Apple Weighs Using Outside AI to Power Siri in Major Shift
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What has, I think, one of the most read stories on the Bloomberg right now, or second or so, and that has to do with Apple, which rallied on news that Apple is considering using artificial intelligence technology from Anthropic.

or OpenAI to basically power a new version of Siri. So it's a big deal because it means maybe possibly sidelining its own in-house models. The story, a Bloomberg exclusive. It's by our own Mark Gurman. He's, of course, Bloomberg News Managing Editor for Global Consumer Technology. I'm convinced he never sleeps because he's constantly putting out exclusives and breaking news stories. All right, Mark, take it away. What's up at Apple?

So Apple, their strategy for artificial intelligence that they unveiled last year was twofold. In-house models that run on the phone and in-house models that run on the cloud. Right?

That competes with ChatGPT, with Claude, with Gemini. With the market and Apple has figured out pretty quickly, they're not very good. So Apple is now evaluating for the first time using a third-party model, either Claude from Anthropic or ChatGPT from OpenAI to power Siri. Obviously, as we all know and experience in our day-to-day lives, Siri is not very good. And Apple had been working on an overhaul of Siri using its own large language models for next spring.

Now, it's exploring maybe using Cloud or ChatGPT instead in order to get new features out the door more quickly and make the voice assistant more appealing. So it is a pretty big development, and you see that Apple's stock spiked on the news because if they do indeed go down this road, which by the way is not for certain by any means, it's going to mean Apple is going to be a real AI player for the first time.

How much time do they have, Mark? I mean, I guess I feel like any company that wants to compete has to have a successful AI offering. On the other hand, this is a company that already has us kind of...

and sinker, right? They own me and my family. Exactly. And me and my family as well, right? I can't imagine living without the genius of their products. And I really feel like an emotional connection to Apple. On the other hand, they have utterly failed in this sense. Carol reminded me that Siri is now 14 years old and she is more incapable than my four-year-old. Yeah.

You guys are very focused on your current setup. You're focused on the current generation of consumers. You're concerned about your families, right? What Apple's concern is and what my concern is and the market's concern is the next generation of consumers.

They're going to lose a whole bunch of people that are new to the smartphones. There are people born every day, there are people who buy their first smartphone every day, there are families getting their first smartphones every day and those people have a decision to make about which ecosystem they want to enter. And right now all the talk is about how Apple's AI is completely behind the times and so that decision…right?

is a lot easier when you realize that the Android ecosystem is a big step ahead in what is perceived as the future of technology. What does this say about Apple as a company? Like, this would be a real big shift, right? In strategy?

You help me out here, right? Apple likes to go in-house for core technologies. Like I've said many times before, AI is as core as technology for the future of hardware as the touchscreen has been for technology over the past 20 years. Apple owns the technology and the patents and everything behind touchscreen and multi-touch, those gestures that we all take for granted today.

With AI, Apple has tried to do something similar, build those models in-house and own the core tech like they own the touchscreen, like they own some of the camera tech, like they own with their processors and all their products now. But what are you supposed to do if it's not very good? You have to find an alternative. You have to go outside and use a partner. They tried to go in-house. It didn't work. They're going to pull back, in my view, go external, use a partner.

Use external partner and maybe one day do a brain transplant when your LLMs that you're building internally are good enough for prime time. But something's got to give. Interestingly, they are working concurrently on a new Siri LLM project that uses in-house models. And so there's still many debates internally and options being poured over to decide if they're going to go with Anthropic, OpenAI, or Apple Foundation models for this revamped Siri coming next spring. By the way...

Are there AI companies that are in the lead? Like, is OpenAI doing better work, at least in terms of the products that we can access now, than Anthropic, than Google, than Facebook? Yeah.

You talk to a bunch of people in the industry, you're going to get different opinions. I would say the top two are Anthropic or OpenAI, Google in third and if you want to talk about the big companies Meta4 and Round It Out with Apple if you're going just for the top five biggest companies that have some meaningful share of the space.

You talk to people at Apple though, the word on the street there is it's all about Anthropic. And so Anthropic is really the focus of Apple for this new generation of Siri. They're using Anthropic to power a lot of their internal AI technology. But

But again, as I say in my story, Anthropic wants billions of dollars at a scale that doubles annually for Siri to be powered by Claude. And so Apple is now taking a close look at OpenAI as well, which has historically given Apple extraordinarily favorable terms. So out of desperation or smart move in terms of what Apple's doing? It's a smart move in response to desperation. Interesting also that they...

could end up working with open AI at the same time as open AI works with Johnny I've to be build what may be like an iPhone killer, right? Mark.

You've seen Apple go down this road before, the company that Apple detests more than any other. If you were to take Apple executives in a room and say "Who do you hate the most in the whole world?" They would say Qualcomm. When the 5G transition happened five years ago, Apple was at an inflection point like they are today with AI. Are we going to partner with Qualcomm who we detest?

Or are we going to miss out on 5G and risk really upsetting customers and losing market share? And so they bit their tongue, partnered with Qualcomm, and behind the scenes, they've been working on a replacement for Qualcomm, and they've just started rolling that out. So you'll see something happen similar with AI, I believe. Pretty wild stuff. All right. Thank you, as always, Mark. We really appreciate it. Mark Gurman, of course, joining us here with the latest on Apple. As we mentioned, Mark also reminding us the stock was up about 2% here yesterday.

at the close on his reporting. The stock is down 18% year to date, but read all about it, all the details. Mark, again, a Bloomberg exclusive on Apple joining us. Mark is BN Managing Editor for Global Consumer Technology joining us out there from the West Coast.

At GSK, our focus is on doing the right thing for patients. We believe they should be free to focus on doing what they love, especially when they're living with a disease like cancer. That's why we focus where we can make the biggest difference matching the right treatment with the right patient.

At GSK, we're pioneering advanced technologies like antibody drug conjugates that precisely target and attack cancer cells. By uniting science, technology, and talent, we work tirelessly to stay ahead of cancer together. Visit gsk.com to discover more.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? Financial services and generosity programs are combined to help you build the financial roadmap for the future.

while also creating opportunities to give back along the way. Visit Thrivent.com to learn more. Thrivent, where money means more. For enterprise organizations, managing all your food needs is a tall order. But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants.

all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting. Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast.

Can you believe it was about a week ago that we were focusing on the Middle East and the U.S. strike on Iran? Yeah.

It was pretty intense. I actually heard Tim go through the whole timeline on Friday, which I thought was a fascinating replay because we're right back to where we started, right? Oil shot up to $81 a barrel on Sunday night, and we're back at like $67 right now. Yeah, I'm just like kind of amazing the trip that we've already taken. And here we are today talking a lot about what's going on in Washington. We also had the NATO meeting of leaders last week.

The Middle East tariffs, military spending and the Russia Ukraine war were certainly some of the things that came up there. The war between Russia and Ukraine, it is now in its third year. Ukraine saying Russia fired a record five hundred thirty seven missiles and drones in a massive attack overnight. We also had a headline just a little while ago, a story crossing the Bloomberg that President Trump will sign an executive order saying

Today, terminating the U.S. sanctions program against Syria. That is according to White House spokeswoman Caroline Leavitt. So a lot going on geopolitically. We wanted to broaden out a little bit today. So delighted to have back with us Ed Price, former British trade official, now non-resident senior fellow at NYU, New York University. He has advised members of the European, also British parliaments, a former British trade official.

And he writes often about politics, economic policy and more. He's with us remotely from upstate New York. Ed, good to have you here with Matt and me on this Monday. I want to jump right to there's so much going on. But you write in Barron's president Barron's excuse me, President Donald Trump's efforts to reshape the nation have roots in Richard Nixon's unfinished presidency. How so? So, well, hi and happy Monday.

It's because of two dates, 1971 and 1974. 1971 was, of course, the Nixon shock, which was effectively the transition from a dollar that made reference to gold to a dollar that didn't, which is fiat currency. And 1974 is when Richard Nixon's presidential career came to an end.

Of course, in that year, he resigned after Watergate. And so what I mean by that is that the two underlying currents behind today's news, I would contend at home, are effectively a dollar story and a fiat dollar story. And on the other hand, the centralization of presidential authority and power that Nixon attempted and failed at, but that it seems Trump so far has had a better run at.

Right. Nixon said if the president does it, that means it's not illegal. And Trump has certainly said that in various ways over the past eight years.

What about Nixon's resignation? I mean, it seems that Trump has gone the other way, right? Nixon was caught doing something illegal and kicked and screamed and left. And Trump has been sort of kicking and screaming and and turning it into something that was OK. If you look, for example, at January 6th.

Yes. January 6th was egregious, and yet it stands. And I think that that hints at how if Watergate happens today, nobody would blink. Right. I mean, somebody busting a safe open and lying about it simply wouldn't make the news. Not even blink. I mean, they would celebrate it. Right.

They probably would, depending on their political views. I would caution everybody, including myself, because I'm so guilty of this, of always sort of looking to Trump as the independent variable in all cases. Well, I want to jump in for a moment because I was just thinking as you were talking, what you were saying, is it more about the U.S. public has changed and that they wouldn't

Well, ultimately, American politics are a subfunction of the American people, as you rightly point out.

And every couple of years we have a major election and the views of the people are thereafter represented in our government via those elections. So, yes, I would say that the American people have moved from, for want of a better word, a puritanical view of the world to something a little less puritanical in, say, the last 20 or so years.

But it's also a function of the Supreme Court, because as Matt just mentioned, when Trump says that his own version of if it's not if the president does it, it's not illegal. The Supreme Court has effectively said that for him, too, when it ruled that anything within his official remit is not subject to prosecution. So there's a there's a shift, I think, in the presidency, the people and the Supreme Court.

You know, I wonder how you feel about the in a sense, the state and local tax deduction debate as an as an outsider looking at the balance that the U.S. founders intended between state and federal power.

My reading of this, because admittedly, I don't like paying this much money, is that it's federal overreach, undue federal overreach to cap the state and local tax deduction because they're impinging on states' rights to sort of taxation autonomy. But no one else seems to talk about this at all. Do you see the power shifting to Washington and away from state capitals?

I do, as a broad theme. And I know you enjoy paying taxes, Matt. So I'm sorry to hit that. I'm sorry to hit that's an ongoing problem for you. Yes, there is a centralization of power in the American body politic that is one theme that I think Nixon introduced, perhaps,

And that people like Dick Cheney tried to theorize with the with his vice presidency and the unitary executive. But there's another theme pushing back at that, which is, as you just mentioned, states rights, liberty, individual rights and so on. And these two strands are bumping up against each other constantly in American history. But it seems that in 2025, they're bumping into each other with ever more friction.

You know what I wonder, too? I mean, the U.S. is by far still the largest economy in the world. And I know that is the current situation. Those mantles can change. But it is still significant, even significantly still above the second largest, which is China. So I understand that its prospects could be dimming based on the actions of the current administration. At least some might say that.

But I do wonder, because of that and still having the most liquid markets or, you know, you think about the Treasury market, still very liquid. And I know you've got some very significant thoughts about the diminishing of the dollar. And we saw the dollar eyeing its longest monthly slide since 2017 as we wrap up the month of June. I mean, does that just by size alone, Ed, though, continue to make the United States a pretty dominant presence there?

in the global economy and not just economically, but politically? Well, yes and no. I mean, it's not just a monthly slide. The dollar has had its weakest start to a year since 1973, losing over 10 percent. I read that in the FT this morning and 73, I think it was 15 percent. So there are signs in the data and anecdotal reports of a weakening demand for the dollar. But

But that's a double edged sword because as you rightly say, the US is present in the world. It is primarily present through the dollar. That was Nixon's decision. He was faced with the choice between continuing to supply the dollar as accords global demand and that required a fiat currency or not and pulling back into sort of a dollar supply that would be more appropriate for the US economy. He chose the former.

But that's good until it's bad, right? And we don't know the horizon at which investors, other countries, sovereigns, pension funds, central banks will really take a look at the dollar itself and say, we don't buy it as a store of value anymore because it's oversupplied.

So that oversupply does keep the global economy ticking. It keeps Uncle Sam's presence all over the world. But there is a day not too far in the future where inevitably a preponderance of people will really scratch their head about whether the dollar is actually worth what it says it is.

I will say that if you back out and look at the dollar as measured by either the DXY or the Bloomberg dollar index over the last, say, 25 years, we're still well above the average and at relatively high levels. But I see this in in treasuries as well. You know, as Fed Federal Reserve independence is threatened and maybe Donald Trump can't do anything to Jerome Powell. But Paul Tudor Jones told us last week that.

He expects Donald Trump to put the yesest yes man in charge of the Fed as soon as he can in 2026. The market doesn't care. They're still buying treasuries and the 10 year yield is back down to four and a quarter. Well, I guess it's like a dualism, isn't it? Because while the good times are rolling, the good times are rolling. This is Hyman Minsky. But as they're rolling, the bad times are storing up.

And if people still look at the dollar and say, everything's tickety-boo, we'll keep buying it, it's still the best game in town, then de facto it is because it's reflexive and that's what they're doing and they're creating their own reality. But I mean, we would be very silly to look at Trump's antics with regard to Jerome Powell and see anything other than an assault on central bank

independence. And frankly, if I was in the Fed, I'd be hopping mad because they've just pulled off a soft landing. Admittedly, they haven't, you know, they haven't got inflation under control in a way that they might like, but they did a pretty good job with soft landing. And then along comes so-called Liberation Day and all these other announcements that are really sending the, sending minds racing as to what the future of US economic data is. But I can see your point. The dollar is the dollar. It is doing well now. It will continue. But at some point,

Something's going to happen. One thing I do want to ask you and is still happening now in its third year is the war between Russia and Ukraine. Ukraine saying that Russia fired a record 537 missiles and drones and massive overnight attacks. It keeps going on. And I always get worried a little bit, Ed, you know, as we kind of run from the shiny news.

new old thing to the other shiny new old thing and we kind of are doing that a lot especially i know in terms of our coverage sometimes it's domestic news sometimes it's geopolitics trade tariffs um top of mind for you as we continue to see this war unwind um and it does feel like the world is growing a bit wary in terms of supporting it yes um this war was putin's choice the fact that there is a war in ukraine was putin's choice

The fact that the war continues is not his choice. It's the selection of other countries. It's been the selection of Iran that helped him build his own domestic drone program. It's been the selection of China and North Korea, who have respectively helped him with materiel and now men. And I'm afraid to say that it's also the selection of the United States and Europe.

Because we were in a position earlier in this war to take a different strategic approach to provide long range weapons, for example, to Ukraine, perhaps even to send peacekeepers. I know I'll get some emails for having said that on your show. But it's the it's an international agreement to let this thing continue and to let Ukraine bleed out.

And I, for the life of me, don't understand why, A, Biden accepted the nuclear threats and framing of Putin, and B, President Trump doesn't seem to want to end it the way he could. We never have enough time. Hey, great to check in with you. Ed Price, former British trade official, non-resident senior fellow at NYU, joining us on this Monday.

This is the Bloomberg Businessweek Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130.

Just want to mention shares of HPE, Hewlett Packard Enterprise rallying. In fact, top performer in the S&P 500, followed by Juniper, the second best stock in the S&P 500. This on news that the Justice Department settled its lawsuit challenging Hewlett Packard Enterprise's $13 billion takeover of Juniper less than two weeks before a trial was set to start. The deal requires the combined company to sell HPE's instant-on wireless networking business and auction off

a license to Juniper's competing missed business. So just wanted to lay that out. We're watching that. There is a lot overall though going on at HPE, including like many companies, I should say, in the tech space. It also includes a focus on supporting the big build out that is artificial intelligence. So let's get into that.

with our next guest. With us is Trish Damkroger. She is Chief Product Officer, Senior Vice President and General Manager of High Performance Computing and AI over at HPE. She joins us from Portland, Oregon. Trish, by the way, former Deputy Associate Director of Computations

at the U.S. Department of Energy's Lawrence Livermore National Laboratory. She led a group of more than 1,000 engineers and scientists focusing on supercomputing efforts. Trish, good to have you here. A lot to get to. I want to ask you, though, anything you can share with us in our audience, our Bloomberg audience, about the news today about the Justice Department lawsuit being settled. The stock is up in a big way. Just big, broad macro. Anything we should know?

I just, we're happy and I'm sure more will be coming out. Oh, okay. To be continued. All right. Look forward to that. Let's talk about your world and what's going on in AI. First of all, set the picture in terms of what you guys are seeing and your understanding of what's going on in certainly kind of the supercomputing LLM world. How much the AI demand and ramp up

is. How would you describe it today? How has it changed in the last few months? Is it more? Is it less? Is it the same? Give us some kind of context. Yeah, so I think over the last two years, we've seen this huge growth in interest in AI, especially the large language model builders. And we all know who those are, you know, the Antropix, the OpenAI, the Groks. So we've definitely been seeing that. I would say that

I wouldn't say that we've had a market increase over the last... It's been kind of a very steady growth rate of, you know, anywhere from, depending upon the segment, of 40% down to 20%. So...

Lovely growth for this market, people building up the infrastructure. But interesting. So you don't see massive. Are you saying you don't see growth in adoption of these platforms? Do you not see your colleagues using them like exponentially more for work?

So I definitely see that. Yes, I think that the enterprise market is still trying out a lot of this, but on average, they're saying about five hours per week people are using them for the repetitive tasks. I mean...

I definitely use it for help with email and transcription. And so a lot of those repetitive things, uh, I still think there's some killer apps that will be coming along that, um, we'll get more widely adopted. What I see the main spend right now is the tier one and Neo clouds that are spinning to develop the models. So does that mean, okay. And forgive me, I'm going to bounce around a little bit, but, um, Salesforce CEO, Mark Benioff, uh,

to our own Emily Chang for one of the episodes of The Circuit. And he said that AI is doing 30% to 50% of the work at Salesforce and just talked about how much work is being done. I feel like there's momentum around it. Do you think it's not going to be as dramatic in terms of the impact on workers in the workforce? You know, that's a great conversation. And I've had it with many different segments, you know,

when we talk about this I do think it's going to impact certain areas more and more right those um you know even as my daughter who's a software developer right is she going to be out of a job for those entry level we're still I mean AI is now helping her code not replacing her

And will it come to that? Maybe in maybe five years or something, but we're still just, it's definitely an aid and not a replacement for a lot of the work that we're seeing.

I do think more of the manual labor AI will definitely start replacing that and is replacing that. But in terms of your job, you're in charge of high performance computing effectively. And I guess the idea here is that HPE has a.

a supercomputer or some sort of computing system that is more efficient than others and you know because as carol says we talk about the energy usage of this all the time people are like wow you know one server um uses as much energy as atlanta um you're working to try and cut the energy needs by making your systems more efficient right right so let's just go back um

HPE acquired Cray over five years ago, and Cray is the leader in supercomputing. So we have the top three fastest supercomputers in the world. El Capitan is an example at Lawrence Liverman National Lab where I came from. So these are great examples of very dense parallel compute. It just turns out that AI,

needs the same exact compute. Put us in a really good place because we've been doing this for 50 years and we've been doing liquid cooling for 50 years and have a ton of IP in this space and truly the experts in the world. So we have taken that expertise and we are helping it to accelerate the infrastructure build out of our customers.

Getting them to where with our 100% fanless direct liquid cooling, that means everything's cooled, not just the GPUs and CPUs, but the switches, the memory. Every component is cooled. That reduces the energy needs by over 90%. So that's a huge win for, as you talk about, the increased need of power.

We're talking gigawatt data centers, not megawatts, and what we can do to help our customers reduce their power bill. And in terms of development and constantly looking to create products that make this much, much more sustainable, I'm assuming you guys are seeing that it'll even be better, I don't know, in the next year, two years? Talk to us about that kind of evolutionary process, because it does kind of blow my mind that I feel like the stories went from

AI companies and chat, you know, chat GPT and so on and so forth to all of a sudden all the power demands, as Matt mentioned too. And it's gone to, okay, so how do we, how do we make it happen? I mean, alpha bits, Google agreed to purchase 200 megawatts of power from Commonwealth fusion systems plan first commercial plant, which is expected to begin delivering electricity to the grid in the early 2030s. I mean, these guys are thinking, okay,

not about today, next week, next month, but what power they're going to need, you know, five, 10 years from now. And, you know, I was at Davos a year and a half ago and I came home and like, babe, we've got to invest in small nuclear reactors. I mean, it was so clear that that was going to be where everything needed to go. But when we look at that, we're also bringing in

our expertise, so new technology to kind of help. So one of the things is just power management. So through software, turning things off when you don't need them, you know, just basic management monitoring is going to be core and what is needed. The other thing is we have are working with different companies to look at heat reuse. So taking that

the hot water that comes out of your supercomputing and using it to heat buildings. We do this with a number of our customers. We're also doing some... That is cool. That's very cool. So you basically use the energy. Yeah. After you've cooled the system, you use the energy that's essentially left over to achieve some other tasks like heating the building. Right. Right.

That's happening up in Lumi in Finland. We're working with a company in Quebec and they're growing tomatoes in the greenhouse with that energy. So this is, I think, going to be

a great opportunity to not, you know, just maybe waste that energy. We're also looking, we're working with NREL, a department of energy lab to do R&D of what more can we do? So we have some strategic programs. And then a lot of our customers are also using the supercomputers or AI machines to look at future. Like we work with this company

small startup in the U.S. that's looking at how to use AI to make, to get small nuclear reactors or nuclear reactors to the market faster by decreasing the needs of the regulatory, not the needs, but how to get through that system faster. Or some of my favorite stories are from the supercomputers where there's the National Ignition Facility at Lawrence Livermore National Labs where they've used

AI to come up with the design for the pellet for fusion energy, which could be a holy grail of energy moving forward. But a long way off still. Yeah. You know, I mean, you talk to different people, but yeah, that one's going to be longer. But definitely, I think the small nuclear reactors, micro nuclear reactors are much

closer in yeah and then there's you know different different compute whether you talk about quantum computing and those kind of things that i also think are a little bit further out but maybe in between that fusion and the nuclear it's cool stuff a very cool stuff i'm actually what positively surprised you know when you said when carol told me she's like we're going to talk about the energy needs of ai and i was like oh god but this is really fascinating stuff i'm so glad we had you on

My pleasure. I love talking about this. Yeah, we can tell. We can tell. Come back soon. I really appreciate it. Okay. Trish Damkroger, she is chief product officer, senior vice president and general manager of high performance computing at AI of HPE. That's serious stuff. Solid German name too.

At GSK, our focus is on doing the right thing for patients. We believe they should be free to focus on doing what they love, especially when they're living with a disease like cancer. That's why we focus where we can make the biggest difference matching the right treatment with the right patient.

At GSK, we're pioneering advanced technologies like antibody drug conjugates that precisely target and attack cancer cells. By uniting science, technology, and talent, we work tirelessly to stay ahead of cancer together. Visit gsk.com to discover more.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? Financial services and generosity programs are combined to help you build a financial roadmap for the future while also creating opportunities to give back along the way. Visit Thrivent.com to learn more. Thrivent is a program that helps you plan your finances for the people, causes, and community you love.

Thrivent, where money means more. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube.

All right. So-called big and beautiful. But what we do know is that it is indeed a massive tax and spending package, a linchpin of President Trump's campaign promises. It's making its way through the congressional process amid Republican internal fighting and Democrats launching attacks to exploit the divisions. Do you want to point out that last night, Republican Tom Tillis said,

He warned Republicans were at risk of a backlash by failing to keep President Trump's health care promises. The Congressional Budget Office estimates that 11.8 million people could lose health coverage over the next decade as a result of the bill. Here's Senator Tillis. I'm telling the president that you have been misinformed.

You supporting the Senate mark will hurt people who are eligible and qualified for Medicaid. We're going to make sure that we fulfill the promise, and then I can feel good about a bill that I'm willing to vote for. But until that time, I will be withholding my vote.

All right. A little heated there. That, of course, North Carolina Senator Tom Tillis last night on the Senate floor. Whoever said governing was easy? Let's get more this process. What's next for President Trump's marquee piece of legislation? Joining us is Bloomberg News congressional reporter Eric Wasson. He's up there at the U.S. Capitol in D.C. All right, Eric, where are we in this process? That's already been a bit long in the tooth.

Well, since 9.30 a.m., Democrats have been throwing amendments at this bill to try to highlight the divisions among Republicans. None of the amendments are succeeding, nor are they likely to. But it will make Majority Leader John Thune's job of wrangling what are really eight

key holdouts for the bill even harder. We have Susan Collins and Lisa Murkowski, sort of the moderate wing of the party, who are very concerned about the cuts to Medicaid, food stamps, and renewable energy. And we have another group, Rick Scott, Ron Johnson, Cynthia Lummis, and Mike Lee, who are conservatives and want much deeper cuts to Medicaid. They have an amendment that would potentially remove 20 million people and save another $350 billion in order to cut the federal match

for Medicaid. That's an amendment that's going to be brought and it's an attempt by leadership to get them on board. It's not clear what would happen if that does fail, if the likes of Susan Collins, Murkowski and the Democrats bring it down. So Thune has his work cut out for him. We're expecting this bill to go late into tonight before it can pass. And then there's an open question of whether it can pass the House. We know Speaker Mike Johnson's been meeting with President Trump. There are people on the right and left

of the GOP in the House that are worried about the Senate bill. You can very well see what I've been calling a hot tax summer of the bill bouncing back and forth between the chambers throughout July. I just don't understand how this gets through at all, to be honest, Eric. I mean, everybody seems so sure that even though people have issues on both sides, it's going to pass. But, you know, on the SALT caucus, how could they...

and still expect to win anything ever again in New York, New Jersey, or California. And then in terms of deficit hawks, I mean, Scott Besson was on Bloomberg Television this morning saying he's a hawk, but they're going to have to raise the deficit ceiling dramatically.

Yeah, well, two issues there. The SALT caucus mostly has capitulated already, except for Nick Lelota. The rest of the SALT caucus is on board with this deal. It's a $40,000 cap for five years instead of permanently. And it did basically allow or sort of bless a workaround by some path through businesses in order to claim unlimited SALT. That's the deal right now. Nick Lelota is dug in as a no vote. And that really matters because of the slim majority in the House. We already have Thomas Massey

a libertarian from Kentucky who's a dedicated no, Nick Lalo to add to that. That really makes the math very hard for Mike Johnson, the speaker, who could probably only lose three or four people depending on Dem absences. As far as the deficit hawk issue is concerned, we saw a very interesting development here in the Senate where they changed the rules essentially to allow a new form of accounting that would count current policy as the baseline for measuring bills. Basically, they're changing the measuring stick

midway and calling the extension of the Trump tax cuts free, costing zero dollars instead of the 3.8 trillion dollars it would cost, while at the same time including a bunch of temporary tax breaks like the SALT deduction, like no tax on tips or overtime. This is basically creative accounting and it seems to be winning over at least the votes of most of the deficit hawks in the party. But it doesn't change the need to raise the debt ceiling, right? Because what you're talking about is an accounting gimmick

at the end of the day we're going to have to spend more money right yes the distilling has to be raised a lot of that's money that's already been appropriated not directly caused by this bill it's going to be raised by five trillion dollars under the senate bill and something has to be done to avoid a u.s payment default as soon as august uh you know there are amendments that are pending from mike lee and others that would raise it as little as 2 trillion or even 500 billion

I don't think that's likely to pass because basically Republicans and Donald Trump have concluded they need to raise this debt ceiling to get them through the midterm election, to not deal with it again right before voters have to go to the polls. All right. So we're going to dig into this a little bit more in just a moment, but I want to just put it out to you, Eric. I mean, it's so easy as we cover something like this to get

you know, caught up in the process, the congressional process and the fighting and that kind of stuff that's going on to get this massive legislation passed. Having said that, you know, who wins, who loses? Rich, poor, big companies versus small, North versus South, blue versus red. I mean, does America come out better on the other side of this? It doesn't sound so if we're going to have a much bigger deficit.

Well, I can point to the the Yale Budget Lab, which is very credible. It says it's basically a very regressive bill. You're seeing the net income of poor people, people who depend on Medicaid and food stamps going down, with the net income of the very rich going up. This is a key talking point for Democrats, and they're hoping to make political gold of it in the next election. Republicans, on the other hand, say that, look, most of Trump's tax cuts are going to expire.

If you don't do anything, if there's just gridlock, you see a $4 trillion tax increase that would hit the economy, which is already experiencing turbulence from Trump's tariffs, etc. So there's an argument to be made there on either side. All right, we're going to leave it on that note. Listen, we so appreciate it. Of course, Bloomberg News congressional reporter Eric Walson with us from the U.S. Capitol in D.C. This is the Bloomberg Businessweek Daily Podcast.

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