Tariffs, Budgets and Geopolitical Risk All at Once

Joe Gould:
We hear on the consumer side, the agricultural products like the things that consumers buy are going to go up in price. Well, in this case, the Pentagon is the consumer. You could have situations where the costs of the tariffs get passed on to the department and then the department's buying power erodes.
Roman Schweizer:
From DOD to Congress and from the White House to Wall Street, the NatSec Need-to-Know podcast, an unrehearsed podcast presenting insightful discussion and forecasts of the major national security and defense issues of the day. We've got a special long form version of our reporter roundtable to discuss the top national security issues in Washington. There's been a bunch, and we've got a lot to cover. Joining me is a murderers' row of experienced Washington editors and reporters, Tony Bertuca from Inside Defense, Joe Gould from Politico, and Aaron Mehta from Breaking Defense. They've each covered Washington and the Pentagon for decades and are as well sourced as anyone in town. Thank you all for joining. Let's get after it.
All right, gentlemen, thanks so much for joining me today. There is a ton to cover as usual and so we'll just get into it, get right after it. Happy Liberation Day to those who celebrate. President made his announcement yesterday on historic tariffs reckoning back to McKinley and Smoot-Hawley. We are in the midst of it. Folks are sorting it out as we speak. I guess the one thing I would say is, we haven't really seen anything from the aerospace and defense industry and the warnings or criticism that have been very muted. Perhaps you all have done some reporting on that. So would anyone like to kind of take a crack at what we've seen sort of early days here, either in the lead up or in sort of the past 18 hours?
Tony Bertuca:
You're right to say that the criticism has certainly been muted, public criticism. I think people are having different conversations in private. But from what you're seeing, we've got a story we ran this week, and I think Breaking Defense ran also, the CEO of Huntington Ingalls, Kastner, said that tariffs are just a non-story for his company. They have enough they buy in America, build in America. They think if it leads to more manufacturing capacity in America, this is just sure going to be a really great thing.
But then, you've got people like Tim Kaine who are trying to ostensibly look out for the interests of shipbuilders like Huntington Ingalls who put a resolution on the floor that passed in bipartisan fashion last night that says they want to terminate the president's declaration of national emergency to put the tariffs on Canadian goods, which includes steel and aluminum. Tim Kaine says the Navy, 30% of its steel comes from Canada, something like that. I think 20% of the aluminum comes from Canada. You had a Navy official last week, Seidle, I think, testified that those numbers were significant. So right now it's really sort of hard to square some of the public, the silence I guess from the defense business associations and the companies with their advocates saying, "Hey, please don't do this. You're going to hurt the defense industry."
Roman Schweizer:
Joe, you want to pile on?
Joe Gould:
Yeah. I'd just say Tony's exactly right there. What I would add is, behind the scenes, some of the things that you're hearing from industry, one is that these tariffs are not really merited in their case because they already have a trade surplus that the American defense industry is famously a major exporter. I think what they're afraid of is that there's going to be a backlash that's going to eat into their exports. I think one of the other things that you hear is that there are all kinds of components that go into these large weapons platforms, and then they get made in multiple countries, and a part will go into another country to have something done to it. It'll come back in, it'll get tariffed. And then if it crosses over the border multiple times, it doesn't get an exemption. That's one thing.
I think another thing, my sense of why is industry so silent or so muted, there's maybe a couple of different reasons. One is, these trade associations are made up of a lot of different members. Maybe not every company agrees or it gets hit the same way. Unanimity, when you have so many different inputs, is a hard thing. So maybe the best thing is to say little. I will say that AIA, the Aerospace Industries Association, did write a letter to Jamieson Greer, the US Trade representative, and they listed a number of concerns that they had about trade policy that's not turning the dial up to 11. They sent a letter, and one of the things that they asked for in that letter was an exemption on national security grounds.
Stop me if I'm going on too long, but what I am hearing from the Hill and privately from defense firms is that the tariff, the cost of the tariffs, we hear on the consumer side, the agricultural products like the things that consumers buy are going to go up in price. Well, in this case, the Pentagon is the consumer. And yes, there is a patchwork of contracts here. Some are cost-plus contracts, some are fixed price contracts where industry is likely going to have to eat these tariffs unless they get some kind of relief. But in terms of these cost-plus contracts, you could have situations where the cost of the tariffs get passed on to the department and then the department's buying power arose. If we have flat budgets, which is what it looks like, flat defense budgets moving forward, you could have a significant issue where the Trump administration says it wants to ramp things up, but it's likely going to stay flat.
Roman Schweizer:
I will pile in with three things. One, interesting data point marketing back to the 2018 steel and aluminum studies by commerce, the 232 investigation, Jim Mattis sent a letter to Wilbur Ross saying that the Defense Department used only 3% of the annual US steel and aluminum production. Now, not to say that's still not a big number in terms of when you jack the price, 25% or whatever.
The other interesting thing, and I will just kind of throw this out there, sort of also maybe a segue into some budget talk, but talking about European allies as well and cross-border traffic and US foreign military sales. Secretary of State Marco Rubio is meeting with his NATO counterparts this week today, and they released a statement, I'm just going to quote this because I think it's great and probably gets to another question, during his press conference with the Secretary General Mark Rutte. He said, "So we do want to leave here with an understanding we are at a pathway, a realistic pathway, to every single one of the members committing and fulfilling a promise to reach up to 5% in spending." That includes the United States will have to increase its percentage. So Marco said it and you know it's going to happen.
And then last thing I would just say is, I mean to me, I'm curious to see, the one program that I would think gets probably impacted is F-35, right? You've got all 50 states, six countries, probably a lot of different work share going on. It'll be interesting to see how that happens. And of course we've got earnings season coming up here in a couple of weeks, so we'll probably hear from the defense manufacturers how this is going to impact them. Aaron, did you want to just kind of jump in?
Aaron Mehta:
Yeah, I'm just personally really excited to see how much money we're going to make off the tariffs from the British India Ocean Territory, which is on the list, which the only people who live there literally are at Diego Garcia, a US-UK military base. We're going to cash in on that. I'm very excited.
Roman Schweizer:
Yeah, I do understand there are some penguins who will owe us some tariffs as well.
All right, let's change gears. Let's go to question number two. It's sort of a three-parter. Feel free to take a bite at whichever one you want. Where are we at the budget? We had a fiscal year '25 continuing resolution, which in my opinion was not a continuing resolution for defense because it had all the little special one-offs and one-timers. It kind of smacks more of a defense appropriations bill light. We've got the reconciliation process rolling along and then we've got the DOD in the midst of a 8% relook on the way to maybe a skinny budget at the end of the month. We'll see. So it's a big topic. Who wants to kind of jump out at it and take a swing first?
Aaron Mehta:
The budget's going to be really interesting because you have this 8% relook, which some people are still saying is a cut. The Pentagon says it's not a cut. But if you look at the language from the original memo Hegseth set out, it sure reads like a cut. What it is a cut to certain programs. Things are getting cut. The top line may not end up being cut. But there's just so much confusion, as there has been especially in the first, I would say, six weeks at the Pentagon, about what is actually being ordered here. That is unclear if every office has determined exactly how they're doing this, whether some offices just said, "Let's just shave 8% off each program," and others just said, "Okay, we'll kill this program and plus up this program." So I expect this budget to be kind of hectic in a way that we don't normally see because I think there's going to be a lot of things where offices made decisions to try to conform to guidance they thought they were getting that wasn't necessarily the guidance they were asked for.
As a result, I think if we do get a skinny budget, there's going to be a lot of questions obviously in that because there's just a lack of details. And I think you're going to see Congress reacting pretty strongly to certain programs that suddenly are going on roller coasters. The one thing we haven't seen so far very much of from Congress in the last two months is any real pushback to the Pentagon. Whether that's when Trump fired CQ Brown and then Hegseth fired the CNO, whether that's some of the guidance we've seen coming out of there, there hasn't been a ton of pushback from Congress. The budget and then particularly the budget posture hearings, which is going to be Hegseth's first time showing up in front of everyone to get yelled at, it's going to be wild. And how much of the budget we're going to know by the time those hearings happen, I just don't really have much clarity on.
Tony Bertuca:
Also on the possibilities for a skinny budget, we don't really know what to expect in terms of a budget rollout, right? I mean we've got a very unconventional administration. So typically you've got a budget day where a half dozen officials take turns briefing people like me, Joe and Aaron, about the budget and what they're doing with the request. You don't get J-books immediately, of course. There's a lag. But we get a lot of material that day from OMB, from DOD, material that maybe they feel like this year they don't have to provide. Maybe this year it's sort of a lot less stuff. There's maybe a digital glossy that goes out. The SecDef does a video, and it's on X, and that's what we get, right? So that's one of the things that I think I'm tracking most closely, is in what way are you guys going to try to provide the public with this information about the budget rollout this year? Because everything... Nothing looks like it's going to track with anything we've done before. So that's just something I wanted to sort of throw out there as it's one of my concerns.
Joe Gould:
Those are all great points, and I think you can pretty much take to the bank that Pete Hegseth is going to make a video. He always does. I'd just add, from a congressional standpoint, the budget always lands and is DOA, Congress works its will, but I think that's also like another open question this time. There's been a lot of deference under Republican control of Congress to the president, and appropriators in this last budget really gave away their power in giving flexibility to the Pentagon. I don't know if you get the toothpaste back in the tube now. I think if Congress had wanted to pass a budget, it would have done one much earlier. I think it's like an exercise maybe they don't even like to do at this point. So now we've sort of created this precedent where they can do a year long CR and defer decisions to the White House. The budget may land, we could wind up with another year long CR or something like it.
Aaron Mehta:
Elaine McCusker and Bill Greenwalt, who are two budget analysts for AEI, wrote a piece for Breaking Defense earlier this week. It was entitled If Annual Appropriations are Dead, It's an Opportunity for Defense. They were basically saying exactly what Joe just said which is, appropriators have basically punted away their power, which that was the one thing I never thought we'd see, right? The actual title of appropriations committees are the Powerful Appropriations Committee, but they've kind of given away the shop here. And you don't hear from appropriators saying, we have to claw back our power and make sure the Trump administration can't take away appropriations. They seem to be okay with it. I think for defense, and this is what the AEI people argued, is this is potentially a game changer now. There may not be to be this constant stream of authorizers, appropriators, a couple of short-term CR to get through things with no new stars. Maybe this just breaks the system entirely. And for defense, that might actually work out in some ways.
Tony Bertuca:
Dysfunction has PPBE reform, you mean?
Aaron Mehta:
Yeah, it's functional. That's exactly right. It's PPBE reform by default.
Tony Bertuca:
Congressional dysfunction as PPBE reform. Yeah.
Roman Schweizer:
Well, so I also want to kind of merge two thoughts, which is also somewhat interesting. Here we are in the midst of this fiscal '26 relook at the budget. At the same time we have DOD with this unique sort of flexibility. We're in this period where they're supposed to be sorting out the fiscal '25 budget. So if you are canceling something in the '26 budget, why would you spend any money on it in the '25 budget? So I think you may see some of those program decisions, programs that are killed, reflected back in the '25 budget. The second thing I would say, which I think is also where you're going to see this sort of Impoundment Control Act, impoundment fight come about, is Russ Vought, the director of OMB, has talked about using a rescissions package, which is quite feasible. I mean really. So you could also see that executed as well.
And then we've got this weird situation about the GOP reconciliation bill, which again, as we're sort of sitting here recording this, the Senate is getting ready to move forward on its budget plan. It includes $150 billion for defense. The House version had 100. I believe they have to sort of anchor on a number that if the Senate passes 150, that's what the House is going to have to swallow. I don't know if there's any sort of legislative jiu-jitsu they can use to sort of flip that around somehow or leave that as a mystery. But the Senate Republicans may be able to pony up or figure out where they want to spend 150 billion over 10 years or over a shorter period. I think that's also the question, is it over two years? Is it over four years? How do they take a swing at this? So I think we'll see that sort of all come together this summer.
One thing I would also make a point of, this 8% relook, I think you're probably going to have a mix of federal civilian headcount as some savings, some program, back in the day we used to call them vertical kills, you kind of kill the whole program, some platform retirements. And then maybe you do wind up having a salami slice across some accounts, the famously said goofy meat ax by Leon Panetta. Always have to go back to the goofy meat ax at Uncle Leon. We'll close out the budget talk, but I think, Joe, you had one comment.
Joe Gould:
Oh, yeah. I was just going to say that, with regard to the $150 billion for defense, there were some Senate hawks who were making noises within the last couple of weeks about trying to increase that number. Pete Hegseth came to the Senate GOP lunch a couple of weeks ago, it's a closed door lunch, but I'm told that he expressed support for a larger number. But then yesterday, in talking to some of those hawks, I think they're going to settle for 150.
There's some question about... In the next couple of days there's something called a vote-a-rama. The Senate is going to have its reconciliation bill on the floor and then it's going to be open to amendments. So hey, if you have hawks who want to increase that defense number, potentially they could introduce an amendment to do that. But the problem is, and I was hearing this from some yesterday, is that that deck could backfire. If they don't get all 50 votes or it shows some kind of... They're going to have to do this all on their own. Democrats, as far as I know, are not joining in this party. So there are some Republicans who may not be on board without larger number or don't want to antagonize the House by creating a larger delta or creating a problem for themselves if they have to offset an additional, say 25 to 50 billion. Just to kind of put a fork in the idea that the Senate Democrats may be able to come in at a higher number than 150.
Roman Schweizer:
And I would just say, this goes without saying, I don't think people fully appreciate how different the various factions within the Senate, which I would consider probably the more disciplined chamber right now, or at least more homogeneous one compared to the House, which is the Wild West, in which we just saw the House go home this week over the proxy voting issue between Speaker Johnson and Rep Luna.
Tony Bertuca:
The majority just shut down the will of the majority this week over in the House. So who knows what's going on over there?
Roman Schweizer:
Right. So I mean I still believe that getting the right mix of tax cuts spending, closing your eyes, and using current policy to somehow not blow out the debt and all that stuff is the equivalent of sticking the Triple Lindy, which some of you may remember from the Rodney Dangerfield classic Back to School. So if you can nail the Triple Lindy, that's what this is the equivalent of doing.
All right, let's move on. I'll leave you guys with that visual of Rodney Dangerfield in a red singlet, which is still burned into my mind. Obviously one of the things we've got pending is a big DOD downsizing memo of reorganization and downsizing that the SecDef announced. This obviously gets after the sort of fed civilian workforce. Believe it or not, this is not a DOGE related effort. I guess it wouldn't be a Washington policy podcast if you didn't mention Elon Musk and DOGE, so everyone can take a drink of their favorite cocktail. Got that out of the way. Anything we've heard about any of these personnel cuts and/or the outlook of reform, reorg in DOD?
Joe Gould:
Oh. All I wanted to say is that I came on this podcast, it's haunted me ever since, but I've came on this podcast and downplayed the impact of DOGE. We thought they're going to put out a study. I recall this vividly, I said they're going to put out a study, it's not going to amount to much. I did not see coming the kind of radical approach that Musk has taken. Without me, I'll turn it over to somebody else to get into the details of the cut.
Roman Schweizer:
Well, I would say you may still be right. I think really that begets the big question of when this is all graded out. In my wayward youth, I was a journalist but I also happened to work for the Department of the Navy. There are certainly room, there's waste, fraud, and abuse and certainly areas that can be reformed and dollars better spent and things like that. So ultimately we'll see what that grades out to.
Joe, along the lines of what you've said, many of us did not assume that Elon would be embraced by the entire Republican caucus in Congress as well as he had. But ending waste, fraud, and abuse is like curing childhood cancer, right? I mean everybody's for that. You can't be against that. I think we'll just have to see how this next spending bill plays out. Maybe that'll be the ultimate test.
Tony Bertuca:
And I, at the time, Joe, was like, "Well, maybe they just want to fix government IT." These are Silicon Valley guys, like this is an area they could really make a difference. Just fix the... No. So I hear you, Joe.
Joe Gould:
Yeah.
Aaron Mehta:
I was right. I always assumed the most dramatic thing that's going to happen will happen. And when I'm right, I get to brag about it. Roman, to your point, I'm pretty sure the guys working on childhood cancer have gotten DOGE out of government, so.
Just to DOD in the civilian cuts, I mean we're going to see where this shakes out. We're going to see who ultimately is kind of preserved from this. We saw very early on people who are key to national security in different agencies getting kicked out and then brought back, the NSA guys who manage all the nuclear warheads getting knocked out and then reportedly, if I recall correctly, about two days later they realized they needed them back, tried to bring them back, and had trouble reaching them because they had immediately confiscated all their IT and shut down their emails and phone and stuff.
Hopefully this is a more organized process than we've seen from DOGE. I think the fact that it's running out of the Pentagon itself is probably a better sign in terms of understanding there are roles that need to be done for national security. We saw a list in Texas memo that was fairly wide in terms of who is exempted from this. So we're going to have to see what this looks like in real terms. I think jokes aside, the fact that two of the smarter colleagues I know were both like, "We don't know what this is going to be, how it's going to turn out," it just tells you that trying to guess ahead of time what these things will look like right now is just a fool's errand. We kind of just have to wait and see and then try to sort through the pieces after.
Tony Bertuca:
And the message we're getting from the building on the civilian cuts is sort of, they really want us to focus on all of the voluntary separations that are going on, right? The deferred resignation program they say has got, I think it was 21,000 nearly that they're going to be able to shed by the end of the year that's nobody getting fired. That's people voluntarily heading for the door. The job freezes, I think that's cutting... You're not adding 6,000 civilian jobs every month as long as the job freezes are in place, although we saw a memo this week with a real wide range of exemptions to that, everything from childcare to... All sorts of jobs are listed as exempt. So again, hard to guess where it goes, but the department at this point sure hopes they don't have to do a lot of heavy lifting. They all said though, we're going to have to riff. We know it. We know that the people we're going to have to riff are, at least 40% of them are veterans. They don't want to go lift too heavy in that regard, and they know it.
Roman Schweizer:
Yeah, I guess the one thing I would say is, from my time in government, there have been sort of cycles of this before. In some cases you have very senior people who know a lot and have important roles and they're gone and you lose that sort of knowledge and experience forever. And that has created problems in navy acquisition programs that I participated in, that that was sort of causality of some of the cost overruns and schedule delays and stuff like that. You also have a chilling effect on getting bright, new, energetic people into the workforce to whether that's throughout the federal government or certainly in DOD. You kind of need to do that. I've talked to people who've had their children have lost internships or were in that sort of first probationary year. And then honestly, the third one, and this is kind of a tough thing to say, but if you are a competent and energetic go-getter in DOD, you're going to punch out and get a job in industry somewhere. So you are sort of leaving that sort of least common denominator there, which can have a negative impact.
Well, we will see, and I guess the one thing I would say is, and this is for sure, this has a real impact on people's lives and livelihoods. However that's handled should be hopefully thoughtfully. We kind of have to touch on, although it sounds like nothing's going to come of it, although there has been some more recent reporting, we had Signalgates. National Security Advisor Michael Waltz as well as Secretary of Defense Pete Hegseth, and then I know there's been some reporting about, I believe it's in Politico, but about Gmail gate that Mike Waltz has been fast and loose with, and/or his staff, on the NSC in terms of using Gmail to whip data around. I mean we know what's happened. Anything in terms of consequences. I know the SASC has talked about maybe a bipartisan review. This gets back to the issue of, this is something where Donald Trump does not want to give in, but three months later Mike Waltz may be out of a job, I think, after a fair amount of time.
Tony Bertuca:
Yeah, I mean one of the things we do know is that there is likely to be the only bipartisan push for this, and it's coming from Senator Roger Wicker, Armed Services Committee chairman, and Jack Reed, the ranking Democrat. They have asked the Pentagon IG to review this. The Pentagon IG doesn't typically step out and say, "Yep, this is what we're doing right away." They kind of take their time whether or not they do it. So this is kind of sitting over there now, but the expectation on the Hill is that the Pentagon IG is going to review it, they'll try in expedited fashion to report back to Wicker and Reed about what happened, which is I think something that we kind of just have to wait around for.
The political impact of it, we saw it come up at some congressional hearings, right? We saw it come up during retired Lieutenant General John Caine's confirmation hearing. I think he's poised to cruise right? He's got Democrats who are on his side. I think Tammy Duckworth, who normally really goes after the Trump nominee, said she looked forward to working with him. But he got hard questions about this because of Signalgate and questions about whether or not he thought it was appropriate. He tried to sort of sidestep some of them, but ultimately came down on saying, "There are appropriate channels. I would only ever use the appropriate channel. And this was not one."
Joe Gould:
I'd just pile on to say that, from the Hill, I think so far we have not seen intense criticism from any Republicans that I can think of, many of whom worked with Mike Waltz when he was a member up here. Right now, in terms of the political fallout, it's mainly Democrats. One of my colleagues had a report that they're also using Gmail. Maybe this is a sort of a truism at this point, but when you look at Mike Waltz as a former member of the House Intelligence Committee and somebody who served, seems like somebody who should know better.
As it happens, I was on vacation while this was all going on. In the hotel lounge, there was an off duty soldier who was yelling at the screen while this news was playing. He turned to me and basically said he's like a logistician who drives a truck, and there is a general order that you can't use any kind of consumer platforms to convey sensitive information. He said, basically his career would be over if he had done what these guys did. But whether there's a political fallout, I think maybe in some ways it may hinge on what the DOD IG investigation says. Tony's right to point out that that's happening. I think there are Democrats who may want some sort of effort to investigate this, but that's going to be a partisan exercise.
Tony Bertuca:
Though I'm sure I speak for my colleagues when I say I look forward to my number getting sucked up into the phone of senior defense officials everywhere.
Aaron Mehta:
Yes. Our phones are all open if anybody's listening to this. Just to underline Joe's point, there is zero question that if a random lieutenant colonel did what Waltz and Hegseth did, they would be gone. Zero question. Obviously it's different when the bosses do it. There are different rules for bosses. We all know that's at the real world that we live in. That's a fair criticism. One that I've heard also, and I'm sure Tony has too, from other people in the military, just kind of rolling their eyes at this going, "We would be totally chucked out a window if we did this." Particularly the information about the strikes, whether that was classified or not is an ongoing argument, but just sharing that information in such a manner would absolutely get somebody riffed out of their uniform.
The other aspect of this I think that's worth noting is remembering that whether there's political fallout on the Hill or not, it really only matters how Trump feels about this. And there has been some reporting, I think Politico had a piece about it a week or so ago that Trump was having discussions about whether to get rid of Waltz in the wake of this. The biggest thing to me is, does this continue to overshadow what Trump wants to talk about? At some point does Trump decide, "I'm sick of hearing about this, let's just dump Waltz"?
I think you'll see on the Hill, part of the reason I think you're not seeing a huge push from national security folks, aside from Don Bacon, who's kind of become the national security Republican who's willing to break ranks to an extent, is that I think there's a view of Waltz as he is one of the more serious national security guys. He's pro-Ukraine, traditionally. He's been in discussions on the Hill with other members about defense. I think there's a sense of, well, we don't want this guy getting taken out and somebody coming in with no experience or who might have ties to other countries that we don't agree with. Or who knows who Trump could pick for his second national security advisor? So I think there's some level of circle that wagons around the guy.
Joe Gould:
It's telling in our coverage that one of the figures who talked to Trump about ousting Waltz was JD Vance, who's a Ukraine skeptic and has less traditional Republican foreign policy views.
Tony Bertuca:
And that the story in Politico has so many unnamed sources that have corroborated that. I mean the knives are out for him in the White House. That's where maybe some of these voices are coming from, right? It's the White House.
Aaron Mehta:
Notably, in the Signal chat you saw Vance basically saying, "Why are we doing this?" And Waltz having to kind of force the issue. Yeah.
Roman Schweizer:
I would just say, I mean look, using unsanctioned devices, I actually nearly spit out my coffee though when CIA director John Ratcliffe said that when he got to the CIA, they installed Signal on his phone. That seems like bullshit to me, but whatever. Maybe CIA tech support has some issues they need to deal with. Bottom line is, it was wrong. They know it was wrong. They shouldn't have been taught... It was a needless flex by Pete Hegseth to put that sort of detail in an open forum, unclassed forum like that. But the bottom line is consequences. And Trump is not going to fire Mike Waltz because that's precisely what everybody wants him to do, is fire Mike Waltz. But three months from now, unless something great happens, I think probably Waltz might be cooked.
Let's briefly, we'll kind of get into a little bit of speed round here. We did mention we did have a confirmation hearing for Lieutenant General Dan Razin Caine at the Senate. He will be, I presume confirmed. He does seem like a pretty serious individual. He's an Air Force three-star, so he'll get his fourth star then retire, or not retire, but he'll be brought back from retirement and get his fourth star. You guys mentioned it. He seemed pretty reasonable, hit all the stuff. I haven't read through his advanced policy questions. Seems traditional, but also an entrepreneurial background. Maybe friendly to some new defense tech as well as reform. And the guy's got a crazy bio in terms of his work experience in terms of special operations command, hunting scuds, working with the CIA and other Intel orgs, with the COCOMs. Pretty interesting background given where we're at in the world environment. Anybody want to pile in on General Caine?
Tony Bertuca:
Yeah. As I said, one of the things I noticed was just, there's bipartisan support for him, right? An unconventional nominee. Once again, he admits he's unconventional, he's coming in after CQ Brown and others were fired. But he seems to enjoy support among Democrats. Senator Tim Kaine, Senator Tammy Duckworth who I mentioned, I think they're supportive of his nomination and he must have made a very good impression. One of the things they mentioned in his background was his time working with the CIA, advising the CIA. That seemed to really appeal to some of the Democrats on the Senate Armed Services Committee.
Also, one of the things he brings up, and he brought it up in his APQs, is he's got a venture capital background. And you're hearing more of that rhetoric now. It's been going on. It started in the Biden administration with the creation of the Office of Strategic Capital by then Secretary Lloyd Austin. But people are talking about trying to expand it, trying to get those government-backed loans to try to help non-traditional companies trying to loosen private capital to get non-traditional companies into the defense industrial base. I don't know what kind of role we can expect the chairman of the Joint Chiefs to play in that regard, but certainly he's very high on the heap. And if he cares about that, it's reasonable to think it becomes a higher priority for the Pentagon.
Aaron Mehta:
Yeah, I just found it very interesting that the Washington Post right before the hearing ran a story where they talked with General David Goldfein, the former Air Force chief of staff, who is not somebody who goes out and talks all that often. He's somebody who's just kind of more low-key. And he was very supportive of Caine. To me, that's a sense that the network of former officers who are serious people have had conversations with this guy and who decided, "All right, we need to throw our support behind him," and probably even having those discussions with members of Congress.
So I think to Tony's point, it's pretty clear that Democrats in the Senate at some point decided, "Look, this guy seems serious. The thing about him putting the MAGA hat on, he's denied and there's no proof of, aside from Trump's story that that's true. Maybe this is a guy that we can work with who will be a serious figure in the Pentagon at a time when Senate Democrats are very concerned. There aren't a lot of those in the building. So why are we going to throw roadblocks in this guy's way? Let's get him in and hopefully he can stabilize things." Whether that happens or not, stabilizing is a separate question, but that seems to be the thinking.
Joe Gould:
Yeah. I would just add that in that hearing, the test at least for Democrats, although the first person to ask a question about it was whether he could provide apolitical military advice to Donald Trump. Later on in the hearing, Mazie Hirono pointed out that there are other, this isn't a hypothetical, there are others who have been in Trump's orbit at the Pentagon who have suffered for giving him advice that he didn't want. Mark Milley, who's now under investigation, whose portrait was taken down from the halls of the Pentagon, whose security clearance was revoked, whose private security was revoked. So there's been some real steps, and that's not even getting into Mark Esper.
So there was this other story that has dogged Dan Caine as well, which Trump tells that when they met in Iraq, Caine put on a red MAGA hat and said, "I would kill for you sir." And that would be inappropriate for a military officer to do, to kind of make a partisan display that way. And Caine pretty adeptly said, I think he may have been talking about someone else, which is not necessarily calling Trump a liar, and yet he is refuting that he did it.
It's just interesting to see the way he acquitted himself in that hearing. He seems to have some sort of political instincts or he was well-prepared. Maybe it's his time in the Guard. Officers at a senior level have to interact with state governors. So maybe that's kind of where he gets it from or maybe it's just kind of his time in the interagency, that experience. But he did really seem to do pretty well. As you guys pointed out, I mean there are Democrats who have expressed support for him, so it's clear that he's going to make it through a committee vote, and most likely that's going to translate to a bipartisan confirmation on the floor.
Tony Bertuca:
Yeah. The president's not a liar, but I didn't do it. That showed some Washington chops there at the hearing. Right? So Democrats nodded along, I think.
Roman Schweizer:
Well, I think, to me, and we can close this out and move on, but I mean to me, in this day and age, to not have it on camera or somebody's phone or a picture or something like that, to not have video evidence. Because I think we would all agree that our college experiences would have been much different if there was video and pictures allowed back then, if they were carrying them around. Not to say that you guys are as old as I am, but although maybe I guess Polaroids did exist when I was out and about. So there might be some incriminating evidence on Polaroids, but certainly not a MAGA hat or, well, I guess that wasn't a thing then.
I guess maybe one thing to talk about, we kind of touched on it in Signalgate, "Hey, in case anybody didn't know, we're bombing Yemen." And we have a bunch of B-2s parked on the lovely tropical island of Diego Garcia. If you don't know where that is, I encourage folks to look on the map. I have known people who have been stationed there. They say the fishing is great and the boredom is incredible. We've also got a carrier there, a second carrier headed to the region and we also have a third carrier, Nimitz Battle Group, in Westpac. So what we would call sprinting distance. So it sounds like things are popping off a bit. The one thing I would just say, surprisingly, I think we've seen more from the Signal group chat about operations in Yemen than we have from DOD or CENTCOM. I find it unusual that there's been a complete media blackout. So you guys tell me, as reporters, I mean I think this is somewhat unusual, right?
Tony Bertuca:
Yeah. I think one of the things you're seeing right, and you saw it play out in the Signal chat, was they know that an operation like this, that they say, "We promise it's not open-ended, it'll end as soon as the Houthis stop." So they know that an operation like this is politically divisive, especially given what the president ran on, what the party's base has started to coalesce around, no more of these forever wars, no more intervention in the Middle East. It's not something they want to celebrate certainly and burden the public with a lot of details about apparently. But I think that has a lot to do with why is just... You saw Sean Parnell in his first press conference, or I think it was the second press conference about this. He got the questions of, "Okay, why is this not an open-ended engagement? You're sure it's not an open-ended engagement. Well, the reason it's not is because you're planning for the Houthis to stop." Well, that's just not something they want to talk about publicly, I don't think.
Roman Schweizer:
I would just make one other observation. Hey, Israel is back in Gaza. Has, I guess, broken the ceasefire, or both sides have broke the ceasefire I'm sure. And the Houthis have not been shooting at Israel, which they have said they would. Or I haven't really seen anything about attacks on shipping, although unless somebody in the neighborhood reports on them, we wouldn't know.
I think just, of course, the other fascinating thing that I have presumed is, I do think we are in store for a major tectonic shift in the region. I believe, and this is not based on any group chats that I am privy to, that there will be a regime change or some sort of major change in Iran over the next, say 18 months. I've been saying 18 months, but I've been saying that for three months, so probably 15 months now.
You've got the sanctions. The Trump administration is sanctioning Russian and Chinese companies that are supporting the Iranian regime. Obviously you've got President Trump's letter to the Ayatollah, the letter back, and we'll see where things go. But the one thing I would just say is that there is an opportunity to completely reshuffle the Middle East for a generation. I think Trump would, one, love to see the Saudis and Israel recognize each other in the Abraham Accords, that he would certainly propose that he should win his second Nobel Peace Prize for that, the first being obviously Russia and Ukraine.
The second item though is just as relevant, is Donald Trump is not going to go down in the history books as the president that allowed Iran to go nuclear on his watch. And that is something that is certainly in the cards over the next four years if the situation does not change. So one way or the other, as Trump might say, there's going to be some sort of major shift there.
All right. Guys, I guess we'll just kind of close out with one bit of news. I guess it's a little stale right now, but the Air Force has a new fighter, the F-47 NGAD program, next generation air dominance. Whether or not you believe it was named for the 47th president, or as the Air Force says, recognizes the P-47 as well as maybe it was one of the next things in line depending on X aircraft and things like that. The Air Force has made a major commitment to a manned fighter, reportedly. Not by one of, I think, your publication, but another public reporter suggested the Navy was on the cusp of awarding its FAXX program, which I think if it does happen, might tie into next week's sea airspace. So just any quick thoughts on the big fighter programs?
Aaron Mehta:
Yeah, I just think the Air Force played this perfectly. They walked into Trump's office and they said, "Hey, Biden tried to kill this thing. You have a chance to save us from Biden's bad decisions." They maybe danced around the F-47 thing, but Alvin's been pretty clear tying it to Trump. The Air Force has played this as well as they possibly could to get the fighter they wanted. Obviously there's huge ramifications from going to Boeing versus Lockheed, but I think we aren't going to know the full ramifications until we see how FAXX, the Navy's jet shakes out whether that comes out soon or not, because that'll kind of give us the full industrial picture. It's just, it's a huge deal. It's the biggest aircraft award in the last decade since the B-21 and it kind of reshapes everything around the service and the industry.
Tony Bertuca:
Yeah, I think it's up there with like the Casper big soldier, little soldier moment, right? It's just, Mr. President, you have a chance to be very decisive here with this major aircraft program that we've been trying to get off and they wouldn't let us. What are you going to do? And he pulled the trigger.
Joe Gould:
I'm going to just cut in a different direction of kind of a more political direction here and say, there's a senator on the Armed Services Committee, Eric Schmitt from Missouri, who in local reporting played a role in landing the deal for Boeing. He just happens to be one of the most interesting folks in the Senate to me. He's a former attorney general from Missouri. He's tightly allied with JD Vance and that wing of the party. He's on armed services. He went to Munich. I just think, keep an eye on that dude.
Roman Schweizer:
Fair enough. I will just chime in with two points. One, I think significant, this is a manned fighter program. So despite the hoopla over Elon and unmanned and new tech and companies are going to come in and AI, this is a manned fighter program. So the Air Force has committed to a manned fighter program, which I think is significant, which I believe the generals, the zoomies always wanted to do in the first place, even though there was a delay. So the uniform guys got what they wanted.
Second thing, we'll see about FAXX. The budget was cut significantly, significantly. The setup was cut. I don't see how you develop a brand new fighter jet from that. So the one thing I would say, this is the aviation nerd in me, is if you take a Super Hornet and you sling a bunch of these, what are now called AIM-174 missiles, which is basically an air launched version of an SM-6, the Raytheon SM-6 missile, you get something that's a hell of a lot like a Tomcat with the AIM-54 Phoenix missile, which back in the old day was the fleet air defense fighter.
So could this all just be a way for Boeing to develop a block III, semi-stealthy, new engine, bad version of a Super Hornet, which I do have to say online, I did see someone call it a murder hornet, which would be phenomenal. So a murder hornet with a bunch of long range air-to-air missiles, that's the kind of stuff that you need for fleet air defense. So I wouldn't snooze on some sort of Super Hornet derivative. Of course I'm totally wrong, but hey, that's all right. I'm swinging for the fences like Aaron, and if I'm wrong, nobody will remember.
All right. Thanks, everyone. Well, we're going to have to bring it to a close. Obviously there's a lot that's happened since our last recording and a lot of stuff going on real time. I just want to say thanks, everyone, for tuning in. Gentlemen, thanks for your insights, and we will be back with you all shortly. Thanks so much.

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