Rand Paul on Yellen, NSA: Political Capital (11/01)

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Nov. 1 (Bloomberg) -- This week on Political Capital, Sen. Rand Paul (R-KY) talks with Al Hunt about Janet Yellen and NSA spying, former PepsiCO CEO Steve Reinemund on business and Obama, Indira Lakshmanan on Iran nuclear talks and Margaret Carlson and Megan McArdle debate Obamacare and the Virginia governor's race. (Source: Bloomberg)

. . business and obama, and the last word, the array nuclear talks.

Margaret carlson debates obama care in the virginia governor's race.

We begin the program with senator rand paul of kentucky.

Let's start with an essay surveillance, the revelation that we listen in on among others germany's angela merkel private conversations.

Is this business as usual and the you believe that president obama has known about it?

It is hard to believe he did not know.

My question is, are they tapping on the president's cell phone as well?

The nsa or the germans?

The nsa, i say that facetiously, but at the same time the words coming out of the fisa court apply to all cell phones.

Conceivably, the nsa could be spying on the president's phone.

He could be included.

I think he is encrypted, protecting himself from his own spy agency because his phone is encrypted.

But do the rest of americans have to get encrypted phones?

There are also reports that the nsa spied on communication links of yahoo!

And google.

Was that an overreach?

And should yahoo!

And google be required to release all of that?

The definition of overreach is everything the nsa has done the past several years.

We have gone too far.

The president likes to say there is a balance between liberty and privacy.

And government.

We have gone overboard.

This needs to be reassessed.

The most important question of all of this to me is this needs to be assessed, debated, and discussed in an open format before the supreme court.

It totally goes against everything our country stands for to have a secret court, pfizer, meeting in secret -- fisa, meeting in secret, there is nobody to present another point of view, and decide in secret what it applies to.

Would you like to see yahoo!

And google release what has been talked about?

Absolutely.

The patriot act took away liability protection, or gave them liability protection.

My protection of these internet companies is only as good as they believe i can sue them over.

If i cannot sue them over it, i privacy means nothing.

You have said that you want to hold up the nomination of janet yellen until you get a vote.

Harry reid says he has the votes to get a pass now.

Does he, and what kind of support can you hold her up?

Will you filibuster?

The audit of the fed bill passed in the house after 20 years of my dad agitating on this.

Every republican and 100 democrats, overwhelming bipartisan transparency bill, apparently janet yellen has been in favor of transparency at the fed.

That is all we are asking for is an open audit a year after the fact.

I think a lot of people in the middle-class america who are concerned about the revolving door from the treasury to the wall street firms to the federal reserve.

Our concern is, are any of these manipulations of money and money being distributed helping people personally, are people becoming wealthy off of policy we should know about?

How about janet yellen, per se.

Will that nomination be approved this year?

In the old days, you could hold on until forever.

Even if i filibuster and a personal fashion, i don't think so.

She will be confirmed?

In all likelihood, yes, but i want to draw attention to the fact that the fed has been held hostage by senator reid for 3 years.

We have had floor speeches that were for auditing the fed.

My question is, let's have at least a vote on this.

Some people say that if you take away any independence from the fed, which an audit would do, that it goes to congress.

That means the bargaining power and influence pressure of the central bank to adopt policies to their political liking.

If they are not doing anything untoward, there should be no reason to not look at it.

This does not affect any fed power to look act over a years time.

At the very least, the federal reserve is a creation of congress.

They are under our jurisdiction.

We are going the opposite way and all of government.

The biggest problem in all of government is giving power to agencies that are not directly responsive.

These are bureaucracies or the federal reserve.

Like dodd frank, a whole agency no longer responsible to the people.

If you got a vote on the senate floor, could you secure 51 votes?

I don't know.

Sometimes they play a game where you have to have 60. we have 25 cosponsors, one democrat cosponsor.

There is not a great groundswell on their side.

I think if you asked the american people, i think it is an issue that 70% of the mayor can people don't think it is right for a guy to come out of the treasury and make $160 million on wall street the very next year and into back into the treasury the next year.

This revolving door, we should at least know what the policy is and whether anybody is getting rich from that policy.

A number of conservative groups are supporting challenges to the incumbent republican senators, kansas, mississippi, even kentucky, where you are backing mitch mcconnell.

Is this helpful or hurtful to the party?

I am a big believer in the free market.

Competition makes us better.

Am i supporting any of the challengers against incumbents?

No, but is competition good?

Yes, it makes us hone our message.

Without competition, we look like one party rule.

It's helpful?

Debate and discussion is good.

U.n. senator ted cruz, both first-term senators, boats launch conservatives, both attracting national attention.

How are you different?

I don't know if i have an answer to that.

We are friends.

We probably vote together a large portion of the time.

Everybody is different individually, but i think it is presumptuous of an individual to say how i am different in personality.

It is more for somebody to judge rather than me describe.

How about january, will there be another shutdown?

I don't think so.

What i tell people at home is there is a conundrum.

Nobody at home -- i mean nobody -- thinks we should raise the debt ceiling without conditions, and they are not real excited about deadlines or shutdowns.

It is a conundrum.

But if we do nothing and the president says he will not negotiate or compromise, we just keep adding debt.

There has to be conditions.

Do you have something you like to add to it?

In 2011, we do not sequester.

A small percentage on discretionary spending.

Do that on mandatory.

If you put a one percent cut in mandatory spending over 10 years -- would back it through the senate?

I could go back to practical medicine.

The largest problem we have is the imbalance of payments.

It is why we are struggling as an economic economy.

Your supporting mitch mcconnell in kentucky in his primary campaign.

His opponent says he was with you in your election suite on election night.

Mitch mcconnell says he was not.

He remember him being there?

It is one of those things if you had to swear in a bible, i cannot.

I will not say he was not there.

If he says he was there, he probably was.

But it is crazy, i made a decision, everybody else has to make theirs.

I am one vote in kentucky.

The competition is good.

It makes us all better.

When we return, we will talk to a lead executive about business in washington.

? welcome back.

This week i sat down with a former pepsico ceo.

He talked about the role business plays with the obama administration and the tea party.

Take a listen.

Thank you for being with us, dean.

It is great to have you here, al.

Is the current political dysfunction good for business, do no harm, or is it bad?

It is hard to imagine it would be good.

I think business operates best with some degree of certainty, and i think the business leaders that i talk to on a regular basis are really cheering for some longer-term solution that would allow us to have some certainty in the decisions we make.

Some compromise and collaboration.

Absolutely.

President obama and his attitudes towards business, how do you assess it?

I am not as close to it as i once was as ceo, but i think the president would be well served to invite a stronger relationship with business because it is in our best interest, collectively, to find compromise.

He still has not quite done it?

I think he certainly moves in that direction, but on a consistent basis, that collaboration rather than sometimes confrontation could be helpful, because at the end of the day, business would well be his strongest supporters.

Not an administration populated by a lot of top business people, is it?

No, it is not, and that is a challenge sometimes.

Not necessarily because it would not take a whole lot for business to fully embrace support for the president.

Likely, it is in all of our best interests to work together.

That me ask about the republicans.

Domination these days of the tea party.

That is causing problems for business, isn't it?

I don't think the tea party itself is.

I think the fact there is not an ability for the party to come together on issues and finding common compromise.

The reality is the american people want to find some common ground, at least i believe they do, and you cannot have strong points of view that are uncompromised on either side and come to a solution that will work.

I am more optimistic today, as i think many people are, that we will come to some common ground going forward because i think our leaders in washington have come to realize that is what the public wants.

Compromise sometimes is a dirty word.

You were a very successful ceo.

You made compromises, didn't you?

I did.

I call it being a pragmatic leader.

As we look back in our history of political leaders who have been successful on both sides, both parties, they have been pragmatic leaders with a point of view, principal, who believed in certain philosophies, but recognized that you don't get everything and if you sit down and talk and get a better understanding of the other side and come to a compromise relatively quickly so that you can move on, everybody is better off.

Let me ask about a couple of specific issues, drawing on pepsico experience, it and you are a board member at walmart, exxon, american express.

Business tax reform -- how important is it?

It is easy to be for lower rates, back, and a major businesses will support base broadening when it affects him of the preferences they enjoyed?

If you want to be theoretical come as people would say let's do it, but the reality is i don't see it happening, and i think getting some certainty and getting some sort of on the margin changes that we can live with is probably a more realistic way of thinking about it.

This whole idea of a grand bargain, again, and very, it sounds great, but -- nothing but a sweeping overhaul?

I think when both sides have a strong commitment to a grand bargain with no willingness to compromise, the willingness of any kind of -- the likelihood of any reasonable solution is probably not going to happen.

Immigration?

Very important.

To get a bill through?

Very important.

The reality is we have a huge issue now and we are just ignoring it and making it worse for the people who are here and making it more difficult for business to hire and more difficult for business to create the jobs that could be created if we get this resolved.

I think every time i get optimistic about it, i get disappointed, but i sense that although it is probably not the highest priority right now, i would hope that within the next 12 months we would have some kind of solution.

How about infrastructure?

America used to be tops in the world in infrastructure, now they are 15th.

Does that impede our global competitiveness?

I think it does, i think it does.

I think the opportunity we could have had over the last 10 years to invest more heavily in infrastructure would have served us well, but we are where we are today.

The question is, how do we sort of take all of the needs that are out there and allocate them to the proper places, and where does the infrastructure fit into that?

I think a large part of the infrastructure investment can come from private business, not necessarily from the government, but that takes some compromise.

Public/private?

Public/private, but also when i talk about infrastructure i'm talking about the lines and rail , -- i'm talking about pipelines and rail, and some of those investments might be taken on by business rather than the government.

Clearly we have to improve the infrastructure to be competitive.

And if we want to export more of our products, particularly in the area of energy, we have to have the infrastructure to do that.

Part of that is regulation, part of that is investment.

Does business have more or less influence on politics than it did 10 years ago?

That's a good question.

I would say it is probably a little less, at the current time it is a little less.

Steve r einemund, dean of business at wake forest university, former ceo of pepsico, think you for joining us.

Al, think you for being with us.

We appreciate you being here.

Coming up, we talk about nsa spying, iran, and a debate over obama care and the virginia governor's race.

Welcome back.

We will get to margaret carlson and megan mccurdy in a moment, but first eavesdropping on other world leaders, including angela merkel.

Is that undermining u.s. ties with our allies or just business as usual?

There is no question it is an embarrassment for the united states.

On one hand, the u.s. is trying to make the argument president obama did not know anything about the wiretapping of 35 world leaders.

You believe that?

It is hard to believe the president would not be aware, even if they do not tell him we are spying our friends like angela merkel.

It is hard to believe they would not know the information about the positions do not come from monitoring her directly.

There has been a lot of raised eyebrows.

If it is important, why not take it to the commander-in- chief.

) and the other question is if he did not know, is that worse?

We have come a long way in our espionage operations since 1969 when harry sense and -- harry stinson said that gentlemen do not read other gentleman's mail.

Now we have the nsa spying on everyone.

Let's turn to the nuclear negotiations with iran.

They resume next week in geneva.

You will be there.

What do we look for?

This is the second round of negotiations with a new iranian government the u.s. has tried to make the case this is more credible, more open to a real deal.

The thing is happened yet, keep in mind.

With the arabians have done is presented a proposal that shows they're willing to make some concessions -- what the iranians have done is resented proposal.

What is happening in washington is interesting because the u.s. administration is trying to pressure congress not to put new sanctions on.

If there is a move in congress to toughen sanctions, can they stave that off long enough to hold these talks?

The secretary of state and treasury are going to capitol hill this week and doing classified briefings to talk to senators.

Part of putting the screws on them to get them to hold off on a senate banking bill.

For the time being i think they will delay it.

I don't know how much longer.

When we come back from geneva after november 9, and congressmen are going to want to see some actual hard progress.

They will say what have you got for me, what can you show to me, or should we not slap one more sanctions to make it go faster, to make the negotiations go faster.

Of course, the administration says that shows bad faith on our part if we are trying to negotiate a deal and punishing the more the same time.

It is a tough call.

It will be a fascinating story.

As the obama care woes mount, is this just a daily problem?

I don't think so.

I blame president obama's speech makers for the line about you can keep it, but not necessarily obama care.

Every reporter who tracks down people who say, i cannot keep my beloved insurance, they have the crappy as to insurance with high deductibles, terrible out of pockets, it almost no coverage, and they can purchase a better one on the exchange for less money.

Kathleen sebelius, i went back and found a post, which i will not bore you with, or the prescription drug expansion.

It was almost word for word what she said about this rollout.

It was the same with romney- care.

This will pass, and i think also what will pass is this flack about insurance being canceled.

I disagree.

There are people who had good insurance who are seeing their rates go up a lot.

A consultant of the insurance industry wrote about this yesterday.

He had fantastic insurance that will now cost him $600 more.

The other thing that i think is a core problem with this law as it is kind of a rude goldberg's edition.

You start the marble at one end, her roles in the can, which tips over, drops it on a scale, which causes something else to happen.

The problem is if any of those pieces breaks, the law does not work.

The core issue with the obamacare glitches -- i think we are way beyond the glitch stage -- if this thing does not work, it has the risk of taking down the whole law and not only that but the insurance, the individual insurance market with it.

Unless pollsters are wrong, democrats are headed for a big day in virginia next tuesday.

Is that a harbinger of republican problems ahead or just unique to virginia?

In some sense, i think it is.

The shutdown hurt badly with contractors in virginia, and it sort of speaks to a difficulty the republican party is having articulating its message to people who are outside of their core districts.

That said, two weeks ago, the problem obama care is having and the way the president's polls are dropping, i am a lot less sure they will have problems.

I think it goes beyond the beltway bandits reaction to how the republicans have behaved.

They don't seem fit to govern.

They seem fit to tear things down, but not much else.

I don't think this is a localized situation.

Not just one state?

It is not just virginia or this race.

I think this will play out in other places.

Obamacare will have time to improve before we get to the midterms.

Can coach an alley -- ken cucinelli may not.

Thank you for joining us, and thank you for watching.

We will see you again next week.

?

This text has been automatically generated. It may not be 100% accurate.

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