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Ready for another dose of mystery and mind games? The Hulu original series Nine Perfect Strangers is back for an all-new season. This May, a new group of visitors with mysterious connections to each other journey to an opulent healing retreat.
Subjected to an intense and unorthodox form of therapy and wellness, they peel back the layers in a series of shocking twists and revelations. Starring Nicole Kidman, the new season of Nine Perfect Strangers premieres May 21st, streaming on Hulu. Bring in show music, please.
Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Been stuck on a runway recently? The U.S. air system is 3,000 air traffic controllers short. Sean Duffy, Transportation Secretary, says the mess we've seen at Newark Airport is just the tip of the iceberg. We're using, you know, 1980s-esque equipment. We have radar that date back to the 70s. The systems are really old. They should have been updated a long time ago.
And investment at birth. Senator Ted Cruz has a pitch for a universal savings account. That investment account, the federal government will seed with $1,000, but that account can receive every year up to $5,000 in contributions from friends and family members and from employers. He's partnered with a big name in Silicon Valley in tech investment, Altimeter's Brad Gerstner. This is every town, every urban block in America, every child in America receiving
Plus, House Republicans inch closer to a tax plan. President Trump touches down in Riyadh, Saudi Arabia, and he's greeted by, well, everyone. Elon Musk, Udias Jensen Wang, Ray Dalio is there, also Palantir's Alex Karp. He's greeted on the airport tarmac in Riyadh by MBS. All of that today and much more. It's Tuesday, May 13th, 2025. Squawk Pod begins right now.
Stand back, keep by in three, two, one, cue, please.
Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. And the gains that we saw yesterday were incredibly impressive. You're looking at the highest levels for many of these markets, the biggest gain since April 9th. And all three of those major averages closed not only above their 50-day moving average, but also above their 200-day moving averages.
The Dow up by more than 1,100 points. It was up by close to 1,200 points yesterday. It was a gain of 2.8 percent. The S&P was up by about 3.25 percent. And the Nasdaq was up by more than 4.3 percent. In a bull market. Yeah. In fact, the S&P is less than 5 percentage points from its all-time high. The Nasdaq is up 24 percent from the low. So, crossed into...
Wow. Ding. That was like a bull market. That was a bull market ding. From the computer. There you go. Treasury yields were sharply higher yesterday as well. You can see this morning that the 10-year is sitting at 445. The 2-year is just below where it was yesterday, 398. Watching those very closely, too. And I think the 30-year Treasury is a little bit lower than the 20-year Treasury at this point, too.
Can we agree that lowering interest rates might not have been a good idea? Not until we see the CPI. It's off the table, effectively, from the market's perspective for July. It's got nothing to do with the 10-year, I don't think. And the oil's back, what, 61 again. Yeah. Do you think it would be a good idea? I certainly don't think we take it off the table.
No, but you think doing it two months ago would have been a good idea? It wasn't two months ago. It was last week when the FOMC met. Right, but I'm saying the effort began two or three months ago. Right, jawboning to try and have rates come down. That's when the EU was cutting. I still think it's more likely than not that for someone who was so worried about the toothpaste being out of the tube and killing the economy, I'm surprised you don't want to cut rates.
Especially if inflation. I think you've got to wait. And I think you've got to wait. So you don't think tariffs killed the economy then with all the uncertainty and the consumer confidence? Apparently not.
Apparently not. Look at where we are. That's good, then. Business leaders have been mixed on their reactions to this. Ken Griffin was saying yesterday that he thinks inflation is still the big issue, but you have other business leaders who are very worried at this point still. I think Austin Goolsbee was just saying this morning that he's still worried about the economic impact of some of these things, too.
President Trump arriving in Saudi Arabia for the first leg of his trip to the Middle East. In just the last few minutes, we've now seen him shaking hands with Elon Musk, videos Jensen Wang, Ray Dalio is there, also Palantir's Alex Karp. He was greeted on the airport tarmac in Riyadh. That's freaking horrible. By MBS, the Saudi crown prince. Meanwhile, the Saudi U.S. Investment Forum, Treasury Secretary Scott Besant hailed progress in the U.S. trade talks with China.
I think what we were able to establish as President Trump and the administration began the tariff program, we had a plan, we had a process, and what we did not have with the Chinese was a mechanism. So the vice premier and I now call this the Geneva mechanism to prevent any misunderstandings.
And we've got some additional news now on the thaw in U.S.-China relations following the weekend trade breakthrough. Bloomberg now reporting that Chinese officials have told domestic airlines they can resume taking deliveries of Boeing jets.
Those had been paused amid tariff tensions. Another development, a White House executive order saying that the U.S. will cut the so-called de minimis tariff on low-cost shipments from China that help sustain businesses like Chan and Temu. Those tariffs hadn't ramped up to 120 percent, but they're going to come down now to 54 percent starting tomorrow, plus a $100 flat fee. I think they wanted you to mention that that was Sam Altman. Yeah.
There's a receiving line that's taking place between President Trump and Sam Altman. Oh, right then. Sam Altman was there just a moment ago. There's the publisher of the LA Times right there.
Having a conversation with both of them. By the way, I was going to say Scott Besson, I think, was in conversation with Dina Powell this morning. Did have a conversation, yeah. I believe that that was the... Maybe Roger Altman, too. I think was potentially on the stage. So a whole bunch of folks who obviously made it off there. What Roger said? I thought they said... Sam Altman. Oh, Sam Altman. I think we were referring to Sam Altman, who's out there, who's obviously raised an enormous amount of money in the Middle East recently on behalf of OpenAI.
And Trump's trying to raise a trillion. And even the 600 billion that MBS already promised is at $60 oil. They're going to run a, it sounded quaint, they're going to run a $70 billion deficit. It's quaint. It's like 70 billion. And by the way, we should mention that that's Patrick Soon-Shiong.
Who's in conversation right now. Who made, you know, became a billionaire in the medical industry. Then bought the LA Times. Right. In a bit of a firestorm around the LA Times recently. Yeah, cleaned it up a little bit. Actually, to cover both sides of the aisle. Some of the politics and areas in conversations with both of these. What a concept to present both sides. It's a big step for the LA Times and any newspaper nowadays. Thank you.
House Republicans unveiling tax proposals that they want included in the large bill that President Trump is pushing to help fulfill promises from the campaign trail, the House Ways and Means Committee, floating breaks for tips, tipped income and overtime pay, and a proposal to permanently enshrine the tax reductions from President Trump's first term. Potentially trillions of dollars in lost revenue could result from the plan. It could be offset by restrictions on Medicaid, which were
If you read the journal, it was the worst fear of the writers. The op ed page of the journal surrenders. GOP surrenders on Medicaid. They don't do much at all. Yet you're still going to get hammered. The Republicans will by Democrats that they're, you know, cutting and slashing Medicaid. And they really didn't do very much at all. So I don't know how they get to 880 billion dollars.
Still unclear as whether Republicans from higher tax states are even going to accept this proposal to increase the state and local deductions of the $30,000 on salt from 10,000. Later in the show, we're going to speak with Texas Republican Senator Ted Cruz about the idea to create what could now be called MAGA trust accounts for children. I don't think you're giving them a Bitcoin, but they're giving them some money at the
There were at least four New York area Republicans who were opposed to the 30,000 limit. And with the very slim majority that the Republicans have in the House, we'll see how this takes place publicly. Or if they are forced to cave under pressure from the president, I think some of them see it as an issue that they won't get reelected if they don't push for higher limits. Yeah. Yeah.
Breaking news, UnitedHealth says Andrew Witte stepping down as CEO. Saying for personal reasons, Board Chairman Stephen Hemsley is taking over.
as CEO and will remain chairman. Witte will stay on as a senior advisor. The company has suspended its 2025 outlook, saying medical expenditures are now expected to be higher than it had anticipated. UnitedHealth says it doesn't expect to return to growth in 2026. I think Witte's
What did we decide? It's 60 years old. And by the way, the losses you're seeing right now, down 4.5%, are on top of the declines that they were seeing yesterday during the session because the pharmacy benefit managers are really the ones that took this on the chin yesterday after the president's executive order came out on the drug pricing because it looks like the pharmacy benefits managers are the ones that he was kind of targeting most heartily. I could be wrong. Did they say they...
they don't believe that they're going to be profitable or return to growth? Or they said that they do believe. Oh, it does expect a return to growth. I do believe that they do believe that they're going to be returned to profitability in 2026. They're just not providing the guidance. I mean, the sort of bigger guidance. Okay.
Or the more minute guidance is maybe the way to say it. It was a couple weeks ago, remember? The Dow was down 800 points because of United Health. It was down like 100 points or something. So they miscalculated on something and then you had...
And Scott Gottlieb talked to us about it, just the idea that the expenditures are going to be much more than they had calculated for, which is surprising. If you look up United Health CEO, Andrew Woody doesn't come up. It's all about the poor guy that was... Right. By the way, he's saying he's leaving for personal reasons. Think about the stress of what the last year must have been like. Right, right. Right.
AMC unveiling a new plan now to bring people to movie theaters midweek. It's going to slash the price of a movie ticket in the U.S. by half. It's going to take place on Wednesdays, so the discount will begin July 9th. Last week, AMC said first quarter admissions fell, revenue fell, I should say, 11% year over year. CEO Adam Aaron is saying that the poor box office performance was an anomaly that has already corrected itself.
I don't know if people are going to go on Wednesdays, unless you're talking about over the summer when kids may want to go. Rainy Wednesdays. A rainy Wednesday, absolutely. But you've got to get a great movie going and a rainy Wednesday. A great movie was the problem, I think. Well, I'm looking forward to Mission Impossible. I am hoping that Tom Cruise is going to bring back the theaters one more time. Watching some of the stunts, my legs get shaky watching the weird things.
He's not afraid of heights. But this one's supposed to be amazing. It's long, though. So the biggest problem, actually, with this film for the theaters is it's almost three hours. So the churn in terms of how many times you can schedule it becomes an issue. A little easier in the multiplexes, like AMC, though. You can have it in two theaters. Tease will be next.
Coming up, Senator Ted Cruz on the congressional push to create investment accounts for American newborns. And my hope is that this will be a reality for every kid in the country.
He's supported by hedge funder Brad Gerstner, who joins us from the Saudi U.S. Investment Forum, where a host of corporate leaders are meeting with President Trump and political leaders from around the Middle East. It's really important that we accelerate American technology around the world. There's incredible enthusiasm among the venture capitalists, the investors, the founders, the CEOs who are here. SquawkPod will be right back.
The country's divided, and folks just don't agree on much these days. But one thing we can all agree on? Teachers bring their all to their students.
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Welcome back to Squawk. Our next two guests are spearheading an effort to establish a universal savings account for every American starting at birth. Joining us right now is Senator Ted Cruz of Texas. He's the chairman of the Commerce Committee. Also, Brad Gerstner, founder and CEO of Altimeter Capital. Good morning.
To both of you gentlemen, but I want to start with the senator, if I could. We've talked about this with Brad and I believe we actually talked about with you as well, Senator. This is now past a new step. Where are we in this? How's it going to work? How much is it going to cost the American public and how much are young kids, hopefully when they get old, going to get from it all?
Right. Well, this is a very exciting initiative that is moving forward because the House Ways and Means Committee just yesterday released the initial draft of their tax bill. And they included within it the idea, Invest America, that Brad has been working on for years, that Brad and I together have spent over a year working very hard to push it forward. The idea is simple.
which is that we're going to create an investment account for every newborn child in America at birth. And that investment account, the federal government will seed with $1,000, but that account can receive every year up to $5,000 in contributions from friends and family members and from employers.
and those contributions grow on a tax deferred basis and they can take it out after they turn 18. What it does is it takes every child in America and it gives them number one, the miracle of compound growth, the ability to accumulate wealth
which is transformational, but number two, it makes them stakeholders. It gives them a stake in the American free enterprise system. And you asked how much they can save. If you have a baby that is born this year that starts with the initial $1,000 seed contribution over the next 18 years, if $5,000 a year is contributed at 7% growth, by the time they're 18, they have $170,000 in this account. By the time they're 35,
they have $700,000 in the account. So I believe this will be a transformational policy. It's something Brad has built a big community of leaders throughout the business community who are enthusiastically supporting it. I've been pitching it to my colleagues in the Senate, my colleagues in the House, to the President, and I think we're gonna get it done. And yesterday's House bill was a big, big step forward.
Senator, before it gets to Brad, do you think long term this would change potentially even Social Security? You know, I don't know. It is obviously not aimed at the end of life. It's not aimed at retirees. It's aimed at babies. It's aimed at children. And the way you pitched it, Andrew, is the right way to think about it. It's a 401k for kids. And think about how 401ks have changed our society. One of the really powerful things is
is I think a lot of employers, when this is passed, will find it a very attractive benefit to give to their employees to say, hey, we're going to match your contributions to these investment accounts for your kids, or we're even going to seed them just like they do with 401ks. And so I think the impact, look, by the time a newborn child is on Social Security,
all of us likely will be dead. We'll let a Congress 70 years from now worry about that. What I'm interested in is giving these kids the ability to climb the economic ladder much, much faster to accumulate wealth. And I think there's a real power
to making them investors and stakeholders in the economy so that a 10-year-old can pull out an app on his phone and say, hey, look, I own 50 bucks worth of Apple. I own 75 bucks worth of Boeing. I own 30 bucks of McDonald's. I go into a McDonald's. I'm an owner of McDonald's. That changes, I think, a young person's attitude when they're a stakeholder in our free market system. Hey, Brad, congratulations. I know this has been a long time coming.
How much is it gonna cost on an annual basis? - Well, it's great to be here today. I'm live from Riyadh, Saudi Arabia, where I'm helping David Sachs and others evangelize about accelerating American AI in the region. And so it's great to be here with you. You know, when you think about this, the leadership that Ted's providing and the House Ways and Means team has provided in putting this in the legislation is absolutely critical.
3.7 million children are born in the U.S. every year. If you seed them all with $1,000 in the S&P 500, that's $3.7 billion a year, Andrew. That's less than the cost of a single weapon system that we have in our military. So it's a tiny amount of money to get every child in America in the game, to unlock the potential.
You know, the president talks about his main street agenda. This is every town, every urban block in America, every child in America. And so we think this is a major step forward. You know, you just heard from the senator. His leadership was absolutely critical to get this on the agenda. And so we're just absolutely thrilled to see it in the first draft from the House. You know, thanks goes out to the speaker and to Jason Smith, the chairman of the Ways and Means Committee, who
But we got a long way to go. And, you know, as he said, this is a private sector program, 3.7 million private accounts. And we have CEOs over here in Riyadh right now. Jensen Huang, Dara Khashoggi, you have all signed up. They will add to the accounts of the children of their employees when we get these accounts set up. So the government's doing what it does well. It's getting it catalyzed and then getting out of the way and letting the private sector, the upside of the American economy, really drive this program.
And in terms of just how it will work, let's say, obviously, the government puts in the first thousand. Employers and others can do things. You can put in more money yourself.
What is the ability to take that money out? And is the goal, I imagine you want this to compound, compound, compound. That's why I mentioned Social Security. You know, I'd love it if that almost, you know, because people keep the money in, then they'll actually have an enormous amount of money when they retire. What's going to prevent people from taking it out? And at what point can you?
It varies depending on the version. The version that I have filed allows someone, if they choose, to take it out at 18. That if you're an adult, you can make a decision about what to do with the capital and the capital you've saved. You're right. It's much more beneficial if they keep it and save it. The House took my language and they changed it a little bit. They modified it. So they allowed someone at 18 to take up 18.
take out up to half of the amount in the account to use for what they called a qualified expense. And a qualified expense was education or buying a home or starting a business. And then the remainder they could take out at 25 or 30.
I'm not sure the precise lines that will be reached because there will be back and forth between the House and the Senate. But I think you will end up seeing either way an investment vehicle that really enables every child to get the benefits, to appreciate the benefits of compound growth. And everyone on this show understands, understands the benefits of being a long term investor and letting your earnings grow.
join your principle and grow the corpus that that is growing. And my hope is that this will this will be a reality for every kid in the country. Does this replace the 529B or would that exist separately? Because I've used 529B to to teach the same lessons to my kids. Becky, it would. And that's the 529 plan is is is one that that I'm
was actually my single biggest legislative achievement to date in 13 years in the Senate. Back in 2017, when we were passing the last tax cut, I introduced the legislation that expanded the College 529 Savings Plan so that it includes K through 12 education. And it ended up, that bill passed on the floor of the Senate. The vote was 50-50. It was one in the morning. The vice president came down to the Senate and broke the tie.
And that is still to date the most far reaching federal school choice plan ever adopted. And it lets parents and grandparents save and spend up to $10,000 per year in a tax advantaged account for education expenses. I'm a big believer in savings in vehicles and I think 529s like 401ks
and like these Invest America accounts are gonna be powerful avenues to help people save and accumulate capital and really have a stake in our system. You know, one of the arguments Brad made to me when he pitched this to me, we started talking,
last April is he said, look, look at the polling of young people and what a high percentage of young people say they're socialist and not capitalist. And one of the things I'm excited about this, it's one thing to say it when you feel you don't have a stake in what's going on. It's another thing when you have ownership, you have involvement. And so I think this is really powerful to raise up
a generation of capitalists who see the power of, wait, if I can own a little bit of McDonald's, maybe I can go and start a McDonald's. Maybe I could work and build a business. And that's really the American dream. That's what I think is really powerful about this idea.
Hey, Brad, while we got you in the Middle East with the president, I'm just curious what the reaction is there to what's happened in the last 48 hours, 72 hours over the weekend in Geneva as it relates to these tariffs.
And what, more importantly, your expectation is going forward, meaning do you believe that this is now a floor and a ceiling on what those tariffs ultimately look like? I know you've been a backer of tariffing China. Some people look at this this tariff number as that may not have enough teeth actually to get some of the other things that I think you've you've asked for. But I don't know.
What's your thought? Well, first thing I would say is Scott Besant kicked off, you know, the program this morning. And congratulations to him on, you know, on securing what I think it will be a historic deal in Geneva this weekend. Remember, you know, I came on Squawk about a month ago and I said there's a real decision. There's a debate within the White House.
There's a Navarro camp that thinks we should have $2 trillion worth of tariffs, that we can replace the internal revenue system with tariffs. And then there's the Besson camp that just wants fair trade around the world. And so it appears to me, and I think the delegates here, that Scott Besson is leading the way, that the president is achieving the goal of re-onshoring strategic industries
Without decoupling from the rest of the world, it's really important that we accelerate American technology around the world. That's what we're doing in the Gulf countries on this trip. And so I would say that there's incredible enthusiasm among the venture capitalists, the investors, the founders, the CEOs who are here. You have every major CEO in America who are here announcing big deals, whether it's NVIDIA or Uber or AMD, etc.,
And so I think it's a major step forward. I think we now have an answer to the question, Andrew, that we poised on your program about a month ago. I think when the stock market was down 15 percent from where we are today, which is, are we going to move in the direction of what I call the nuclear style Navarro tariffs? Or are we going to move in the direction of the Besant style fair trade tariffs? And I think that is now.
now clear we're going in the direction of fair trade that's good for america that's good for the global economy that's why you see the stock market bounce back so aggressively here um and so you know we've also seen all this incredible pro progress on the reconciliation bill and and let's remember invest america is an incredible part of the reconciliation bill but the key here is extending and uh and passing further reductions in
and taxes in the U.S. And so there's an opportunity here. There's a lot of work that still needs to be done, but we're encouraged by the progress that we've seen.
Hey, Senator, also wanted to get your thoughts. You've been somewhat critical. I think we've had a couple of discussions about Qatar, the Qataris over the years. They now plan to provide a plane to the president. There's some questions about the emoluments clause and whether it's going to go to his library, whether he's going to get to fly on it afterwards. What are your thoughts about all this?
Well, listen, I'm not a fan of Qatar. I think they have a really disturbing pattern of funding theocratic lunatics who want to murder us, funding Hamas and Hezbollah. And that's a real problem. I also think the plane poses...
significant espionage and surveillance problems. So we'll see how this issue plays out, but I certainly have concerns. I will say what Brad said a minute ago about the announcement, Secretary Bassett's announcement, I emphatically agree with. And in fact, the way he broke it down of two paths, one path
using the leverage of tariffs to get lower tariffs. That's a fantastic path. That's, I think, what the president is doing, which is why the market is reacting positively. There is another camp within his administration that doesn't want lower tariffs, wants to see high tariffs in perpetuity. And I think right now the president has made the right decision to go down path number one. I think that's exactly the right path to go down. Senator, the-
a higher in the brad mentioned the reconciliation bill the higher uh corporate or the higher tax rates off the table apparently we talked about that just last week i i think when you were on but uh you know the medicaid the medicaid stuff uh
Republicans wimping out, they're still going to get hammered by Democrats, even with the really anemic reforms that are in there about Medicaid. And now you got theoretically the importation wasn't as bad as people thought, but the importation of price controls on on pharmaceuticals. Do you have any comments on either one of those recent things since it happened since you were on?
Sure. So let me say several things. Number one, I'm glad the House has put out its tax bill that is cutting taxes, that is maintaining things like, for example, the House incorporated my legislation, no taxes on tips. I think that's going to be really important for working class voters across the country. I'm really grateful to see that. I think extending
the tax cuts is incredibly important for our economy. In terms of Medicaid, I think the House made some important steps forward. I'm hopeful, I think there's a real possibility you'll see the Senate stand up and be even bolder and be bolder, number one, in terms of strengthening work requirements, but number two, in terms of going after waste, fraud, and abuse. There's a considerable abuse in the Medicaid system, particularly in big blue states where you have politicians
that have taken advantage of the federal taxpayers. So I'm hopeful that this will be a back and forth. In 2017, the House passed a really good bill. It went to the Senate, the Senate made it stronger. And then we went to conference committee, it made it even stronger. I'm hopeful we'll see that same iteration. You know, I will say, Joe, in addition to no taxes on tips and Invest America accounts, there were two other big victories of legislation I was fighting for that are in the House bill.
They created a pipeline to auction Spectrum, 600 megahertz of Spectrum to make it available to the private sector. That is hugely important and will unleash billions in new investment. And they also included a version of my legislation
to create federal tax credits for contributions to scholarship granting organizations in the states. If enacted, that will be the most far reaching federal school choice legislation ever enacted. And I actually think that legislation and Invest America are likely to be the two biggest legacy items of this legislation. They're both in the House bill. And so the credit goes to Jason Smith and to the speaker who really shown tremendous leadership on the House.
Senator, we're out of time, but I'm getting a text from somebody who's watching us just to put a fine point on the airplane, because I think people want to understand if you're worried about the national security issues about that, would you be telling the president explicitly do not accept that plane? And if you were to accept it, is that something where you think the Senate might try to take action in terms of investigating things related to it?
Look, I think there will be serious conversations, especially on the security side. We've seen in the past, for example, issues with embassies in foreign countries that when we've let foreign countries build an American embassy, the walls are literally filled with bugs and listening devices. You look at the technology now.
You think of the conversations that occur on Air Force One, any nation, but especially a nation like Qatar that funds Hamas, would love to know every conversation that happens on Air Force One. So I think the security challenges there would be massive. This issue will continue to play out. I'm confident we have not reached the final resolution of it. What's your thought on the emoluments clause piece of it about being able to take the plane and keep the plane afterwards?
I think that's a question that will be litigated. It is uncharted territory, so I don't know the answer to that, but I'm sure it will be litigated. Okay. Senator, I want to thank you. Brad, I want to thank you from the Middle East. Congratulations to both of you. We look forward to talking to both of you soon again. Thank you. Next on Squawk Pod, understanding the chaos at Newark Airport. Transportation Secretary Sean Duffy says it'll take years to fix the cracks in our air travel system. We're 3,000 air traffic controllers short.
Today's issues were a long time coming. We've had this problem for 10 years, but the school that trains our air traffic controllers in Oklahoma City shut down and didn't ramp up fast enough during the COVID years. And so it's exacerbated the problem.
Okay, we each owe 15 bucks. Can you cover me? Payday can't come soon enough. Haven't you heard? With GoToBank, payday comes early. Plus no monthly fees with eligible direct deposits, which means more money for me. Wow, that sounds less like a bank and more like my new GoTo. You don't need a big bank making you feel small. You need a GoTo. Tap to open a GoToBank account today.
Early direct deposit availability depends on payer type, timing, payment instructions, and bank fraud prevention measure. No monthly fees with eligible direct deposit, otherwise $5 per month. Earn a business degree on your terms. At Capella University, our FlexPath format is available in select programs and lets you learn on your schedule. A different future is closer than you think with Capella University. Learn more at capella.edu. This is Squawk Pod from CNBC with Joe, Becky, and Andrew. Here's Becky Quick.
The work week started with more delays at Newark Liberty International Airport in New Jersey. Flights there were delayed by as long as seven hours. The FAA told the New York Times that as few as three air traffic controllers were scheduled to work last night directing planes into and out of Newark. That is well below the target number of employees, and sources told the Times that just one fully certified controller was on duty at some points.
In response to the problems at Newark, the Trump administration announced an emergency task force of experts from the FAA, Verizon and L3 Harris to address those ongoing issues. Joining us right now is Transportation Secretary Sean Duffy. He joins us this morning. Thank you for joining us. Let's just go through the basics at this point, which is.
How safe is it genuinely to be in the air, to be landing or taking off at Newark Airport? - Good question. It's safe, and that's because we have numerous redundancies in place at the FAA. So when you have issues with your telecom, we slow down traffic, which is exactly what we've done at Newark. And then even if you lose telecom, like you saw twice in the last two weeks, there's procedures in place with the air traffic controllers and for pilots
And so it's safe. But again, we have a problem on our hands in that we have an aging telecommunications system using copper wires, not fiber. And we have a shortage of air traffic controllers. This has been a problem that's been burning for a number of years. There were watchdog groups in government that gave warnings to the last administration that this was a problem. Nothing was done. And so now we have solutions.
uh... and fixes to the problems but none of these you can snap your fingers and fix they all take time and we're gonna ask the congress for the money the resources to make those fixes uh... but again it's going to be you know two three four years before we see more traffic controllers and we get an infrastructure that's worthy of america you know into our airspace united is already obviously uh...
shifted its schedule and sort of retreated in terms of how many flights it has out of Newark. That's ultimately going to impact LaGuardia and JFK. And these, of course, are international hubs. It's also probably going to put pressure on pricing, meaning that customers are going to be paying more for flights out of these out of these airports. What is your expectation over the next couple of weeks or months for those folks who have actually booked out of Newark and
whether those flights are going to ultimately get removed and pushed to other places, just in terms of, for those, and this is a news you can use question, for those who are trying to schedule things, what would you be doing? What would you be doing yourself with your own family? So I have the power to convene the airlines with the FAA to talk about, you know, the capacity at airports. It hasn't been used in 20 years. I've exercised that authority. That meeting's going to happen this Wednesday, October,
All the airlines are going to come together and see if they can get to an agreement on how they reduce their capacity at Newark. Because again, Andrew, what you want is you want people to book their flights and be able to fly on those flights without being delayed for four or five hours and then have their flights canceled. So again, I think as we get through this week, we're going to have a pretty good idea of what the capacity is. And again, if we get the agreement from the airlines, we're going to be in a place where if you book, you're going to fly.
Secretary, the FAA told The New York Times that as few as three air traffic controllers were scheduled to work last night directing planes in and out of Newark. And at some points there was just one fully certified controller on duty. There were delays of up to seven hours yesterday. How is that possible? Is that true? Yeah, listen, we're 3000 air traffic controllers short.
And it's going to take time to train up those controllers. Let me just explain one quick thing. If you have a controller who, say, works in the DC airspace, they've been in the job for 20 years, they're experienced. If you move them up to Newark, it takes them almost a year to get trained up on that specific airspace. So I just can't move controllers around the country and fill the gaps in Newark. It's a specifically trained controller that can work that airspace.
And so when we had, you know, air traffic controllers after the system went down a couple weeks ago that took leave because they were stressed out, that puts more pressure on the system. We had a few additional situations last night. And again, what we do is we will slow down traffic. You'll see delays, but safety is the top priority. And so if you don't have the controllers,
to navigate the airspace, you slow the airspace down. Or if it's not safe, you shut the airspace down. That's what we do. And so you might complain about delays, which I agree, traveling with a family in this environment is challenging. But in the end, I want to make sure you get to the place that you're going and you get there safely. I mean, traveling for business is almost...
at this point. If you're talking about delays on those levels, you can't schedule business. It's going to cut into efficiency in this area. How did we wind up 3,000 air traffic controllers short? And is there anything that could be done to bring back people that may have left or retired? Or are there mandatory retirement ages and there's nothing we can do about?
that? No, that's a great question. So, you know, we've had this problem for 10 years, but the school that trains our air traffic controllers in Oklahoma City shut down and didn't ramp up fast enough during the COVID years. And so it's exacerbated the problem. And so what I've done now is
Again, the mandatory age of retirement for a controller is 56. Most of them retire at 51, 52, 53, because they can retire after 25 years of service. What I've done is I've offered them a 20% bonus to stay on. Don't leave. They're the most experienced controllers that we have.
A lot of them, I think, just patriotic controllers are going to stay on and continue to serve the country. And then there's a lot of problems of getting young people into the academy and through the academy in Oklahoma City. We've worked through the kinks in the academy, and we're going to expand the capacity at the academy so we're going to get more controllers into the airspace.
But again, it takes a year to three years to train up a new controller to work in airspace. So this is going to be a longer term problem. Someone should have seen this coming in the last administration and try to do this supercharge. But we're left with, again, 3000 short and we're going to fix the problem as well as trying to fix the infrastructure. I don't know if you saw our press conference last week. We're using, you know, 1980s ask infrastructure.
equipment. We have radar that date back to the 70s. The systems are really old. They should have been updated a long time ago. And so now we need new telecom and we need all new equipment in the centers and towers and tracons throughout the country that keep our airplanes away from each other and keep passengers safe. On a very technical level, I know you plan to replace the copper connections between Newark and Philadelphia with fiber.
How is that going to change things immediately? Meaning meaning once that is done, what does that do? So one is going to solidify the communication lines. Right. So we have air traffic controllers that can talk to airplanes and we can get the radar feed on the controller scope so they can see where airplanes are. We already laid fiber in at Newark. It's being tested right now. Hopefully the tests are going to be done next week.
We're working on new lines that are going to connect Newark to the TRACON that controls that airspace down in Philly. Hopefully that's going to be done in the next month. But again, lay in fiber and doing these connections don't happen overnight. It takes time to do it and then to test it. And we're in the process of doing that right now. But again, we're working at lightning speed. Verizon has been a great partner of ours. They put us to the top of their list.
of the work they're gonna do to make sure that Newark is taken care of and we have solid strong lines coming in. Just one quick note, fiber's great, right? It's reliable, it's the gold standard in communication. The problem we have is it's really fast and so as fiber comes into the tower or the TRACON or the center, we actually have to slow it down because it's so fast, our systems need a speed of
of copper
So, again, it becomes technical and challenging because the speeds don't match. But, again, it's going to be reliable. We have the technology to slow that speed down so it can work with our old equipment. But, again, we have industry working with us at the FAA. And, again, I can't snap my fingers and fix it, but I think we're going to be on a good path here this week and in the coming couple of weeks getting that fiber laid and connected between the airport and the TRACON.
Secretary Duffy, first of all, thank you for taking this seriously and working quickly. Obviously, this is something that's built up over years and even decades when it comes to the equipment that we're dealing with. If Newark is the worst place in the country right now, where's the second worst? And should we expect to see this happen in other cities across the nation over the coming months?
Now, listen, so we're starting to see cracks in the system, right? It's safe, but we should heed the warnings that we see with the equipment that we use, and we should fix it. A lot of Americans fly. And so, to make sure that we have great infrastructure, that we lead the world on this infrastructure, I think is incredibly important. Newark is interesting because last summer, that airspace at Newark was controlled
by the New York TRACON, which had LaGuardia and JFK. Last summer, they moved Newark down to the Philly TRACON. And that created a number of problems when they moved it. Again, they didn't harden the connections that were necessary, and they didn't move one of the systems that are necessary down to Philly. They're pulling that information out of the Newark TRACON. This gets really complicated really quick, so I'm sorry about talking about those things.
Because of the setup when that airspace was moved from N90 in New York down to Philly, it created problems that we're now dealing with today. Had the work been done last summer up front to make sure that the lines were hardened and all the systems were in Philly, I don't think we'd be dealing with this situation. Why did that happen last summer?
Yeah. What happened last summer? Who decided to not push that through? They didn't have money from Congress. What happened? It was politics between Chuck Schumer, the FAA, the controllers. The real problem was that they weren't able to get enough controllers at the New York TRACON.
that controls that airspace or staffing shortages. And I think the FAA thought that they would have better staffing options in Philly. It was a process that was going on for a couple of years. The move happened last summer. You know, people who had judged in the FAA, you know, certified that the move should take place. The problem was they didn't do the precursor work necessary to make sure that we wouldn't have the problems that we're seeing today. But
To your broader question, we're seeing problems throughout the system. Small cracks. Yeah, where's the next worst place? I don't know. We see blips in our communication, you know, 100 plus times a week, right? The systems don't go down, but we're seeing infrastructure issues. And so, and again, that's why we have multiple redundancies in place to make sure flyers are safe.
But my call, though, is Congress has to fund a massive build
around our airspace and our air traffic control. And it's going to take billions and billions of dollars. I think we can do this in three to four years. We have to clear the permitting regulation so we can do it fast. And if Congress does that for us, again, we're going to have a system that will be the state of the art. It'll be the envy of the world. It'll be the best in the world. But I can't do it by myself. I need the Congress to partner. And by the way, this is bipartisan. Democrats and Republicans
are all in agreement. We have to find a vehicle in which they can put the money in to get it to us so we can start the work. But again, top level legislators in both chambers, R's and D's are supportive of what we want to do.
Mr. Secretary, I have one final question, which is the cost of all of this and who's going to ultimately bear it. There's an argument that the taxpayers should ultimately because it actually benefits the entire economy and all Americans benefit just from the movement that that airlines create. There's also an argument to be made that the airlines should be paying for it because they're profiting off of customers who are getting on those planes. They were also beneficiaries of some of the bailouts during covid and other things like that.
How do you see that playing out over time? And do you think the customers will ultimately pay more for tickets as a result of paying for this safety, which is so necessary? So we have general aviation that uses the airspace. We have airlines that use it. We have cargo shippers that use the airspace. And so, again, I think that that's
The Congress is going to pay for it. There was a debate that happened five years ago. Should air traffic control be privatized? What that's going to do is it's going to divide people. It's going to divide the industry. It's going to divide the Congress. We don't have time for a divisive fight.
let's fix the system. Do I think it's gonna make your tickets go up? No, but I think what's gonna happen is you're gonna have a more resilient system that is going to allow us to be more efficient in the airspace. Listen, we're gonna add on drones and EVA TOLs, these Ubers in the air. The airspace is becoming more complicated. There are more flights that are taking place. And so with this new technology,
We can make the airspace more efficient as the airspace continues to evolve over the course of the next years and decades. And what's also interesting, if we build this new system, it's like your iPhone.
The technology is or the hardware is so good you can you can update it with software updates as new technology becomes available in the airspace. We can actually build on top of what we're what we're going to what we're going to use. But what we have right now, it's like the old flip phone. You can't you can't update anything there.
Quick question. In your lane, sort of in your lane, but related, we just had Ted Cruz on the broadcast and we were asking him what he thought of the Qataris offering a plane to the president. He had some deep concerns about the national security implications and potentially the emoluments clause and other things of that sort. Do you have those same concerns?
Listen, I know the president wants a plane. I will leave that to the Congress and to the DOD in regard to the safety issues that come into play. Andrew, I've been so focused on the issues at Newark and around the airspace. That's a question I'm not going to walk into because, again, there's a lot of other elements that are at play right now. But I appreciate the question, and I hope the president does get a plane soon.
Mr. Secretary, I want to thank you for joining us in this conversation. And, Boyd, we wish you a lot of luck in all that you're working on because it affects so many Americans. Talk to you soon. Thank you so much.
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