watching the bond market, which you would think would not like a bill like this. Just the conventional wisdom would be that.

The market is not moving. It is not the bond market is not acting in a way that's suggestive that they have a problem with this bill. Now, on the other side of it, we talked to Steve Leisman recently. One of the interesting things that may be part of the calculus is there's an expectation even already that a year from now, Jay Powell will not be in this job. And maybe you'll have a Fed chair that's going to start lowering interest rates. And if that's the case, maybe that's offsetting whatever potential.

anxiety there would be but then you'd probably have even more anxiety about the dollar frankly so what how do you reconcile all of that but surprising to me i mean obviously the bond markets moved a month or so ago and maybe they've already factored in that this bill was going to pass but you've got tariff policy that in my view is slowing the economy and we're going to see

perhaps in this jobs report or in Q3, combined with now massive deficit spending that's going to put pressure on our interest rates. And that's the concern, that you have a slowing economy and at the same time higher interest rates. But, you know, obviously I don't have a crystal ball in terms of what the bond market is going to do. I just think that we don't have smart economic policy right now. Can you at least, do you acknowledge that this bill, though, could

improve the economy or help businesses, which will then improve the economy overall. I mean, permanent expensing, that's a very...

You know, that's very attractive and it could be very good for businesses to spur investment in equipment as well as facilities. You know, making the tax cuts permanent, that is a very, you know, that's key to stabilizing the outlook of the economy. I mean, there are offsets here, Congressman, to this, aren't there? In terms of, you know, your concerns about the deficit, it could ignite some growth here.

- Scott Martin: Well, are there aspects of the bill in isolation that I could support? Things like the no tax on tips, things like the making child tax credit permanent, no tax on overtime? Absolutely, but overall, the bill is skewed

to people who are extremely wealthy, about 60% of the benefits are going to go to people over 220,000. This is not the kind of bill you would pass if you wanted to have more consumer spending. You would do what Josh Hawley was saying, double the child tax credit. You would skew most of the tax credits and tax breaks to the working and middle class. And we saw with the previous Trump tax bill that it didn't lead to higher

investment. It was basically distributionally skewed towards the wealthy, and it didn't lead to more manufacturing or domestic investment. And there's no reason to think that this is going to lead to that kind of productive investment now. Congressman Ro Khanna, thank you for joining us this morning. It's good to see you. We wish you a very happy 4th, and we'll see when this bill gets passed, what happens next. Thank you.

Coming up on SquawkPod, Microsoft is laying off about 4% of its workforce while it's doubling down on AI. The question is, are the layoffs because of the AI? CNBC contributor Mikhail Levram on the future of tech at Tech.

I absolutely don't think that we're going to be, you know, getting like 360 performance reviews from an AI bot anytime soon. Probably never. Our own Steve Kovach isn't so sure, but we'll get to all things tech right after this break. Okay, close your eyes, exhale, feel your body relax, and let go of whatever you're carrying today.

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This is SquawkPod.

You're watching Squawk Box right here on CNBC. I'm Andrew Ross Sorkin along with Melissa Lee hanging out with us ahead of the holiday. It's kind of like a half day holiday, but not in the news business today. It's still a three hour show, Andrew. No, a three hour show, but the markets closed at 1 p.m. today. Having said that, a lot of news. This week, Microsoft announcing it is laying off nearly 4 percent of its workforce as it tries to refocus more on AI.

Mikhail Livrem is a Silicon Valley-based journalist. She joins us live this morning. We've also got CNBC's Steve Kovach here at the NASDAQ. Do we believe that AI is the reason for these layoffs? I think it's an excuse, maybe not a reason. I look at what Mark Benioff said the other day, and he said 50% of our work right now is being done by artificial intelligence. If that was true, we'd be hearing about massive layoffs at Salesforce. We'd be hearing about huge

huge improvements to margins and so forth. But we're hearing it increasingly. The Journal did a story on this yesterday, guys. They said, you know, saying the quiet part out loud. Ford CEO is talking about it now. We had Andy Jassy from Amazon talking about it. Those Microsoft layoffs, though, yesterday, no word of AI. They did talk about efficiencies and things like that, leveraging technology, presumably AI. But it was mostly just getting rid of middle managers. AI can't replace that. Mikhail, what do you think?

So I agree, but I don't think the only options are AI or BS. You know, I think there's a truth somewhere in the middle, too. So while I don't believe that these are job losses due to AI, that AI is taking over jobs, and yes, totally agree that we would see a bloodbath if that was really starting to happen, I do think it's the result of the company reorganizing itself around AI. And we saw the same phenomenon in other technological transformations, 2014,

Microsoft shed 18,000 jobs as they were making the transition to really focus on mobile and cloud. And so this is kind of a natural thing that happens with Silicon Valley companies when we're going through one of these big technological transformations and reallocations. But if we were having this conversation 12 months from now, do you think we're going to see a lot more of this? And will it be much more severe?

I think so. I don't know about more severe, but I think, you know, Microsoft has now gone through several waves. You know, maybe there'll be more, maybe not. By the way, the cuts are really across the board, both geographically and across different divisions. Definitely hearing about

Some cuts on the Xbox side, various gaming studios. So they're across the board. I do think we'll see more of them. But, you know, that said, again, I don't know a single software engineer out here who has actually lost their job to AI. And even if 20 to 30 percent of the code is being generated at Microsoft now by AI, you know, software engineers do a lot of things. They're not just

constantly writing code nonstop. I asked a friend of mine just the other day, who's a software engineer out here, how much of your time are you actually giving off to vibe coding? And she said about 10%. They're checking the software. They're testing it. They do a lot of other things. So I do think that there's going to be a lot more-- and other companies as well, I don't know about Microsoft-- more of this restructuring and reprioritization.

but not a huge loss of jobs due to AI anytime soon. It seems like it would be a good time for a lot of the other Mag7 names or big cap tech names outside of Meta to examine that year of efficiency. Meta really gained a lot in terms of stock market value because of the year of efficiency and with AI kicking in,

the ability to reap those efficiencies much easier, I would imagine. We hear about that all the time, but we just don't see the evidence of it yet. I mean, there's so many anecdotal stories when I talk to CTOs at companies and I say, you know, are you guys using, did you buy a co-pilot license and so forth? And so many people say, yeah, we're testing it, but it's too expensive. It doesn't do enough. You know, we see some moderate gains in productivity. It's not really fulfilling the

that promise that we heard of, but let's extrapolate this a little bit. 'Cause I was talking to, I can't really say who it was, but I was talking to someone who works in HR at one of these big tech companies. They are already talking about a universe in the not too distant future where your boss is an AI agent. And they're already talking about within this company, planning for a world where you're literally reporting to an artificial intelligent agent.

What does that look like? How do you handle human resources? How do you manage people like that? This is how they're already, these companies are already thinking that way. I haven't talked to people about that. I've talked to people about who think that they're going to have sort of these agent hierarchies where there'd be an AI boss that would be bossing around, if you will,

other AI agents that would have different tasks. If you were to think of sort of a various hierarchy, one might be responsible for if you were a reporter, one might be a reporter and they might have an editor or a producer or an element in this universe. Why couldn't you make an AI agent that can do all? That does it all. Yeah. Why can't it do it all? Why is there layers of agents and AI bureaucracy? I think early on, part of it is, as you probably, we've all learned through prompting,

You have to do it. Everything is actually quite specialized. You can't, if you just tell the, tell AI to go do something. You have to be specific. It doesn't, it can't really do it.

Right. It's just like a person, by the way. A person is specialized in something and they have a they have sort of a strategy and a plan to do it. If it's not like it becomes an all seeing robot, I don't think. And to your point, that's why we're not seeing huge layoffs because I can't take those jobs. What do you think about that? You think we're all going to be have have an AI boss soon?

No, I don't. Not at all. I think we will have an AI helper, an AI assistant. I think that makes a lot more sense to me. By the way, there's a company out here called Latticeworks. They're in the HR space and they actually launched a product a while back that was onboarding AI agents. And there was such a backlash, they decided to pull the product. They're heavy into AI and using AI for all sorts of HR practices, functions. But

But that one didn't go over well. I think it is a culture, corporate cultures, even on the startup level, not quite ready for that. But yes, we'll have more and more of AI. A lot of experimentation going on right now. Not a lot of use cases that are really proving themselves quite yet. But I do think we'll continue to see people working hand in hand.

vibe coding is real i mean engineers are leaning on it and i think it's going to get better and better and it's going to have more and more use cases but i absolutely don't think that we're going to be you know getting like 360 performance reviews from an ai bot anytime soon probably never okay yeah let's take that i can tell you that one company is thinking about it uh steve thank you everyone work for that company happy july 4th thank you happy fourth

249 years ago, the Declaration of Independence was signed in Philadelphia. While the rest of the country celebrates, City of Brotherly Love is on day three now of a garage strike. Garbage. Garbage. Did I call it garbage? Yeah. Garbage.

Garbage strike. Well, a garage strike would be a different thing. A garbage strike, I apologize, is going to be, if you can believe this, 90 degrees for the next five days in Philly. And that, of course, not going to help the water department staff, some rec workers, 911 dispatchers also off the job. So that is terrible. Not a great time. I feel bad for all the tourists going to Philadelphia to celebrate the nation's birthday. All the garbage. Yeah, they should just stick it in the garage.

Since there's no garage strike. Yeah. That's the podcast for today. I hope everyone has a great 4th of July weekend. Happy Independence Day, everybody. Have a great weekend. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Thanks to Melissa Lee for filling in this holiday week. You can catch us live on CNBC weekday mornings from 6 to 9 a.m. And you can always find the highlights of our show right here on Squawk Pod.

Please follow us wherever you're listening right now. And if you already do, thank you. We'll meet you right back here on Monday. Have a great long weekend. We are clear. Thanks, guys. Life insurers put life into the things you live for. The new factory that's hiring your neighbors. Maintenance on the bridge that keeps traffic flowing. The paycheck that puts pizza night on the table.

Life insurers contribute $8 trillion to the U.S. economy through bond purchases and other investments and protect the financial security of 90 million American families like yours. See how life insurers put life into America at acli.com. Paid for by the American Council of Life Insurers.